The Telephone Consumer Protection Act: New Developments and Issues to Watch September 26, 2014 Mark W. Brennan, Partner

2 Overview Overview of the TCPA FCC Developments FCC Issues to Watch What You Can Do

3 Overview of the TCPA Congress enacted the TCPA in 1991 specifically to curb aggressive telemarketing practices: –Using automatic dialing equipment to make unsolicited calls to random or sequential telephone numbers –Calling sequential telephone numbers in a way that ties up a block of telephone numbers and creates public safety risks –Concerns about telemarketers shifting calling costs to wireless consumers

4 Overview of the TCPA (cont’d) Imposes a number of restrictions on telemarketing calls, faxes, and other outbound communications. –Some restrictions apply to non-telemarketing calls –Implemented by the Federal Communications Commission (“FCC”)

5 Overview of the TCPA (cont’d) Two increasingly problematic provisions: 1) No autodialed or prerecorded or artificial voice calls to wireless telephone numbers, absent an emergency or “prior express consent.” –Applies regardless of content –The FCC and some courts have determined that this applies to text or short message service (“SMS”) messages –New FCC rules

6 Overview of the TCPA (cont’d) 2) No prerecorded or artificial voice calls to residential telephone numbers without “prior express written consent.” Exceptions: –Not a solicitation or telemarketing –Not made for a commercial purpose –Emergency calls –By or on behalf of a tax-exempt nonprofit organization –Healthcare calls subject to HIPAA

7 Overview of the TCPA (cont’d) The TCPA defines an autodialer (“automatic telephone dialing system”) as “equipment which has the capacity— –(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and –(B) to dial such numbers.” The application of this definition is a key unsettled issue in today’s TCPA landscape. The FCC has taken the position that (at least some) predictive dialers are autodialers (more on this later).

Overview of the TCPA (cont’d) 8 NOTE: Adults are aged 18 and over; children are under age 18. SOURCE: CDC/NCHS, National Health Interview Survey. Percent Wireless rules increasingly important, particularly when serving younger Americans.

Overview of the TCPA (cont’d) TCPA Violations Can Be Costly Minimum statutory damages of $500 per call. Statutory damages of $1,500 per call for knowing or willful violations. Class actions allowed, with no cap on damages or de minimis exception: –1,000 calls = at least $500,000, potentially $1.5 million 9

Overview of the TCPA (cont’d) Hogan Lovells has been deeply engaged in this area: Cross-practice TCPA Working Group. Represent clients in court and before the FCC, Federal Trade Commission, Congress, and state agencies. Secured dismissals and nominal settlements for clients in TCPA actions. Worked with the FCC to clarify TCPA rules. 10

FCC Developments Recent decisions –GroupMe A consumer’s “prior express consent” may be obtained through and conveyed by an intermediary However, parties remain liable for TCPA violations if, in fact, intermediaries do not obtain “prior express consent” The burden remains on the caller if there is any dispute over whether consent was obtained –Cargo Airline Association First-of-its-kind exemption Free-to-end-user voice calls and text messages for non- telemarketing package delivery notifications 11

FCC Developments (cont’d) More than 45 parties have filed petitions asking the FCC to clarify issues: –Autodialer definition –Which party is the “caller” –Disclosure rules –The status of reassigned wireless numbers –Vicarious liability for TCPA violations –Applicability of fax opt-out notice requirements 12

Santander Consumer USA Filed: July 10, 2014 Issue: whether and how “prior express consent” for non-telemarketing calls can be revoked Proposals: –FCC should clarify that “prior express consent” to receive non-telemarketing calls and texts to cellular phones using ATDS and/or prerecorded voice messages cannot be revoked –If there is a right to revoke, the FCC should confirm that the caller may designate methods for consumers to revoke, including in writing, by , by text message, by fax, or as prescribed by the FCC 13

ACA International Filed: Jan. 31, 2014 Petition for Rulemaking asking the FCC to –confirm that not all predictive dialers are autodialers; –confirm that “capacity” under TCPA means present ability; –clarify that “prior express consent” attaches to the debtor, not the specific telephone number supplied by the debtor when the debt was incurred; and –establish a safe harbor for autodialed “wrong number” non-telemarketing calls to wireless phones 14

United Healthcare Services, Inc. Filed: Jan. 16, 2014 Issue: liability for calls to reassigned wireless telephone numbers for which the caller had obtained “prior express consent” Proposals: –“prior express consent of the called party” encompasses non-telemarketing, informational calls until the caller learns that the telephone number has been reassigned –“called party” encompasses both the consenting party and the new subscriber to a reassigned number –good faith exception 15

Professional Association for Customer Engagement Filed: Oct. 18, 2013 Preview dialing and autodialer definition –An autodialer must have the “capacity to dial numbers without human intervention” –The “capacity” of a system means what that system can do at the time the call is placed, without additional modification 16

FCC Issues to Watch What does “autodialer” mean? Will there be a TCPA rulemaking? Will there be more industry-specific exemptions? What rules will apply to “solicited” fax advertisements? To what extent does the TCPA apply to mobile device applications, mobile financial services, and other new technologies and services? How will the FCC apply its new “prior express written consent” requirements? 17

What You Can Do Assessing your existing data –What level of consent can you demonstrate? –Have you obtained additional consents under the new rules? Reviewing intake and account forms, calling scripts, and other consent channels –Are the disclosures adequate? –Are the telephone number types specified? –Is your privacy policy sufficient? Analyzing the available opt-out mechanisms Reviewing calling policies and manuals Preparing training modules for employees 18

What You Can Do (cont’d) Analyzing vendor agreements for TCPA compliance and adequate protection (including vicarious liability issues) Assessing call monitoring and recording compliance issues Evaluating management of customer number changes Ensuring adequate record retention Obtaining insurance Monitoring TCPA litigation developments and pending FCC proceedings for filings and decisions of interest Aggressively and intelligently defending against TCPA lawsuits 19

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