While this change is noteworthy, it is important for businesses to remember that Maine’s telephone solicitation statute has a number of exceptions. For example, the law – and thus this new requirement to scrub against the reassigned number database – does not apply to calls made “in response to and at the express request of the person called,” and calls “to any person with whom the telephone solicitor has an established business relationship” (based on a purchase within the preceding 18 months or consumer inquiry within the preceding 3 months). As such, businesses engaged in telemarketing that may reach consumers in Maine should examine their practices carefully to understand whether the new requirement will apply, and if so, how to implement reassigned number database verifications into their outreach flows.

If you have any questions about how this new requirement may affect your business, please reach out to Alysa Hutnik or Jenny Wainwright. For more telemarketing updates, subscribe to our blog.

The specific rule changes address three issues related to revocation of consent, explained in more detail below. The item also includes a further notice of proposed rulemaking on whether the TCPA applies to autodialed or artificial/prerecorded voice calls or texts from wireless providers to their own subscribers, as well as a possible mandate for an automated opt-out mechanism on every call that contains an artificial or prerecorded voice.

The timing for implementation of the rule changes is unclear at this point, because most of them will be delayed until six months after completion of a review by the Office of Management and Budget (OMB).

Nevertheless, these new requirements should be reviewed carefully, including through consultation with counsel, to prepare for the upcoming changes. For example, businesses will need to review their internal processes and modify them as appropriate to ensure that they are properly processing opt-out requests, and may need to develop new methods for honoring non-standard language opt-outs, as well as update training and compliance materials to adhere to the new requirements.

A general note for readers: Throughout this post, you’ll see the term “robocall” and “robotext” when we quote from the order. To be clear, the TCPA, and therefore the FCC’s regulatory authority, is limited to autodialed and/or artificial/prerecorded voice calls and texts.

Changes to the Revocation of Consent Rules

1. “Reasonable” Means of Revoking Consent

The order codifies the FCC’s longstanding position that a called party may revoke consent “by using any reasonable method.” This “reasonable method” standard was established in a 2015 declaratory ruling that was the subject of vigorous litigation, including on the issue of revocation of consent, which was ultimately upheld by the U.S. Court of Appeals for the D.C. Circuit.

To provide further clarification on what constitutes a “reasonable” means of revoking consent, the FCC put forth the following specific requirements:

• “Any revocation request made using an automated, interactive voice or key press-activated opt-out mechanism on a call; using the words ‘stop,’ ‘quit,’ ‘end,’ ‘revoke,’ ‘opt out,’ ‘cancel,’ or ‘unsubscribe’ sent in reply to an incoming text message; or pursuant to a website or telephone number designated by the caller to process opt-out requests constitutes a reasonable means per se to revoke consent.”
• “If a reply to an incoming text message uses words other than ‘stop,’ ‘quit,’ ‘end,’ ‘revoke,’ ‘opt out,’ ‘cancel,’ or ‘unsubscribe’ the caller must treat that reply text as a valid revocation request if a reasonable person would understand those words to have conveyed a request to revoke consent.”
• “Should the text initiator choose to use a texting protocol that does not allow reply texts, it must provide a clear and conspicuous disclosure on each text to the consumer that two-way texting is not available due to technical limitations of the texting protocol, and clearly and conspicuously provide on each text reasonable alternative ways to revoke consent.”

Callers will not be permitted to “designate any exclusive means to request revocation of consent,” and will be required to honor revocations made in a reasonable manner within 10 business days of receipt of the request.

If a consumer attempts to revoke consent using a method or language other than what is prescribed in the rules, or in the event of a dispute, the order establishes a standard of review based on the “totality of circumstances,” but there is a “rebuttable presumption” that the consumer has properly revoked consent if the consumer can “produce evidence that such a request has been made.”

2. Confirmatory Opt-Out Texts

The order also codifies a previous FCC determination that a “one-time text message confirming a request to revoke consent from receiving any further calls or text messages does not violate [the TCPA] as long as the confirmation text merely confirms the text recipient’s revocation request and does not include any marketing or promotional information, and is the only additional message sent to the called party after receipt of the revocation request.” In general, the order requires the confirmatory text to be sent within 5 minutes of receipt of the opt-out request, or “the sender will have to make a showing that such delay was reasonable.”

Additionally, the as-written rule provides that “[t]o the extent that the text recipient has consented to several categories of text messages from the text sender, the confirmation message may request clarification as to whether the revocation request was meant to encompass all such messages; the sender must cease all further texts for which consent is required absent further clarification that the recipient wishes to continue to receive certain text messages.” The above language only contemplates clarifying text message opt-outs, and in the order, the FCC states it intent to “limit this opportunity to request clarification to instances where the text recipient has consented to several categories of text messages from the text sender” and that “this rule will give consumers an opportunity to specify which types of text messages they wish to no longer get.” However, the FCC in the next sentence states that the “request for clarification can seek confirmation that the consumer wishes to opt out of all categories of messages from the sender, provided the sender ceases all further robocalls and robotexts absent an affirmative response from the consumer that they do, in fact, wish to receive further communications from the sender.” This arguably could encompass both voice calls and text messages.

Finally, “the timing of the confirmation text does not impact the obligation to honor the revocation within [10 business days after receipt of the request].” And a “lack of any response to the confirmation text must be treated by the sender as a revocation of consent for all robocalls and robotexts from the sender.”

The order makes clear that an opt-out message cannot attempt to persuade the recipient to reconsider their decision to opt-out. But one can look back at prior FCC statements on confirmatory opt-out messages and learn that FCC has previously suggested that “confirmation texts that include contact information or instructions as to how a consumer can opt back in fall reasonably within consumer consent.”

[Note: This particular rule change will not be subject to an OMB review, and is expected to become effective 30 days after the order is published in the Federal Register. While publication time can vary from a few days to a few weeks, affected parties should be prepared for this rule to go into effect as early as the end of March 2024.]

3. Scope of Revocation of Consent

The order acknowledges that certain types of calls and texts do not require consent, and clarifies that “when a consumer revokes consent with regard to telemarketing robocalls or robotexts, the caller can continue to reach the consumer pursuant to an exempted informational call, which does not require consent, unless and until the consumer separately expresses an intent to opt out of these exempted calls.”

It explains that “[w]here the consumer has revoked consent in response to a telemarketing call or message, it remains unclear whether the consumer has expressed an intent to opt out of otherwise exempted informational calls absent some indication to the contrary. … If the revocation request is made directly in response to an exempted informational call or text, however, this constitutes an opt-out request from the consumer and all further non-emergency robocalls and robotexts must stop.”

Additionally, “when consent is revoked in any reasonable manner, that revocation extends to both robocalls and robotexts regardless of the medium used to communicate the revocation of consent. For example, if the consumer revokes consent using a reply text message, then consent is deemed revoked not only to further robotexts but also robocalls from that caller.”

