Two Rulings in Two Weeks on the TCPA’s Autodialer Restrictions

The last two weeks have brought two important (although unrelated) rulings on the TCPA’s Autodialer Restrictions.  First, on June 25, the Federal Communications Commission limited the applicability of the autodialer restrictions in the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the “TCPA”), to an emerging texting technology. Second, less than two weeks later, the Supreme Court ruled that an exception to the TCPA’s autodialer restrictions for calls to collect federal debts was unconstitutional and expanded the statute’s reach.

The FCC’s recent ruling opened the door to wider use of peer-to-peer (“P2P”) texting, a relatively new technology used to reach large audiences on a one-to-one basis. The FCC found that if this technology requires human intervention to send a text, it is not an autodialer subject to the restrictions of the TCPA.

P2P texting differs from automated bulk text messages like flight-delay updates sent by airlines in that a user must send each message individually. P2P texting took root in political campaigns in the 2016 and 2018 election cycles and has expanded quickly. For example, colleges have used the technology to reach alumni, and job recruiters have used it to contact potential applicants. See Petition for Clarification of the P2P Alliance, CG Docket No. 02-278, FCC (filed May 3, 2018).

The process for sending a P2P text is straightforward. An organization provides a call list and a text script, leaving placeholders for unique content like the recipient’s name. The user must click “send” for each message to be delivered, but the text message itself is auto-populated with the script along with any unique content (such as the recipient’s name). P2P companies boast that a single user can send over 5,000 messages an hour using this technology.

A coalition of providers and users of P2P texting petitioned the FCC in 2018 seeking clarification that P2P texts do not fall under the autodialer provisions of the TCPA. In a declaratory ruling, the FCC largely agreed with the coalition’s position. Declaratory Ruling, DA 20-670, FCC (June 25, 2020). It looked to the language of the statute’s autodialer provisions, which prohibits any person, without prior consent, from initiating a call to a wireless phone number using “equipment which has the capacity-(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”

The FCC found that the fact that a technology enables messaging to a “large volume of telephone numbers is not probative of whether that equipment constitutes an autodialer.” It went on to determine that “if a calling platform is not capable of originating a call or sending a text without a person actively and affirmatively manually dialing each one, that platform is not an autodialer.” But the FCC did not opine on whether any particular high-volume texting platform meets this criteria.

While the FCC’s declaratory rulings may not be the final word on the issue, this ruling should provide significant clarity and comfort to organizations using texting technology that lacks the capacity to send a message without human intervention . See City of Arlington, Texas v. Fed. Commc’n. Comm’n, 569 U.S. 290 (2013) (applying Chevron deference in upholding an FCC declaratory ruling).

Separately, on July 6, the Supreme Court, in a splintered opinion, struck down a content-based exception to the ban on autodialers and prerecorded voices. See Barr v. American Ass’n. of Political Consultants, Inc., No. 19-631 (July 6, 2020). But rather than finding that this exception made the entire restriction unconstitutional, the Court severed the offending exception and allowed the rest of the law to remain in place.

Congress added the exception in 2015. It permitted autodialing if the call was made to collect on debt owed to or guaranteed by the federal government. Plaintiffs – who objected that their political messages to cellphones were banned while federal debt collectors messaging was allowed – argued that this exception amounted to a discriminatory, content-based restriction on speech that violated their First Amendment rights. While all of the justices agreed the restriction was a content-based restriction on speech, they disagreed on whether to apply strict or intermediate scrutiny, whether the government could meet the requisite level of scrutiny, and whether the provision was severable from the broader autodialer ban.  This splintering meant that no single opinion attracted more than a plurality, although a majority of the Justices felt that the exception was a content-based restriction that failed a strict-scrutiny analysis and that the appropriate remedy was severing and invalidating only the exception.  Ironically, as Justice Gorsuch pointed out in his partial concurrence and dissent, the successful plaintiffs received no relief from the Court’s decision, and the Court’s decision striking a statutory provision on First Amendment grounds had the odd result of banning more speech.

The Court’s opinion does nothing to change the status quo for most organizations that would like to use autodialers. However, for any organization placing calls to collect on student loans, farm loans, veterans’ loans, or any other loans backed by the federal government, the change is significant: Those calls must now comply with the TCPA’s autodialer prohibitions. And, with $150 billion owed in student loans alone, that is no small compliance effort.