The new Supreme Court Term is underway and for the second straight Term, and second time in 2020, the Court will address a Telephone Consumer Protection Act (TCPA) question. On December 8, 2020, the Justices will hear argument in the case of Facebook v. Duguid, which is expected to resolve a widening Circuit split regarding the definition of an automatic telephone dialing system.

On the latest episode of the Ad Law Access podcast, Kelley Drye's litigation partner provides some background on where things stand with the TCPA, level-set on the current status of the ATDS definition, and lay out some of the potential implications for the Court’s ruling.

If you have any questions or concerns about the technology that you’re using or your particular telemarketing procedures, our team of compliance and litigation specialists would be happy to talk through your practices or campaign and offer practical feedback and evaluation of the potential risks on this quickly evolving topic.

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In September 2009, the FTC staff had taken the position that avatar calls were not considered prerecorded messages under the Telemarketing Sales Rule (TSR). See FTC Staff Opinion Letter to Call Assistant LLC (Sept. 11, 2009). In November 2016, however, the FTC decided to revoke its previous letter, explaining that it is now the FTC staff’s opinion that outbound telemarketing calls that utilize avatars are subject to the TSR’s prerecorded call provisions. See FTC Staff Opinion Letter to Call Assistant LLC (Nov. 10, 2016).

The 2016 opinion letter explained that the staff’s change in position is due to the increasing volume of consumer complaints, the increase in how this technology has allegedly been abused by using it to conduct multiple calls at the same time without giving appropriate responses to consumers, and that the soundboard technology does “deliver a prerecorded message” under the statutory language used in the TSR. The staff said that, even with a 1-to-1 limitation in place (i.e., using the technology to place one call at a time), this would not change the staff’s analysis.

A trade group representing companies that manufacture and use soundboard technology had challenged the FTC staff’s opinion letter, stating that the FTC: (1) circumvented the Administrative Procedures Act’s (APA) notice-and-comment requirements, and (2) violated the First Amendment by exempting pre-recorded solicitation calls between a non-profit charitable organization and its existing donors, but failing to exempt such calls to potential first-time contributors. The court rejected both claims in Soundboard Ass’n v. FTC, No. 1:17-cv-00150 (D.D.C. Apr. 24, 2017).

First, the court found that, although the November 2016 letter is a final, reviewable agency action, it was at most an interpretive rule that the FTC was not required to issue through notice and comment under the APA. Second, the court concluded that the letter did no more than subject soundboard calls to valid time, place, and manner restrictions. The court explained that the exemption provided to pre-recorded calls on behalf of charitable organizations to existing donors, but not to charitable organizations’ calls to potential, first-time donors, is a content-neutral regulation of speech that easily satisfies the requisite intermediate scrutiny.

Bottom Line: Companies that use soundboard technology will need prior written consent and will need to comply with the prerecorded message requirements under the TSR effective May 12, 2017, per the FTC’s grace period for compliance (as well as the TSR’s abandoned call provisions, as applicable).