Further Notice of Proposed Rulemaking

In addition to adopting the rule changes outlined above, the item adopted at the open meeting also includes a further notice of proposed rulemaking (FNPRM) to seek comment on two issues. First, the FCC asks whether autodialed and/or artificial/prerecorded voice calls and texts from wireless providers to their own subscribers are subject to the TCPA. The FNPRM suggests the FCC thinks the answer is “yes,” which in turn leads to questions about whether a wireless carrier would have to get specific consent to send autodialed or prerecorded calls or messages to their customers or whether they “satisfy any TCPA consent obligation pursuant to the unique nature of the relationship and service that they provide to their subscribers.” The FCC then asks whether such consent based on that relationship would extend to calls and texts that contain telemarketing or advertisements. The FNPRM also proposes “that wireless subscribers, as any other called party, be able to revoke such consent by communicating a revocation of consent request to their wireless provider and that such request must be honored.” Second, the Commission seeks comment on a proposal by the National Consumer Law Center to “require an automated opt-out mechanism on every call that contains an artificial or prerecorded voice.”

Initial comments in response to the further FNPRM will be due 30 days after the item is published in the Federal Register, and reply comments will be due 45 days after publication.

* * *

If you have any questions about how these changes may affect your business, or are interested in filing comments, please reach out to Alysa Hutnik or Jenny Wainwright. You can also hear more about this order on Kelley Drye’s Full Spectrum podcast. For more telemarketing updates, please subscribe to our blog.

Specifically, the FCC concluded that “AI technologies that resemble human voices and/or generate call content using a prerecorded voice” fall within the scope of “artificial or prerecorded voice” calls that are regulated under the TCPA. In reaching this conclusion, the FCC focused on the ability of AI technologies to simulate or “emulate real or artificially created human voices for telephone calls to consumers,” and how such capabilities might be used in a way that is harmful to consumers. The FCC did not delineate exactly what “technologies” are encompassed in the Declaratory Ruling, except to highlight “voice cloning” as an example of a covered technology. Additionally, seemingly in response to comments filed last month by 26 state attorneys general, the Declaratory Ruling notes that “the TCPA does not allow for any carve out of technologies that purport to provide the equivalent of a live agent.”

In light of ongoing attention to AI issues across all industries, and the particular regulatory scrutiny on prerecorded message calls, it would be prudent to construe this ruling broadly, and for impacted businesses to strictly adhere to the FCC’s directive that “callers must obtain prior express consent from the called party before making a call that utilizes artificial or prerecorded voice simulated or generated through AI technology,” and obtain prior express written consent for any such calls that “introduce an advertisement or contain telemarketing.” AI-generated calls also will be subject to identification and disclosure requirements “for the entity responsible for initiating the call” and for advertising/telemarketing calls, they must also include an opt-out mechanism.

• The amendment to the do-not-call registry rule for text messages will be effective on March 26, 2024.
• The text blocking rule will be effective on July 24, 2024.
• The 1:1 consent rule will be effective on January 27, 2025.

The FCC also set the dates for the comment cycle on its additional proposed rule changes, with initial comments due on February 26, 2024, and reply comments due on March 11, 2024.

Please contact your regular Kelley Drye attorney if you have questions about the upcoming rule changes or are interested in filing comments with the FCC.

The rule changes will go into effect on a rolling basis over 12 months after publication in the Federal Register. As of the date of this post, publication has not yet occurred, so affected businesses will have all of 2024 to review their current practices and update them as appropriate to comply with the new requirements.

1:1 Consent and the “Lead Generator Loophole”: Among the most significant changes adopted, the Order institutes a new requirement that, to send an autodialed telemarketing text or phone call, the texter/caller must first obtain a consumer’s prior express written consent specific to the company that will place such a text or call to the consumer’s cell phone – in other words, a 1:1 consent. In adopting this requirement, the FCC explicitly stated its intent to “close the lead generator loophole by prohibiting lead generators, texters, and callers from using a single consumer consent to inundate consumers with unwanted texts and calls when consumers visit comparison shopping websites.” Of particular importance for this consent:

• A texter/caller cannot rely on a bundled consent applicable to multiple sellers. According to the Order, “[c]omparison shopping websites can provide additional information about sellers or a list of sellers that a consumer can affirmatively select in order to be contacted,” and it does not “prescribe” the number of sellers such websites can list. However, the FCC expressly rejected a “hyperlink” list approach to identifying sellers on such websites, and was clear that “if the web page seeks to obtain prior express written consent from multiple sellers, the webpage must obtain express consent separately for each seller.”

• For consent to be considered valid, the disclosure seeking consent must be “clear and conspicuous” so the notice is apparent to a reasonable consumer, and it must comply with the ESign Act if collected online. In addition, the scope of interest in certain products or services for the consent “must be logically and topically related to that website.” The Order does not define what “logically and topically” means, but explains that “when in doubt, [companies] will err on the side of limiting that consent to what consumers would clearly expect.”

• Key Takeaway: The FCC’s new TCPA restrictions described above apply only to autodialed and prerecorded calls to wireless phone numbers. But even if a company is comfortable that it is not using an autodialer, it should still evaluate other legal and business case reasons for implementing the 1:1 consent rule, including confirming compliance with do-not-call requirements under a separate TCPA provision (in addition to the Telemarketing Sales Rule and state telemarketing laws), as well as possible contractual obligations with partners in its business flows. Further, while compliance may not be required for another twelve months, it would be prudent to start A/B testing now on the most effective (and still compliant) ways to obtain 1:1 consent for each seller in scenarios where one company is capturing consent for multiple parties, and consider what new contractual provisions may be worth instituting in agreements.

It is worth noting that although the item was generally favored by all FCC Commissioners, Commissioner Nathan Simington dissented specifically to the 1:1 consent requirement, citing concerns about its impact on small businesses. In a Second Further Notice of Proposed Rulemaking (NPRM) that was included in the item, the FCC is seeking public comment on the “potential economic impact on small businesses” of the 1:1 consent rule, and whether the Commission could “clarify or refine this requirement to further minimize any compliance costs.” Initial comments on these questions, as well as other proposals in the NPRM (discussed below) will be due 30 days after the item is published in the Federal Register, and reply comments will be due 45 days after publication.

Texting and Do-Not-Call: The Order also confirmed that Do-Not-Call list protections apply to text messages, and “[t]exters must have the consumer’s prior express invitation or permission before sending a marketing text to a wireless number in the DNC Registry.” This action is the latest iteration of the FCC’s longstanding policy that texts are equivalent to calls for TCPA purposes, and consequently means that if a consumer revokes his or her consent to receive texts, a company would be required to add that number to its internal do not call list. The FCC further suggested that a single opt-out text from a consumer should be viewed as a revocation of consent for all marketing messages from a particular company, stating in the Order that the Commission disagrees “with the contention that if a consumer revokes consent for autodialed text messages from a seller on one text messaging chain, the seller can continue to send that consumer texts or calls through a different program or chain…The Commission has never bifurcated consent in such a manner and does not endorse it here.”

