Two FCC TCPA Orders Address Consent through an Intermediary, Provide First TCPA Exemption, and Hint at Future Directions

The FCC recently issued a Declaratory Ruling and an Order that provide some clarity in the TCPA arena and create a new exemption for certain types of text messages and calls. In sum, the FCC clarified that a company may obtain “prior express consent” through an intermediary for the purpose of sending administrative text messages. In addition, the FCC created an exemption for package delivery companies to send delivery notification text messages and make autodialed calls to mobile numbers in the absence of prior express consent. Even for companies not directly affected by these changes, the ruling and a concurring statement by a new FCC commissioner may provide some guidance for marketing messages and foreshadow the direction of future FCC action. Read our full analysis below.

Consent Through An Intermediary: the GroupMe Ruling

As an initial matter, it is important to clarify the scope of the GroupMe ruling: It applies only to non-advertising/non-telemarketing messages, which require “prior express consent.”[1] It has no effect on advertising/telemarketing messages, which now require “prior express written consent.”[2] However, the ruling includes several nuggets that may have broader applicability, including within the marketing realm.

GroupMe provides an online service that enables up to fifty individuals to send group text messages to each other. The group creator signs up, agrees to terms of service, which require the group creator to represent that each individual added to the group has consented to be added and to receive text messages, and then provides GroupMe with the mobile phone numbers of the group members. GroupMe then sends up to four text messages to each group member, informing each member of information about the group creator, the names of the individuals who comprise the group, the unique ten-digit number GroupMe assigned to the group, instructions on how to stop receiving text messages associated with the group, and instructions to download the free GroupMe app. GroupMe petitioned the FCC for a declaratory ruling that the message recipient’s consent included the messages that GroupMe sends.

In the declaratory ruling, the FCC ruled that “text-based social networks may send administrative texts confirming consumers’ interest in joining such groups without violating the TCPA because, when consumers give express consent to participate in the group, they are the types of expected and desired communications TCPA was not designed to prohibit, even when that consent is conveyed to the text-based social network by an intermediary.” (GroupMe Ruling, at 1.) In other words, an intermediary may convey a message recipient’s consent to receive non-advertising/telemarketing messages to a social network, and that social network may send its own administrative (i.e., non-advertising/telemarketing) messages to the consumer within the scope of that consent. Nothing in the ruling suggests that the social network may also send marketing messages based on that consent.

Such a ruling does not exonerate the social network: if it turns out that the consumer did not provide consent, the social network remains liable for the TCPA violation. (GroupMe Ruling, at 5 ¶ 11.) The FCC emphasized the importance of taking “adequate steps to ensure full disclosure to group organizers and to ensure that group organizers do in fact obtain the requisite consent.” (GroupMe Ruling, at 6 ¶ 13.) The FCC also noted that while GroupMe’s Terms and Conditions required group organizers to obtain consent, but encouraged the company “to ensure that group organizers are aware of the need to obtain such prior express consent and that they are representing to GroupMe that they have in fact obtained it.” (Id.)

The FCC’s ruling adds another wrinkle to the social network’s potential liability: “To the extent that a consumer, in the absence of instructions to the contrary, agrees to participate in a GroupMe group, agrees to receive associated calls and texts, and provides his or her wireless telephone number to the group organizer for that purpose, we interpret that as encompassing consent for GroupMe to send certain administrative texts that relate to the operation of that GroupMe group.” (GroupMe Ruling, at 5 ¶ 11.) Thus, if the consumer actually provides contrary instructions (e.g., “but I do not consent to receive administrative messages from the messaging platform”), the FCC’s ruling may imply that the social network is responsible for honoring those contrary instructions. The intermediary would first need to convey those contrary instructions to the social network, and the social network would then need to have some way of honoring those instructions (or refusing to serve the consumer who provided contrary instructions). If the social network has no way of receiving or processing such “contrary instructions” before delivering text messages, that social network may face TCPA liability.

The FCC’s GroupMe Ruling is actually quite limited. Under its plain terms, the ruling only permits prior express consent to be provided through an intermediary and authorizes a messaging platform to send administrative messages within the scope of the user’s consent.

