Appeals Court sets aside auto-dialer ruling

The DC Circuit Court, which often hears direct appeals regarding federal regulatory bodies, vacated portions of a 2015 order by the Federal Communications Commission regarding the use of auto-dialers in communicating with consumers. The ruling had been harmful to credit unions. The Telemarketing and Consumer Fraud and Abuse Prevention Act gave the FCC the ability […]

The DC Circuit Court, which often hears direct appeals regarding federal regulatory bodies, vacated portions of a 2015 order by the Federal Communications Commission regarding the use of auto-dialers in communicating with consumers. The ruling had been harmful to credit unions.

The Telemarketing and Consumer Fraud and Abuse Prevention Act gave the FCC the ability to protect consumers from robocalls. That act gave several agencies, including the FCC, power to make rules to further its purpose. The relevant portions of the 2015 order 1) defined what an auto dialer was and 2) when the act was violated by a caller dialing to a reassigned number that had previously consented to receiving calls.

In short, the Commission’s definition of an auto dialer was measured by its capacity, meaning its ability to be modified to call many recipients. The court noted that the order could be interpreted to mean than any uninvited, without prior consent, message by someone from a smartphone (which would have the ability to make multiple calls via apps) could make them liable for monetary penalties. The court concluded that “The TCPA cannot reasonably be read to render every smartphone an ATDS subject to the act’s restrictions, such that every smartphone user violates federal law whenever she makes a call or sends a text message without advance consent.”

Regarding the second issue, the court disagreed with the commission finding that a number that had been reassigned and had been called by an auto dialer without having prior consent was a violation of TCPA.  The reasoning was that the FCC granted callers a one-time amnesty in the case of a reassigned number, but it didn’t articulate why it chose a one-time safe harbor.  The commission acknowledged that even the most careful caller, after employing all reasonably available tools to learn about reassignments, “may nevertheless not learn of reassignment before placing a call to a new subscriber.” The court found that the FCC’s lack of articulation on the point made the rule arbitrary and thus violated the standards for rules created by agencies.

In this opinion, the court is clear that the 2015 ruling is inconsistent with itself and if failed to consider many of the positions made by those challenging it during the rulemaking process. This ruling demonstrates that Congress sorely needs to update the law to account for the great changes in communication in the last few decades. If you have questions on this ruling, contact LSCU Director of Regulatory Advocacy, Governmental Affairs Mike Lee at Michael.lee@lscu.coop.

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The League of Southeastern Credit Unions & Affiliates represents 342 credit unions in Alabama, Florida and Georgia, with a combined total of $118.63 billion in assets and more than 10.1 million members. LSCU & Affiliates provides legislative and regulatory advocacy; education and training; cooperative initiatives (including financial education outreach); public messaging; information services; and business solutions.

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