• Key Takeaway: As a default posture, an opt out of a telemarketing text should be treated as a request to be placed on a company’s internal do not call list. While the Order did not expressly address this question, it would be consistent with consumer expectations and consumer protection law to maintain the discretion to offer a consumer a menu of opt out options so long as there is an option to stop receiving all telemarketing calls and texts from the company.

Text Blocking: The new rules require “terminating” mobile wireless providers “to block all texts from a particular number or numbers when notified by the Enforcement Bureau of illegal texts from that number or numbers.” The Order makes clear that this mandate is intended to supplement “voluntary blocking measures by providers” and that “providers can [and are expected to] continue to block and improve their blocking going forward.”

• Key Takeaway: Companies should recognize that carriers and texting platforms may bolster efforts to block text campaigns that are viewed as spam or which are triggering high opt out rates. To avoid being blacklisted, it will be increasingly important to ensure your company has a thoughtful approach to its marketing outreach efforts to ensure that recipients are receiving communications they both want and expect. A solid consent strategy is a durable way to prepare for and manage this risk.

Additional Proposals and Requests for Public Comment. In addition to adopting the rule changes outlined above, the NPRM portion of the item also lays the groundwork for the FCC to expand on some of these rule changes, as well as consider others. Among its proposals are a possible expansion of text blocking by “originating” service providers, whether the FCC should require or incentivize providers to block texts based on reasonable analytics,” and whether it should adopt “additional protections against erroneous text blocking” such as a notification requirement if texts are blocked based on reasonable analytics.

The NPRM also seeks to update the record on text message authentication and spoofing, including the extent to which number and/or identity spoofing is currently an issue for text messages, technical standards and tools that are in use or being developed to address authentication in text messaging, and whether the FCC should require the industry to provide regular updates to the Commission on text authentication.

Additionally, the NPRM proposes to require service providers to make email-to-text service an opt-in, rather than simply encouraging an opt-in framework (as it chose to do in the Second Report and Order). It seeks comment on several questions related to the proposal.

Initial comments on the NPRM will be due 30 days after the item is published in the Federal Register, and reply comments will be due 45 days after publication.

If you have any questions about how these changes may affect your business, or are interested in filing comments, please reach out to Alysa Hutnik or Jenny Wainwright. For more telemarketing updates, please subscribe to our blog.

According to the current Rule, a “breach” means that a person “without authorization or exceeding authorization, has intentionally gained access to, used, or disclosed CPNI.” As summarized in the NPRM, CPNI includes “phone numbers called by a consumer, the frequency, duration, and timing of such calls, the location of a mobile device when it is in active mode (i.e., able to signal its location to nearby network facilities), and any services purchased by the consumer, such as call waiting.” (The NPRM does not propose any changes to the definition of CPNI.)

Initially adopted in 2007 as part of a broader effort to combat pretexting – the practice of pretending to be a customer in order to obtain that customer’s telephone records – the current data breach notification rule (47 CFR § 64.2011) requires telecommunications carriers, including interconnected VoIP providers, to provide notice of a data breach involving CPNI to the Secret Service, FBI, and affected customers. The Rule also requires notifying law enforcement within seven business days at http://www.fcc.gov/eb/cpni. Carriers then must wait an additional seven business days to notify customers about a breach (barring any objection from law enforcement officials).

The NPRM solicits comments on a series of potential changes to the Rule, including:

• Removing the intent standard: Under the current Rule, a breach is reportable when a person intentionally, and without authorization or exceeding authorization, gains access to, uses, or discloses CPNI. The NPRM proposes removing the intent standard, explaining that “inadvertent” disclosures of CPNI can still impact individuals, and that intent may not be immediately apparent “which may lead to legal ambiguity or under-reporting.” The FCC seeks comments on the benefits and burdens of this proposal and whether other data breach laws should influence the policy it adopts.
• Adding a harm-based reporting trigger: The FCC proposes to include a harm-related reporting trigger, in an effort to avoid notifying customers about breaches that are not likely to cause harm – what the FCC terms “notice fatigue.” As an example, many data breach laws do not require notification about a data breach involving encrypted information based in part on a harm calculation. The FCC also solicits comments on how to determine and quantify “harm” in the context of CPNI.
• Expanding the notice requirement: The NPRM asks whether the FCC has authority to include in its Rule – and should include – information that is not considered CPNI, such as Social Security numbers or other financial records,.
• Notice to the FCC: The FCC proposes that carriers should notify the FCC, in addition to the FBI and Secret Service, about CPNI breaches. It seeks comment on the costs and benefits of requiring such notification.
• Notice Timeline: The FCC proposes removing the seven-business day waiting period to notify customers about a CPNI data breach, instead requiring notification “without unreasonable delay” after discovery of a breach, unless a law enforcement agency requests that the carrier delay notification. The FCC tentatively concludes this approach is consistent with other laws and better serves the public interest than the current requirement.
• Minimum Requirements for Notice Content: The current rule does not address the content of notifications, and the NPRM solicits comment on whether to adopt a floor for information that must be included in data breach notices to consumers. The FCC notes that many state data breach notification laws impose minimum content requirements, requiring notices to describe what information was subject to the breach, the date(s) of the breach, how the breach occurred, and what steps were taken to remedy the situation.

Finally, the NPRM raises the question of the FCC’s legal authority to adopt its proposed changes to its Rule, particularly in light of the fact that Congress nullified the 2016 revisions to its Rule (2016 Privacy Order) under the Congressional Review Act.

Comments on the NPRM are due on February 22, and reply comments are due on March 24.

Wu’s history as a law professor and advocate may offer some clues about how he will approach his duties. He rose to prominence as an advocate of “net neutrality,” a phrase he coined in 2002. In general, his scholarship focuses on telecommunications, technology, and competition.

After the 2020 presidential election, Wu and several former federal antitrust officials authored a Washington Center for Equitable Growth (WCEG) report entitled “Restoring Competition in the United States: A Vision for Antitrust Enforcement for the Next Administration and Congress.” The report that concludes the “U.S. economy is plagued by a problem of excessive market power” and “antitrust enforcement has failed to prevent this problem.” Among the report’s recommendations is a suggestion to create a White House Office of Competition Policy within the NEC, to bring a “‘whole government’ approach to competition policy.”

Although the White House has not created such an office, Wu’s title and administrative home in the NEC closely track WCEG’s advice. In the view of Wu and his co-authors, the White House should “pressure agencies to open up closed markets while discouraging agencies from entrenching the industries that they regulate.” Agencies that the WCEG report lists as possessing competition-related rulemaking authority range from the FDA to the Federal Housing Finance Agency.

