Disconnected: The Telephone Consumer Protection Act At 25 Years Old

The Telephone Consumer Protection Act ("TCPA" or "Act") has become fertile ground for plaintiffs seeking to use the prospect of aggregated statutory damages to extract sizable settlements. Further, while as its name suggests, the Act was enacted to protect consumers, it is being enforced in a manner that actually harms consumers by preventing them from receiving important informational telephone calls and text messages from businesses that are concerned with running afoul of the Act. The TCPA has plainly deteriorated into something far afield from its original intent 25 years ago.

To be sure, Congress passed the TCPA in 1991 to combat the proliferation of unsolicited telephone calls by certain groups of telemarketers to consumers, whose numbers were often dialed at random or sequentially using automated dialing equipment.1 For many years, the Act was used for that purpose to regulate and sue rogue telemarketers. It is only more recently that plaintiffs have used the TCPA as a vehicle to bring costly class actions against businesses of all types and, increasingly, where those organizations engaged in communications that Congress probably never intended the Act to prohibit.2

The number of TCPA lawsuits has skyrocketed in the past few years. It is reported that, in 2007, a mere 14 new TCPA lawsuits were filed. Five years later, in 2012, plaintiffs filed 1,102 new TCPA lawsuits. And, since then, the rate of filings has more than tripled, with 3,710 new cases filed in 2015.3 Plus, this upsurge of TCPA litigation has resulted in record-breaking multi-million-dollar settlements over the past few years, some higher than $30 million. Highlighting the significant exposure presented by the Act, in a recent opinion approving a $34 million settlement of a 32-million member TCPA class, a district court acknowledged that a "complete victory" for the class on the merits would be in the range of $16–$48 billion.4

What led to this torrent of litigation? While the Federal Communications Commission (the "FCC" or the "Commission") attributes the surge in litigation to the "skyrocketing growth of mobile phones," the FCC's interpretations of the TCPA in its implementing regulations and declaratory rulings may be the real culprit. As discussed below, interpretations of the Act from the Commission's recent Omnibus Declaratory Ruling and Order (the "2015 Declaratory Ruling") are now the subject of a consolidated appeal pending before the D.C. Circuit, ACA International v. Federal Communications Commission, in which the petitioners raise a number of compelling arguments that certain of those interpretations are unreasonable and should not be accorded deference.

The FCC's Implementation of the TCPA Prior to 2015

The TCPA, with limited exceptions,5 prohibits unsolicited calls to wireless telephones using an automatic telephone dialing system ("ATDS" or "autodialer") or an artificial or prerecorded voice, and to residential landlines using an artificial or prerecorded voice.6 The Act also mandates the creation of national and company-specific "Do Not Call" lists and regulates telemarketing faxes.7 To ensure compliance, the TCPA creates a private right of action. A plaintiff can recover $500 in statutory damages for each violation of the Act and $1,500 in damages for a willful or knowing violation.8

Congress granted the Commission authority to prescribe regulations to implement the requirements of the TCPA.9 The FCC's initial implementing regulations largely tracked the TCPA and were not the subject of much discussion.10 But the Commission's more recent interpretations of the TCPA's statutory terms have garnered significant interest, particularly from businesses that the interpretations could affect, such as those that communicate with customers by voice calls and text messages.11 Three such interpretations prior to 2015, which are discussed below, concerned the definition of an ATDS, whether the term "call" includes text messages, and what constitutes the requisite "consent" to receive autodialed, artificial or prerecorded calls.

ATDS

The TCPA defines an ATDS as "equipment which has the capacity" to "store or produce telephone numbers to be called, using a random or sequential number generator" and "to dial such numbers."12 The FCC first considered the scope of the term "capacity" in 2003 when asked whether...