On Wednesday, February 15, 2012, the Federal Communications Commission (FCC) released a Report and Order adopting new rules for unwanted autodialed or prerecorded telemarketing calls, so-called “robocalls.” The order is available here.

The Order makes 4 major changes to existing telemarketing rules:

• Telemarketers must obtain prior express written consent from consumers before placing autodialed or prerecorded telemarketing calls to wireless and residential numbers; the “established business relationship” exemption is eliminated.
• Clarifies that express written consent can be electronic, such as a website form.
• Requires that an interactive opt-out mechanism be made available during each autodialed or prerecorded call.
• Establishes a three percent abandonment rate for individual telemarketing campaigns.

Report and Order does not change:

• Consent requirement for calls and text messages to wireless numbers.
• Consent exception for informational calls to residential numbers.

“Established Business Relationship” Exemption Eliminated
The most significant change is the elimination of the “established business relationship” exception for telemarketing calls to residential numbers in the regulations under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA), and requiring prior express written consent before making such calls to both residential and wireless numbers. ¶¶ 20, 35. Previously, the “established business relationship” exception would allow a bank to call its customer to sell insurance without prior express consent because of the customer’s business relationship with the bank. Now the bank must obtain prior express consent in writing. ¶ 20. This rule change means that telemarketing calls to residential numbers must meet the same standards that now apply to calls to wireless numbers (and the term “call” includes text messages). Telemarketing calls to wireless numbers already required prior express consent. With these new rules, telemarketing calls to both residential and wireless numbers will require prior express written consent.

Applicability Of Electronic Consent Clarified
The term “prior express consent” had been undefined in the TCPA and regulations and only a few court decisions offered any guidance. Through these new rules the FCC is defining prior express consent and requiring that it be written, defining it as “an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.” Page 34 of the Report and Order.

Although prior express consent must be “in writing,” the new rules clarify that it may be obtained through electronic means such as “an email, website form, text message, telephone keypress, or voice recording.” ¶ 34. The term “signature” is also defined to include “electronic and digital form[s] of signature.” Id. Thus, as a practical matter, the writing requirement should not significantly change how businesses have operated. In fact, the clarification and authorization of electronic consent should make compliance with the TCPA regulations and defense of TCPA litigation easier for businesses. Businesses should maintain a record of the consents they obtain, however, because the FCC will put the burden on the business to show consent if the consumer claims that he or she did not provide it prior to receiving telemarketing calls. ¶ 26 n.68.

No Affect On Informational And Political Calls
The rules do not change the ability to provide, without prior express consent, “informational” or non-telemarketing calls to residential numbers. ¶ 3. Informational calls include flight notifications, school closures, and research or survey calls. ¶ 3. In addition, no prior express consent is required for residential numbers for emergency calls, calls by or on behalf of tax-exempt non-profit organizations, calls “made for a commercial purpose but does not include or introduce an advertisement or constitute telemarketing,” and calls for political purposes. ¶¶ 3, 28. Such calls require either written or oral consent if made to wireless numbers, however. ¶¶ 28-29. No consent is necessary for calls from a wireless carrier to its customer for which the customer is not charged. ¶ 27. The FCC is also allowing “health care” calls to residential numbers subject to HIPPA, which is consistent with the Federal Trade Commission rules on the subject. ¶¶ 57-65.

The FCC notes, however, that informational calls remain subject to the requirements of 47 U.S.C. § 227(d), which requires that the calling entity identify itself at the beginning of the call and state its address or telephone number during the call. ¶ 49.

Rule Summary:

	Residential Landline Number	Wireless Number
Telemarketing calls	Prior express written consent (new rule, clarified that consent can be electronic)	Prior express written consent (no change, clarified in new rules that consent can be electronic)
Informational calls	No prior consent required (no change)	Prior express consent, either oral or written (no change, clarified in new rules that consent can be electronic)
Emergency calls	No prior consent required (no change)	No consent required (no change)
Calls “made for a commercial purpose but does not include or introduce an advertisement or constitute telemarketing,”	No prior consent required (no change)	Prior express consent, either oral or written (no change, clarified in new rules that consent can be electronic)
Calls by or on behalf of tax-exempt non-profit organizations	No prior consent required (no change)	Prior express consent, either oral or written (no change, clarified in new rules that consent can be electronic)
Political Calls	No prior consent required (no change)	Prior express consent, either oral or written (no change, clarified in new rules that consent can be electronic)
“Health care” call	No prior consent required (new rule)	No prior consent required (new rule)

FCC Adopts Opt-Out Mechanism
The next rule change is the new requirement for an interactive opt-out mechanism for all autodialed or prerecorded telemarketing calls regardless of whether they are directed at a wireless number or residential number. ¶ 44. The opt-out option must be announced at the outset of the call and must allow the listener, through a voice prompt or keypress, to automatically add the listener’s telephone number to the caller’s do-not-call list and terminate the call. ¶ 47.

FCC Expands Abandonment Rate
The FCC is requiring a three-percent abandonment rate for individual telemarketing campaigns to avoid hang-ups and dead-air calls because of predictive dialers. ¶ 50. The new rules apply the three percent abandonment rate to a single calling campaign, whereas the prior rule applied the three percent abandonment rate over a 30-day period. ¶¶ 51-52.

Implementation Schedule
Implementation of the new rules is a staged process, as follows:

• The abandoned call rate implementation must take place 30 days after the Office of Management and Budget (OMB) publishes its approval of that aspect of the new rules. ¶ 69.
• The interactive opt-out mechanism must be in place 90 days from publication of OMB approval of that aspect of the new rules. ¶ 69.
• The requirement for prior express consent and the elimination of the established business relationship exemption must be in place with one year from publication of OMB approval of that aspect of the new rules. ¶ 67.

The FCC established these time frames based on the record and its evaluation of the time it would take businesses to implement the new rules. It reasons that the requirement for prior express consent and the elimination of the established business relationship exemption warrants the longest implementation period, because “it will take time for businesses to redesign web sites, revise telemarketing scripts, and prepare and print new credit card and loyalty program applications and response cards to obtain consent from new customers, as well as to use up existing supplies of these materials and create new record-keeping systems and procedures to store and access the new consents they obtain.” ¶ 67.

The FCC’s summary on the Report and Order is available here.

For further information, contact Jason Koslofsky or any of our attorneys in the Telecom Group.