Wu’s record and the current political environment, however, suggest that the internet and communications industries are likely to be a core part of his focus. The Department of Justice, FTC, and FCC will be central to any ramp-up in competition regulation or enforcement in this arena. These agencies have over time played complementary, but sometimes competing, roles in internet and communications issues, particularly in large communications and media mergers. With the shifting jurisdictional classification of broadband internet services at the FCC, moreover, the dividing line between FCC and FTC jurisdiction over various players in the market has been unclear. Both the FCC and FTC, for example, jointly took an aggressive stance against VoIP gateways through which unlawful robocalls were being transmitted.

These agencies present challenges to an assertive White House coordinating role. The FCC and FTC are independent; the selection of agency chairs and nominations to fill vacancies could indicate how willing the agencies will be to coordinate with the White House. At the same time, the Justice Department’s independence was a prominent issue in Merrick Garland’s confirmation hearings and could affect how the White House attempts to shape the Department’s competition policy agenda.

Wu will also have competition of his own within the White House. For instance, OMB’s Office of Information and Regulatory Affairs has a direct role in reviewing proposed federal regulations and may be more reluctant to issue aggressive regulations. Other White House components, from the Office of Science and Technology Policy to the Domestic Policy Council, are likely to make their voices heard, too.

We will closely monitor developments as Wu’s role and the leadership picture in key agencies become clearer.

In the first ruling, P2P Alliance, the Bureau ruled that an automatic telephone dialing system (“ATDS”) is not determined by whether the equipment has the capability to send a large volume of calls or texts in a short period of time. Instead, the Bureau, while recognizing that the Commission’s interpretation of the ATDS definition remains pending, ruled that “whether the calling platform or equipment is an autodialer turns on whether such equipment is capable of dialing random or sequential telephone numbers without human intervention.” The Bureau also provides an illuminating discussion of the so-called “human intervention” element of prior FCC statements regarding autodialers.

In the second ruling, Anthem, Inc., the Bureau denied a petition to exempt certain healthcare-related calls from the TCPA’s consent requirements. In this order, the Bureau breaks less new ground and instead reiterates that prior express consent must be obtained before a call (or text) is made and that the supposed value or “urgency” of the communication does not necessarily make it permissible.

Besides these two petitions, the Commission has nearly three dozen petitions pending before it on a variety of matters relating to exemptions from the TCPA’s consent requirements, the collection and revocation of consent, the “junk fax” provisions, and other questions raised by the flood of TCPA class action litigation in the last five years. If the FCC begins addressing these other pending petitions, the course of TCPA class action litigation could change significantly.

In March 2018, the United States Court of Appeals for the D.C. Circuit issued a landmark rebuke of the FCC’s interpretation of the TCPA. The case, ACA International v. FCC, reviewed a 2015 Omnibus Declaratory Ruling on a variety of matters, the most notable of which was the FCC’s expansive interpretation of an “automatic telephone dialing system” (“ATDS”), the use of which triggers therobo TCPA’s prior express consent requirements and private right of action provisions. In ACA International, the court found the FCC’s interpretation “impermissibly broad” and remanded the case to the FCC for further consideration.

Since that time, the FCC has taken comment twice on the ACA International remand, but FCC Chairman Pai has focused the agency’s efforts on identifying and reducing illegal robocalls rather than addressing the remand. Chairman Pai has repeatedly said that unwanted automated calls is a top consumer complaint and he has pursued a multi-faceted approach to preventing or blocking those calls before they reach consumers.

The Commission has

authorized voice service providers to block incoming calls that “reasonable call analytics” identify as likely illegal calls,

mandated that service providers implement a call authentication framework to prevent unlawfully spoofed calls,

directed specific service providers to block certain calls or have their own calls blocked by other providers,

proposed multiple fines exceeding $100 million each for illegally spoofed calls, and

authorized a comprehensive database to identify when telephone numbers have been reassigned from a subscriber who may have given consent to a new subscriber.

Indeed, on the same day as the rulings we will discuss, the Commission set for a vote a proposal to provide a safe harbor for voice service providers that erroneously block calls in good faith and to establish protections against blocking critical calls by public safety entities. According to an FCC staff report issued the same day, these actions are helping to reduce illegal robocalls.

The Anthem and P2P Alliance Rulings

Against this backdrop, the flood of TCPA class action cases has powered a rising tide of petitions for declaratory rulings addressing specific aspects of the TCPA’s requirements, from when consent is needed, how it may be obtained, and how it may be revoked. At Kelley Drye, we have chronicled these developments in our monthly TCPA Tracker and its accompanying FCC Petitions Tracker of the nearly three dozen pending petitions. The total number of petitions has risen slightly over time, as new petitions have modestly outnumbered decisions issued by the Commission.

P2P Alliance Petition (Two-Way Texting With Manual Intervention). In May 2018, the P2P Alliance, a group that represents providers and users of “peer to peer” text messaging services, sought a declaratory ruling that peer to peer messaging services did not involve an ATDS and thus were not subject to the restrictions on ATDS calls/texts contained in the TCPA. The petition sought a ruling with respect to text messaging services that enable two-way text communication, requiring a person to manually send each message. Although the Bureau declined to rule with respect to any specific platform – citing a lack of sufficient evidence regarding the how the platforms operate – the Bureau issued a ruling with several important clarifications.

First, the Bureau ruled that the ability of a platform or equipment to send “large volumes of messages” is not probative of whether that platform or equipment constitutes an ATDS under the TCPA. The Bureau declared that “whether the calling platform or equipment is an autodialer turns on whether such equipment is capable of dialing random or sequential telephone numbers without human intervention.”

This conclusion effectively puts to rest ambiguous statements in some prior orders that TCPA plaintiffs had argued brought any high-volume calling platform within the scope of the TCPA. Furthermore, the Bureau’s conclusion appears most consistent with decisions by several U.S. Courts of Appeal that have ruled an autodialer must employ a random or sequential number generator to meet the TCPA’s definition of an ATDS. The Bureau noted, however, that the “details” of the interpretation of an ATDS were before the Commission in ACA International so, until the Commission addressed that issue, the Bureau was relying solely on “the statutory definition of autodialer.”

The Bureau’s ruling contains an illuminating discussion of the so-called “human intervention” element of prior FCC statements regarding autodialers. Per the Bureau’s ruling, “If a calling platform is not capable of dialing such numbers without a person actively and affirmatively manually dialing each one, that platform is not an autodialer.” The Bureau explained the “actively and affirmatively” dialing standard as requiring a person to manually dial each number and send each message one at a time. Use of such technologies is not an “evasion” of the TCPA, the Bureau commented, because the TCPA “does not and was not intended to stop every type of call.”

