FCC Issues Declaratory Ruling on Actions of Third-Party Telemarketers

The Declaratory Ruling interpretations require that, while a seller of goods or services may not generally be considered the one who initiates a telemarketing call made through a third-party telemarketer within the meaning of the TPCA, such seller may nonetheless, in certain instances, be held vicariously liable under federal common law principles of agency for its third-party telemarketer’s actions. In doing so, however, the FCC expressly rejected arguments that such vicarious liability should extend beyond these agency principles and create vicarious seller liability where a call is made “simply to aid or benefit the seller — even if agency principles would not otherwise impose vicarious liability on the seller for the call.”

Background

The FCC’s Declaratory Ruling arose from three separate, but related petitions seeking guidance on the proper application of the TCPA. At issue in each of the petitions were telemarketing calls made by a third-party telemarketer on behalf of the DISH Network, LLC (DISH Network) that were allegedly in violation of the TCPA’s prerecorded and do-not-call provisions. In each case, the plaintiffs sought to hold the DISH Network liable for the actions of its third-party telemarketer, arguing that the calls were made “on behalf of” the DISH Network. The DISH Network argued in contrast that it cannot be held liable for the actions of its third-party telemarketer because it did not “initiate” the calls as required by the TCPA and that the TCPA only imposes liability on the entity that actually places an unlawful call.

The TCPA Provisions at Issue

Under 47 USC § 227(b)(1)(B), the TCPA makes it unlawful for any person to “initiate any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party, unless the call is initiated for emergency purposes or is exempted by [FCC] rule or order.” This is similarly the case under 47 CFR § 64.1200(c)(2) of the FCC’s implementing do-not-call rules, which make it unlawful for any person or entity to “initiate any telephone solicitation ... to any residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry.”

47 USC 227(c)(5) also provides that “any person” may sue for damages and injunctive relief for violations of the TCPA’s do-not-call provisions where a call was made “by or on behalf of” a company.

The FCC’s Findings

With regard to whether a seller may be considered to have “initiated” a call made by a third-party marketer as contemplated under section 227(b)(1)(B), the FCC rejected arguments that simply entering into a contract with a third-party marketer should be construed as initiating the call. Rather, the FCC found that a person or entity “initiates” a telephone call “when it takes the steps necessary to physically place a telephone call, and generally does not include persons or entities, such as third-party retailers, that might merely have some role, however minor, in the causal chain that results in the making of a telephone call.” Thus, unless a seller becomes involved in the manner and timing of the placement of a specific telephone call by its third-party marketer, the FCC does not appear to believe a seller is the initiator of the call.

As it relates to whether a seller can be held vicariously liable for the actions of its third-party telemarketer under sections 227(b) and 227(c), the FCC determined that under certain circumstances vicarious liability may attach. Here, however, vicarious liability is limited to the federal common law principles of agency, including formal agency, apparent authority and ratification, where the seller knows of the third-party telemarketer’s actions and benefits from them.

To provide guidance in this area, the FCC listed the following illustrative examples as evidence that may demonstrate that the telemarketer is the seller’s authorized representative with apparent authority to make the seller vicariously liable for the telemarketer’s violations:
 

• if the seller allows the outside sales entity access to information and systems that normally would be within the seller’s exclusive control, including: access to detailed information regarding the nature and pricing of the seller’s products and services or to the seller’s customer information;

   

• if the outside sales entity has the ability to enter consumer information into the seller’s sales or customer systems, as well as the authority to use the seller’s trade name, trademark and service mark may also be relevant;

   

• if the seller approved, wrote or reviewed the outside entity’s telemarketing scripts; or

   

• if the seller knew (or reasonably should have known) that the telemarketer was violating the TCPA on the seller’s behalf and the seller failed to take effective steps within its power to force the telemarketer to cease that conduct.

A copy of the Declaratory Ruling can be found here.