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October 27, 2016

ILR Continues the Fight Against FCC’s Omnibus Declaratory Ruling

The gulf between the mindset of FCC regulators and the business community was vividly on display during oral arguments in a D.C. Circuit Court hearing before a three-judge panel last week on a case that affects every business that uses a phone or texts to reach their consumers.   

The Chamber and other organizations are challenging the FCC’s Omnibus Declaratory Ruling, issued in 2015, that was supposed to clarify how new technologies can be used under the Telephone Consumer Protection Act (TCPA), a law passed in 1991 to regulate overly aggressive telemarketers.

Rather than clarifying the law, the ruling has created a whole new set of problems for businesses.

While there are numerous issues being challenged, one of the most contentious requires business to know if a phone number has been reassigned from one subscriber to another.  With 37 million wireless phone numbers reassigned each year, companies are vulnerable to lawsuits that could result in millions of dollars of awards.

In spite of the evidence presented, the FCC’s attorney said that the problem of tracking reassigned numbers is “grossly exaggerated.” Let’s look at his claims, one by one:

(1) He said most people do not sue over a wrong number call.

Maybe not, but the steep escalation in TCPA lawsuits shows that the ruling has severely exacerbated litigation. From Aug. 2015 to Aug. 2016, there was a 91 percent increase in the number of lawsuits were (1,668 to 3,191), and class action lawsuits increased by 199 percent ( 217 to 648).

The beneficiaries of this growth in litigation? According to a 2014 federal survey, the average attorneys’ fee awarded in TCPA class settlements was $2.4 million, while the average class member’s award was $4.12.

While “most people” don’t sue, they nonetheless may be sucked into a class action TCPA lawsuit on their behalf.

(2) The FCC’s attorney explained how companies could find out if a number has been reassigned.

Even one of the justices found the FCC’s bureaucratic position to be unrealistic, saying, “It’s not as straight forward as you are talking about … I think that [business people] would say that it’s a total folly and that isn’t a way we can operate reasonably. . . It’s just not a viable suggestion.” He added, “I realize it’s a consumer statute. But the statute does pay some attention to the needs of people in the business community and those suggestions seem silly to me. That isn’t the way [businesses] are going to operate.”

(3) The FCC also argued that companies have not ceased communications with their consumers, proving the TCPA is not a problem.

First, that’s like arguing a disease is not a danger until the patient dies. It is also inaccurate that companies have not ceased or curtailed their communication with consumers because of the threat of TCPA lawsuits. FCC filings and petitions from numerous companies show that they have ended certain time-sensitive communications with consumers, such as power outage notifications, because picking up the phone or sending a text messages places them squarely in the path of a potential TCPA lawsuit.

The threat of litigation has certainly hampered companies’ contact with consumers since one call or text to a reassigned number—that the company received consent for and is using in good faith—can anchor a class action lawsuit worth millions, if not billions, in statutory damages. 

The Chamber, on behalf of American businesses, will continue to push back on this bureaucratic ruling, fighting for reasonable and commonsense regulation reflecting life and business in the 21st century.

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