Thus, while the full contours of the ATDS definition are still to be defined by the Commission, the Bureau’s P2P Alliance ruling helps to clarify that an “active and affirmative” manual process for sending calls or messages removes a platform or piece of equipment from the ambit of the TCPA. This ruling could buttress many district court rulings that have found sufficient human intervention in the operation of many calling or texting platforms.

Anthem Petition (Prior Express Consent for Healthcare-Related Calls). The Anthem petition addressed by the Bureau was filed in June 2015, one month before the FCC released the Omnibus Declaratory Ruling addressed in ACA International. (Anthem has a more recent petition addressing post-Omnibus order issues that remains pending.) In the June 2015 petition, Anthem asked the Commission to create an exemption for informational healthcare-related calls/texts initiated by healthcare providers and sent to existing patients, arguing that such communications were beneficial to patients and could be protected by an opt-out process it believed the Commission was then considering for ATDS calls. The Commission received limited comment in September 2015 (while the ACA International appeal was being litigated) and has received virtually no filings discussing the petition since that time.

In the ruling, the Bureau denied virtually all of Anthem’s requests, emphasizing instead the TCPA’s requirements for prior express consent for ATDS calls. Specifically, the Bureau ruled that “makers of robocalls generally must obtain a consumer’s prior express consent before making calls to the consumer’s wireless telephone number.” (emphasis in original). It rejected Anthem’s request for an exemption permitting such calls, subject to opt-out, and repeated that the “mere existence of a caller-consumer relationship” does not constitute consent. Importantly, however, the Bureau affirmed prior statements that a consumer who has knowingly released their phone number for a particular purpose has given consent to receive calls at that number.

To the extent that the Anthem petition sought an exemption based on the “urgency” of healthcare-related communications, the Bureau declined to create such an exception, emphasizing, however, that the “emergency purposes” exception could apply to the extent the calls/texts satisfied the Commission’s rules and its recent COVID-19 Declaratory Ruling.

In the end, the ruling likely will not change the status quo for calls and texts being made today. The Bureau emphasized previous rulings requiring prior express consent and endorsed previous statements about how such consent may be obtained. Further, the Bureau affirmed the “emergency purposes” exception, although declining to expand its scope. Thus, entities making calls or texts following prior FCC guidance should not need to make any changes as a result of the Anthem ruling.

Looking Ahead

These decisions are not the broad rulings that many hoped for when ACA International was remanded to the FCC in March 2018. Chairman Pai was highly critical of the 2015 Omnibus order from the FCC (from which he dissented) and welcomed the ACA International decision. He has focused the agency on reducing unwanted calls prior to addressing the legal interpretations called for by the remand. Now, however, with those actions at an advanced stage and with his expected time as Chairman of the FCC about to end, many are wondering if the Pai Commission will revisit the ATDS definition, revocation of consent, and safe harbor questions remanded to it. Even if it does not, however, the Commission has nearly three dozen other petitions still pending, which could provide needed guidance on discrete issues that have arisen in TCPA litigation.

We don’t know at this time which way the FCC is likely to go, or even if it will address more TCPA issues during Chairman Pai’s tenure, but enterprises and service providers should watch the FCC closely over the next few months.

The Warning Letters

The agencies identified the three VoIP gateway providers as the sources of the illegal calls through the efforts of the USTelecom Industry Traceback Group, a consortium of phone companies that help officials identify potentially unlawful calls. The phone companies used a process known as “traceback,” in which they share information to trace unlawful spoofed robocalls to their origination.

In the letters, the agencies reminded the companies that the COVID-19 scam robocalls are in fact illegal and directed them to cease transmitting the traffic immediately, as the calls have “the potential to inflict severe harm on consumers.” The letters warned the companies that if they did not stop transmitting the identified traffic within 48 hours, the FCC would authorize other U.S. voice providers to block all calls from the companies and take any other steps necessary to prevent transmission of the calls. The agencies also sent a separate letter to USTelecom advising the trade association that, if the VoIP providers do not block the traffic, the FCC will authorize other U.S. service providers to block all calls coming from that gateway and will take other actions as necessary to authorize U.S. service providers to block traffic from the originating entities. In addition, the FCC encouraged other service providers to take immediate action to block unlawful calls pursuant to existing legal authority.

This action is a significant – and significantly aggressive – new approach by the agencies. While both agencies have taken actions to prevent and deter unlawful robocalls, the threat to block traffic from the originating carrier is a new tactic in the fight against unlawful calls. Notably, it is not clear under what authority the FCC can or would order the blocking of all traffic from the subject VoIP gateway providers if they failed to block the allegedly unlawful robocalls. The letter does not cite any provision of the Communications Act that would authorize such blocking. Moreover, existing FCC orders relating to call blocking have authorized only limited call blocking practices that were optional for the carriers. Were the FCC to order such blocking (and to make it mandatory), it appears that such action would be the first of its kind by the agency.

Briefly, we will review the agencies’ recent history with anti-robocall activities.

The Educare Services Enforcement Action and Prior FTC Warning Letters

In the three letters to the VoIP gateway providers, the FCC and FTC reference the FTC’s recent enforcement action against VoIP provider Globex Telecom. This action relied upon provisions of the FTC’s Telemarketing Sales Rule (“TSR”), which addresses calls made for a telemarketing purpose. In December 2019, the FTC obtained a preliminary injunction against Educare Services and Globex Telecom Inc. for robocalling consumers to promote allegedly fraudulent credit card interest rate reduction services. The FTC complaint alleges that Globex played a key role in “assisting and facilitating” the illegal credit card interest rate reduction services Educare promoted by providing Educare with the means to call consumers via interconnected VoIP communication services and facilities. For a VoIP company to be liable under a TSR “assisting and facilitating” theory, the FTC must prove that the company “knew or consciously avoided knowing” the robocall campaigns violated the TSR.

A week before the joint letters, the FTC sent letters to nine VoIP service providers and other companies warning them that “assisting and facilitating” in the transmission of illegal COVID-19-related telemarketing or robocalls is unlawful. The agency also sent letters to nineteen VoIP service providers in January with a similar warning about all illegal robocalls.

FCC TRACED Act Implementation and the STIR/SHAKEN Mandate

Like the FTC, the FCC recently shifted its focus in robocall enforcement towards the originating carriers. On February 4, 2020, the FCC’s Enforcement Bureau sent letters to seven VoIP gateway service providers, notifying them that unlawful robocalls had been traced to their networks and asking for their assistance in tracking down the originators of the calls. Although no enforcement action was threatened at the time, the FCC also asked each provider to detail their anti-robocall efforts to the Commission.