Potential Broader Guidance & Future Directions

For companies not directly affected by the GroupMe ruling, there are still some nuggets worth considering:

The FCC’s 1992 Statement Has Continued Vitality. It is also significant that the GroupMe ruling re-emphasizes the continued applicability of the FCC’s 1992 statement that “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.” (GroupMe Ruling, at 4 ¶ 10.) Although the FCC had not relied on this statement for many years in TCPA orders, there has been a recent trend for district courts to dismiss TCPA cases based on this statement. See, e.g., Kolinek v. Walgreen Co., 2014 WL 518174 (N.D. Ill. Feb. 10, 2014); Baird v. Sabre Inc., 2014 WL 320205, --- F.Supp. 2d ---- (C.D. Cal. Jan. 28, 2014); Roberts v. PayPal, Inc., 2013 WL 2384242 (N.D. Cal. May 30, 2013); Pinkard v. Wal-Mart Stores, Inc., 2012 WL 5511039 (N.D. Ala. Nov. 9, 2012). The FCC’s affirmation of this statement suggests that these district court cases are on sound legal footing.

A Text Message Providing A Link to an App May Not Be Advertising in Some Cases. It is noteworthy that the FCC considered “instructions to download the free GroupMe app” to fall under the “administrative text” (i.e., non-advertising/telemarketing) umbrella when the app was not required to use the service. Users could still use the service through SMS, but the app would transmit group messages to be transmitted using data. However, it may be relevant that these instructions were not sent alone: they were accompanied by “information about the group creator, the names of the individuals who comprise the group, the unique ten-digit number GroupMe assigned to the group, [and] instructions on how to stop receiving text messages associated with the group.” (GroupMe Ruling, at 4 n.22.) These precise types of text messages – texts with a link to download an app – had been challenged by the plaintiff in the class action Glauser v. Twilio, Inc. as “advertisements” that are “sent solely to benefit Defendants.” See Complaint, Glauser v. Twilio, Inc., No. CV 11 2584 (N.D. Cal. May 27, 2011), at ¶¶ 23, 25. It appears now that the FCC may not agree with the plaintiff’s allegations.

This ruling also calls to mind the Ninth Circuit’s holding in Chesboro v. Best Buy Stores, L.P., where the appellate court  held that robocalls urging a consumer to redeem expiring rewards points were telemarketing calls because they encouraged a future purchase (even though that purchase may have been free). 705 F.3d 913, 918 (9th Cir. 2012). The facts underlying the GroupMe Ruling and Chesboro are similar in the sense that in both cases, consumers provided some degree of consent, and the companies delivered a message that encouraged consumers to act in a way that would benefit both the company and the consumer. Best Buy’s consumers already consented to participate in the rewards program; and the robocall, while benefitting Best Buy by encouraging the customer to come into the store to make a purchase, also benefitted the consumer to use the points which would provide either a discount or possibly free merchandise. GroupMe’s users likewise already consented to participate in the service; and the text message would benefit GroupMe by having more individuals use its app and potentially benefit the consumer by using data instead of SMS messages. Under Chesboro, GroupMe’s act of sending instructions for downloading an app might be considered to be advertising or telemarketing under the theory that it encourages engagement in a commercial activity. Thus, the FCC’s ruling and Chesboro are potentially inconsistent. It will be interesting to see how a court addresses a potential future challenge to Chesboro based on this FCC declaratory order.

Future Directions. Citing the legislative history, the FCC notes that “Congress did not expect the TCPA to be a barrier to normal, expected, and desired business communications.” The FCC includes reference to “expected and desired communications” (or some variant thereof) several times throughout the Ruling. This phrase is notably absent from most of the FCC’s prior TCPA rulings. Perhaps this language signals a new perspective on part of the FCC that may favor businesses. Additionally, although the FCC did not rule on the issue, it commented that “we do not foreclose the possibility that an agent or legal guardian, for example, could provide the consent of the consumer.” (GroupMe Ruling, at 6 n.34.) This statement may foreshadow the future direction of the FCC, and potentially in TCPA cases

Exemption for Package Delivery Companies: The CAA Order

In a separate Order, the FCC exercised its statutory authority to create an exemption for companies to send free-to-end-user package delivery notifications via text message and through automated calls in the absence of prior express consent, subject to restrictions established by the FCC in the Order. This is the first time that the FCC has exercised its authority to issue an exemption under the TCPA.[3] Because this exemption is solely for package delivery notifications, the Order does not apply in other contexts.

In its petition, the Cargo Airline Association (“CAA”) – whose members include FedEx, UPS, and DHL – highlighted the benefits of notifications, which include reducing package theft when delivery notifications are sent and improving the chance of successful delivery of signature-required packages when pre-delivery notifications are sent. The CAA also noted that consumers rarely opt out of notifications to residential phones. The FCC found “that these notifications are the types of normal, expected communications the TCPA was not designed to hinder, thus further persuading us that an exemption is warranted.” (CAA Order, at 7 ¶ 19.)