More recently, the FCC took several steps in implementing the TRACED Act, which requires the FCC to initiate several near-term rulemakings and other actions aimed at addressing unlawful spoofing and robocalling operations. On March 27, the agency adopted a Report and Order and Further Notice of Proposed Rulemaking establishing rules for the registration of a single consortium to conduct private-led “traceback” efforts, which is expected to formalize the relationship with the USTelecom Industry Traceback Group. Additionally, on March 31, the FCC adopted a separate Report and Order and Further Notice of Proposed Rulemaking mandating that originating and terminating voice service providers implement the STIR/SHAKEN framework in the IP portions of their networks by June 30, 2021. STIR/SHAKEN—the technology framework behind the “traceback” process—allows providers to verify that the caller ID information transmitted with a particular call matches the caller’s number as the calls are passed from carrier to carrier. FCC Chairman Pai previously urged major providers to adopt STIR/SHAKEN technology voluntarily and warned that the voluntary approach would become a mandate if the providers did not move fast enough. Still to come are comments on a “know your customer” obligation for service providers and rules to deny access to numbering resources to originators of unlawful calls.

As we have previously noted, the TRACED Act also requires the implementation of an alternative call authentication framework in non-IP networks, extends the FCC’s statute of limitations for bringing some illegal robocall enforcement actions, and eliminates the requirement to give warnings before issuing certain filings.

Takeaways

These letters, coupled with the recent activity by the FTC and FCC to combat illegal robocalls, signal the agencies’ desire to cause a meaningful reduction in unlawful calling, and in particular, demonstrate a desire to prevent scammers from taking advantage of the COVID-19 crisis to carry out their deceptions. Both agencies can seek civil penalties and take other actions necessary to prevent the proliferation of these calls.

Importantly, the targets of agency action are not necessarily limited to the entities that place the unlawful calls. These federal actions are a good reminder for VoIP and other service providers to assess whether their customers’ practices may indicate unlawful use of VoIP or other services. With the warning letters, and now these blocking letters, the FCC and FTC increasingly are showing an openness to pursuing penalties under vicarious liability theories. If there are facts that support knowledge of the unlawful activity or “red flag” type practices (such as a customer being the target of multiple third party government subpoenas, among other facts), that’s a good indication that further steps by the VoIP provider may be warranted to mitigate the risk of facing an enforcement action by the FTC or FCC. If you have questions about how these enforcement trends and related risk factors are relevant to your business, please contact your Kelley Drye counsel.

States of Emergency: Two states, New York and Louisiana, prohibit certain telemarketing calls during declared states of emergency.

• New York: The prohibition applies to any unsolicited telemarketing sales call to any person under a declared state of emergency. Calls made (1) in response to an express written or verbal request, or (2) in connection with an existing business relationship, are not “unsolicited” and are therefore permissible. Importantly, it is ambiguous as to whether this prohibition also covers business-to-business telemarketing calls. The provision applies to unsolicited telemarketing sales calls made to any person during a declared state of emergency. The statute defines “person” to include businesses, but the other telemarketing provisions in the statute are limited to business-to-consumer calls.
• Louisiana: The prohibition applies to all telemarketing calls to consumers, except those made (1) within six months of an express request, or (2) pursuant to an existing business relationship or a prior business relationship that has lapsed within six months.

These are difficult times, but we are happy to help, so please do not hesitate to reach out to us or to check out the Kelley Drye COVID-19 Resource Center.

Glasser represents a significant reduction in the scope of liability under the TCPA. Since 2003, due to an order by the Federal Communications Commission (“FCC”), the use of predictive dialing equipment has been sufficient to trigger the TCPA’s protections under the ATDS provisions of the statute. In ACA Int’l v. FCC, however, the D.C. Circuit vacated prior FCC guidance on this issue, which the Eleventh Circuit (along with other courts), held includes the FCC’s 2003 order. In reaching its conclusion, the Eleventh Circuit noted that the FCC had improperly sought to expand to the scope of the TCPA in order to capture more modern technology. “[T]he [FCC] had watched companies switch from using machines that dialed a high volume of randomly or sequentially generated numbers to using ‘predictive dialers’ that called a list of pre-determined customers. . . .Watching this happen in real time, the [FCC] tried to use a broad ‘reading of the legislative history’ and an all-encompassing view of the law’s purpose to expand the statute’s coverage and fill this gap.”

Even under Glasser’s interpretation of the statute, an important limitation on the use of “automated telephone equipment” remains, however, because such equipment must connect customers with a “human representative” or obtain the requisite consent to place calls using an “artificial or prerecorded voice” to avoid liability under the TCPA. In Glasser, where the record demonstrated that one of the defendants had made calls using an “an artificial or prerecorded voice,” the Eleventh Circuit held that this conduct provided an “independent basis” for liability under the TCPA and affirmed summary judgment in plaintiff’s favor with respect to those calls.

In addition, it is important to keep in mind that while the Eleventh Circuit’s decision provides strong support to limit the scope of liability under the TCPA, the Ninth Circuit has held that dialing numbers from a stored list “automatically” will trigger the TCPA’s protections. In addition, there is uncertainty in many other jurisdictions as to the type of technology that will qualify as an ATDS and the FCC still has not issued its order on remand following the D.C. Circuit’s ruling in ACA Int’l. See www.adlawaccess.com/2019/03/articles/taking-stock-of-the-tcpa-in-2019-what-is-an-autodialer/. Further, it remains to be seen whether the Supreme Court will take up the issue of the appropriate definition of ATDS presented by the appeal in Duguid v. Facebook, Inc., in addition to the constitutional challenge it has already accepted in Barr v. American Association of Political Consultants, Inc. on January 10, 2020.

In this post, we revisit the relevant details of the Court’s decision in ACA International, and prior statements of FCC Chairman Ajit Pai concerning the ATDS definition to assess how history may be a guide to how the FCC approaches this issue.

D.C. Circuit Found FCC’s 2015 Definition of ATDS Was Too Broad

Under the statute, an ATDS is defined as a device with the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator” and “to dial such numbers.” 47 U.S.C. § 227(a)(1)(A)-(B). The D.C. Circuit unambiguously concluded that in 2015 the FCC adopted an overly expansive and unreasonable view of this definition. In its 2015 Declaratory Ruling and Order, the FCC defined equipment as an autodialer if it contained the potential “capacity” to dial random or sequential numbers, even if that capacity could be added only through specific modifications or software updates (so long as the modifications were not too theoretical or too attenuated). Under this revised interpretation, any equipment that could be modified to dial numbers randomly or sequentially would be an ATDS – and therefore subjected the caller to potential liability under the statute. The FCC also made contradictory statements about the capabilities that an autodialer must possess – reaffirming and then appearing to disclaim its prior rulings on predictive dialers, and offering contradictory statements regarding the level of human intervention that would preclude a call from being auto-dialed. These statements further compounded the uncertainty surrounding autodialers.

The D.C. Circuit Court was troubled by the “eye-popping” reach of the 2015 Order’s interpretation, which could be applied to any smartphone, and found that such a reach could not be squared with Congress’ findings in enacting the TCPA. The Court observed that the FCC’s interpretation was “utterly unreasonable in the breadth of its regulatory [in]clusion.” It rejected the FCC’s justification that a broad reach was necessary to encompass “modern dialing equipment,” concluding that Congress need not be presumed to have intended the term ATDS to apply “in perpetuity” and citing paging services as an example of TCPA provisions that have ceased to have practical significance.

Although the Court did not clarify the requisite “capacity” needed—present or future—to be an ATDS, it declared that “the TCPA cannot reasonably be read to render every smartphone an ATDS subject to the Act’s restrictions.” The Court also found that the confusion over the term “capacity” as it relates to the ATDS definition was multiplied by the FCC’s insufficient explanation of the requisite features that the covered ATDS equipment must possess. Specifically, the 2015 Declaratory Ruling and Order fell short of reasoned decision making in “offer[ing] no meaningful guidance” as to the seminal questions of whether a device (1) must itself have the ability to generate random or sequential numbers to be dialed, (2) must dial numbers without human intervention or (3) must “dial thousands of numbers in a short period of time.”

By setting aside the prior interpretation, the D.C. Circuit handed the issue back to the FCC for further analysis and explanation. The FCC sought comment on how to respond to the D.C. Circuit’s ruling and appears to be close to issuing a decision on the remanded issues.

Is Commissioner Pai’s 2015 Dissent a Harbinger of the Decision on Remand?

When the FCC’s 2015 omnibus TCPA Declaratory Ruling and Order was issued, then-Commissioner Pai (now Chairman of the FCC) authored a highly critical dissent, including a direct challenge to the interpretation of an autodialer. In his view, the ruling improperly expanded the definition of an ATDS beyond the legislative mandate, and needed to be reigned back in.

Chairman Pai’s dissent took issue with the ATDS definition as overbroad and over-inclusive. He posited that only equipment that has the capability to dial sequential numbers or random numbers should qualify as an ATDS. “If a piece of equipment cannot do those two things—if it cannot store or produce telephone numbers to be called using a random or sequential number generator and if it cannot dial such numbers—” Chairman Pai asked, “then how can it possibly meet the statutory definition? It cannot.” The principal issue addressed in the 2015 order was whether the statute’s reference to the “capacity” of ATDS equipment referred to the potential capabilities of the equipment. On this front, Chairman Pai’s view was clear: he believed that the statutory definition of an ATDS was limited to the equipment’s “present capacity,” not to its potential or theoretical capacity, and his dissent focused largely on why the concept of potential capacity was a bridge too far.

Chairman Pai’s interpretation of the statute closely hues to the specific capabilities listed in the text of the TCPA—the ability to store or produce numbers using a random or sequential number generator, and to dial such numbers. The FCC’s interpretation, Chairman Pai charged, “transforms the TCPA from a statutory rifle‐shot targeting specific companies that market their services through automated random or sequential dialing into an unpredictable shotgun blast covering virtually all communications devices.” Chairman Pai was willing to claim victory for the “rifle‐shot” set, stating that if today’s callers have abandoned random or sequential dialers due to the TCPA’s prohibition, then the TCPA has “accomplished the precise goal Congress set out for it” and, if parties want to address more modern types of abusive dialing equipment, they should go to Congress for action.

Given Chairman Pai’s previous statements and the D.C. Circuit’s criticism of the prior order’s scope, it appears likely that the FCC will look only to the present capabilities of particular equipment, rather than its potential or future capacity. However, this alone does not answer the question before the agency. In 2015, Chairman Pai seemed ready to declare the autodialer definition to have achieved its goal, but now that he leads the agency, will he hold to that position?

Notably, since assuming the leadership of the Commission, Chairman Pai has made multiple statements about the need to address the “scourge” of robocalling. The FCC has taken several actions aimed at reducing abusive calls, better detecting spoofing and unlawful activity, and empowering carriers to block illegal calls and consumers to block illegal and unwanted calls. Much of these actions were detailed in an FCC Bureau report on illegal robocalls released on February 14. While it eschews any recommendations for future actions, the report details ongoing FCC and industry efforts to combat illegal robocalls, and identifies some of the challenges to FCC enforcement activities. The Commission also recently adopted a database for number assignment changes that aims to reduce misdirected calls to the wrong telephone number. Will these robocall reduction efforts give the Pai-led FCC the “cover” to narrow the definition of an ATDS, and, if so, by how much will it be narrowed?

Some narrowing of the prior definition is inevitable. Few argue that ordinary smartphones should be subject to the TCPA restrictions. But even advocates of a broad interpretation disagree on how to get there: some have argued that the FCC should maintain the prior definition but exempt smartphones, while others argued for standards that would exclude “ordinary” or unmodified smartphones. Some in the industry, on the other hand, are asking the FCC to focus more narrowly on equipment prominent in the early 1990s, when the TCPA was passed, and be less likely to include equipment that solely calls from pre-loaded lists of numbers. This would be consistent with Chairman Pai’s dissent – provided he has the other votes to achieve it. An interpretation along this line would appear to be good news for predictive dialing equipment and various dialers that involve differing levels of human intervention to complete calls.

Given the divergent interpretations in Marks and Dominguez, the FCC’s interpretation of the ATDS definition is almost certainly headed back to the courts for confirmation that the FCC’s revised definition (whatever it is) lies within the agency’s delegated powers and is sufficiently clear to pass judicial muster. Moreover, a restrictive interpretation of the legislative mandate for what can be regulated would leave to Congress the question of whether a broader definition must be considered, including how to address modern dialing equipment and other modern technologies. Several anti-robocall bills aimed at expanding the reach of the ATDS definition are already under consideration in both houses of Congress. Thus, even if the FCC adopts a narrower interpretation, we’re likely to see the ATDS issue shift to other forums in the second half of 2019.

With that in mind, and given the continual cycle of TCPA lawsuits, companies placing calls or texts and those designing calling or texting platforms should consider how participating in the FCC and subsequent proceedings can further their interests. They also would benefit from determining how the clarified ATDS definition is likely to affect their business, and whether any proactive adjustments would be helpful to prevent disruption to the business or to manage TCPA risk exposure, including evaluating whether the consent they obtain is sufficient. Kelley Drye will continue to follow these issues and provide updates through its monthly TCPA Tracker. Please contact us to join our list or if you have any questions concerning these issues.

Most consumers might not think that LED signs fall within the FCC’s jurisdiction. However, the signs emit radio waves that can interfere with communications services. As a result, the FCC requires most LED signs and other “unintentional” radiators to be tested for compliance with its technical requirements prior to marketing. Importantly, the FCC’s rules prohibit the marketing of such devices unless they have been properly authorized, labeled, and carry the required disclosures. Even with the FCC’s recent efforts at simplification, the rules regarding equipment marketing are complex, requiring close attention to compliance at every step in the supply chain.