Under the exemption –

1)      a notification must be sent, if at all, only to the telephone number for the package recipient;

2)      notifications must identify the name of the delivery company and include contact information for the delivery company;

3)      notifications must not include any telemarketing, solicitation, or advertising content;

4)      voice call and text message notifications must be concise, generally one minute or less in length for voice calls and one message of 160 characters or less in length for text messages;

5)      delivery companies shall send only one notification (whether by voice call or text message) per package, except that one additional notification may be sent to a consumer for each of the following two attempts to obtain the recipient’s signature when the signatory was not available to sign for the package on the previous delivery attempt;

6)      delivery companies relying on this exemption must offer parties the ability to opt out of receiving future delivery notification calls and messages and must honor the opt-out requests within a reasonable time from the date such request is made, not to exceed thirty days; and,

7)      each notification must include information on how to opt out of future delivery notifications; voice call notifications that could be answered by a live person must include an automated, interactive voice- and/or key press-activated opt-out mechanism that enables the called person to make an opt-out request prior to terminating the call; voice call notifications that could be answered by an answering machine or voice mail service must include a toll-free number that the consumer can call to opt out of future package delivery notifications; text notifications must include the ability for the recipient to opt out by replying “STOP.”

(CAA Order, at 6-7 ¶ 18.)

In addition, text messages must be free-to-end-user text messages. The FCC interpreted “the TCPA’s [statutory] ‘no charge’ requirement to preclude exempting notifications that count against the recipient’s plan minutes or texts.” (CAA Order, at 5 ¶ 12.)

Thus, this exemption sets forth very specific rules that must be followed for the exemption to apply. The FCC warned: “any party who sends an autodialed or prerecorded package delivery notification to a wireless number that is not in full conformance with the requirements we adopt today may not take advantage of this exemption and risks violating the TCPA.” (CAA Order, at 8 ¶ 21.)

Business-Friendly Concurring Statement

FCC Commissioner Michael O’Rielly, who took office in November 2013, made a business-friendly concurring statement applicable to both the GroupMe Ruling and CAA Order, which questions whether the TCPA should be applied to text messages:

[These orders] will provide much needed clarity in an area where uncertainty can inhibit legitimate businesses from offering consumer-friendly applications and services, and can breed litigation. They will also directly benefit consumers by enabling them to receive package delivery notifications they want and expect, and by ensuring that they can take advantage of a service that helps connect groups of friends, families, and colleagues.

My only hesitation is on the applicability of the TCPA to text messages. The TCPA was enacted in 1991 – before the first text message was ever sent. I was not at the Commission when it decided that the TCPA does apply to text messages, and I may have approached it differently. It would have been better if the Commission had gone back to Congress for clear guidance on the issue. I will look for opportunities, like the ones presented here, to ensure that our rules do not stand in the way of innovation and certainty that benefits consumers and businesses alike.

To be clear, this concurring statement does not cast doubt on the FCC’s actual ruling that the TCPA applies to text messages. Only time will tell how Commissioner O’Rielly’s stance will affect future FCC decision-making.

[1] The term “prior express consent” is not defined in the TCPA, and courts have not ruled consistently regarding what constitutes consent. On the one hand, the Ninth Circuit has held that “express consent” under the TCPA means “consent that is clearly and unmistakably stated,” while a growing body of district court decisions hold that a customer’s provision of a phone number is an invitation to be called (or texted), absent instructions to the contrary. Compare Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (9th Cir. 2009), with Kolinek v. Walgreen Co., 2014 WL 518174 (N.D. Ill. Feb. 10, 2014), Baird v. Sabre Inc., 2014 WL 320205, --- F.Supp. 2d ---- (C.D. Cal. Jan. 28, 2014), Roberts v. PayPal, Inc., 2013 WL 2384242 (N.D. Cal. May 30, 2013), and Pinkard v. Wal-Mart Stores, Inc., 2012 WL 5511039 (N.D. Ala. Nov. 9, 2012).

[2] The TCPA defines “prior express written consent” to mean “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.” 47 CFR 64.1200(f)(8). A “clear and conspicuous disclosure” of certain information is also required. Id. Consent obtained in compliance with the E-SIGN Act satisfies the writing requirement. In re Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, 77 FR 34233, 34236-37 (2012).

[3] Under the TCPA, the FCC is authorized to issue an exemption for “calls to a telephone number assigned to a cellular telephone service that are not charged to the called party, subject to such conditions as the Commission may prescribe as necessary in the interest of the privacy rights this section is intended to protect.” See 47 U.S.C. § 227(b)(2)(C).