While all the settlements contain the standard FCC compliance and reporting obligations, a few key facts deserve further attention.

• First, the FCC initiated each of the investigations in response to a complaint. It is unclear whether all of the complaints came from the same source, but wireless carriers have shown no hesitation to alert the FCC of potential violations when they identify lighting systems as the source of interference on their spectrum.
• Second, it appears that the targeted companies did not conduct required testing until after the FCC started the investigations, potentially signaling a breakdown in compliance in the supply chain regarding who was responsible for ensuring the devices met FCC specifications.
• Third, all of the targeted companies brought their LED displays into compliance prior to reaching a settlement agreement with the FCC. The FCC usually sees such compliance as a necessary condition before settlement talks can begin.
• Fourth, each of the manufacturers or retailers were first-time violators. Unlike with entities that violate the TCPA rules, the FCC is not required to give warnings to entities that market devices that require an FCC equipment authorization. As a result, each of the entities in these investigations paid a fine, even though they appeared not to have prior knowledge of the regulations and appeared to respond in good faith to obtain the necessary authorizations after being contacted by the FCC. With LED signs, the FCC is not issuing free passes to first-time offenders.

This post was originally published on CommLaw Monitor.

Future episodes of “Inside the TCPA” will tackle reassigned numbers, consent, and other topics raised before the FCC. This is a companion to Kelley Drye’s comprehensive list of petitions before the Commission available in our monthly TCPA Tracker newsletter. Please contact us if we can assist you with any of the FCC proceedings.

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As we previously discussed, the Order effectively reverses the Commission’s 2015 Open Internet Order, reclassifying broadband Internet access service as a lightly regulated Title I “information service” and eliminating the 2015 Order’s open Internet rules (while retaining a modified version of the transparency requirement).

The Order will not go into effect until after the Office of Management and Budget completes its Paperwork Reduction Act review, which could take several months. However, last Thursday’s publication is significant because it triggers deadlines for challenges to the Order, both in the courts and in Congress.

The Federal Register publication gives litigants ten days to file petitions for review in federal courts of appeals if they would like to be included in a court lottery to determine the venue for consolidating the Order’s challenges. The following petitions have already been filed:

• New York District Attorney General Eric Schneiderman announced he and 22 other Democratic attorneys general filed a petition for review at the U.S. Court of Appeals for the D.C. Circuit;
• Public Knowledge, Mozilla, Vimeo, National Hispanic Media Coalition, and New America’s Open Technology Institute each filed petitions for review in the D.C. Circuit;
• The California Public Utilities Commission and Santa Clara County each filed appeals in the Ninth Circuit;

Federal Register publication also allows lawmakers to formally introduce a Congressional Review Act (CRA) resolution of disapproval, which would reverse the Order and prevent the Commission from subsequently introducing a substantially similar Order. While CRA resolutions are a powerful tool in the hands of the majority – as we saw with the rollback of the Broadband Privacy Order earlier this year – as the minority party, the Democrats are at a significant disadvantage. Senator Ed Markey, D-MA, and House Communications Subcommittee ranking member Mike Doyle, D-PA, have led the Democrat’s effort to draft a CRA resolution to nullify the Order. At the time of this blog post, the CRA resolution had 50 Senator co-sponsors, including all 49 Democratic senators and Senator Susan Collins, R-ME. President Trump is not expected to support the CRA resolution, even if the measure passed both chambers of Congress.

In addition to activities in federal court and in Congress, 26 states are considering net neutrality legislation, and five state governors have issued executive orders regarding net neutrality following the Commissioners’ December 2017 vote.

We will follow up this blog post with a more comprehensive review of the Restoring Internet Freedom Order soon. In the meantime, contact any of the authors of this blog post for more information on the proceeding.

The MOU generally divides FCC and FTC jurisdiction over BIAS providers as follows:

FCC		FTC
Monitor the broadband market and identify market entry barriers by, among other activities, reviewing informal complaints filed by consumers. Take enforcement actions against ISPs that fail to comply with the Transparency Rule’s posting requirement. FCC enforcement would not address the adequacy of the disclosure, however.		Investigate and take enforcement action against ISPs for unfair, deceptive, or otherwise unlawful acts or practices, including but not limited to, actions pertaining to the accuracy of the disclosures required under the Transparency Rule, as well as their marketing, advertising, and promotional activities.

The agencies have made clear that they will coordinate their activities “to promote consistency in law enforcement and to prevent duplicative or conflicting actions.” They will also continue to share consumer complaints with each other and will collaborate on consumer and industry outreach and education efforts. FCC Chairman Ajit Pai said in a statement that the MOU “outlines the robust process by which the FCC and FTC will safeguard the public interest,” but Commissioner Mignon Clyburn (a Democrat) called the MOU “a smoke and mirrors PR stunt, distracting from the FCC’s planned destruction of net neutrality protections later this week.”

Despite the MOU and upcoming Restoring Internet Freedom Order, significant questions will remain about the appropriate jurisdiction of the FCC and FTC with respect to BIAS and ISPs. For example, less than three months ago, the Ninth Circuit received arguments in a rehearing en banc of the court’s earlier decision to dismiss an FTC case against AT&T Mobility over allegedly “unfair and deceptive” throttling practices in connection with wireless data services provided to AT&T’s customers with unlimited data plans. Implementation of the MOU may be impacted by how the Ninth Circuit resolves this jurisdictional dispute. If the Ninth Circuit finds the common carrier exemption to be activity-based, then the FCC’s expected decision to walk back from “common carrier” designation for BIAS will open the door for FTC oversight. On the other hand, if the Ninth Circuit finds that exemption to be status-based – or resolves the case without resolving the question – then the FTC’s ability to proceed under the MOU may be in question. Thus, even after the MOU is finalized, we may have to wait to see the final impact of the agreement.

The original Ninth Circuit decision was notable because it held that the “common carrier exemption” in section 5 of the FTC Act—which excludes common carriers from FTC jurisdiction—was “status based” rather than “activity based,” and as such AT&T was not subject to the FTC’s jurisdiction even for non-common-carrier activities. The original decision had the effect of resetting the jurisdictional boundaries between the FTC and the Federal Communications Commission (FCC) and removing a wide swath of the telecommunications and technology ecosystem from the FTC’s jurisdictional reach.

In a statement, FCC Chairman Ajit Pai applauded today’s order, noting that it will make it “easier for the FTC to protect consumers’ online privacy” and “strengthens the case for the FCC to reverse its 2015 Title II Order,” which classified broadband Internet access service (BIAS) as a common carriage “telecommunications service” and established the FCC’s current open Internet rule framework. The 2015 Title II Order is now the subject of a draft Notice of Proposed Rulemaking scheduled for a Commission vote at its May 18, 2017 open meeting.