The Federal Communications Commission (“FCC”) has adopted an order that will restructure the way lead generators collect consumer consent to receive robocalls or robotexts from sellers. Many businesses, particularly small businesses, rely on lead generators to advertise their products and obtain customers. Lead generation websites promote various products and services and often enable consumers to compare offerings from numerous sellers. Consumers complete forms on these websites that provide consent to receive autodialed calls or texts or prerecorded or artificial voice calls for marketing contacts covered by the Telephone Consumer Protection Act (“TCPA”). The consent may then be “sold” or distributed to numerous sellers that may offer products unrelated to the website. The FCC has determined that obtaining consent in this manner is invalid and instead will require lead generators to obtain written consent one seller at a time. The new rule will go into effect 12 months after approval by the Office of Management and Budget. The FCC will be provide notification of the effective date.
Background
The TCPA requires sellers to obtain prior express written consent from consumers before making a telemarketing sales call or text using an automatic telephone dialing system (“ATDS” or “autodialer”) or calling using a prerecorded or artificial voice – so called robocalls or robotexts. Sellers, particularly smaller business, often rely on lead generators to identify potential customers and obtain consent to make telemarketing calls. According to the FCC, obtaining consent through lead generators is a significant cause of unwanted robocalls or robotexts. The problem identified by the agency is that lead generator websites may include virtually hidden links to hundreds or thousands of “partners,” sometimes offering services or products unrelated to the website, for which the consumer unwittingly provides consent. Consent may also be sold and resold numerous times. The FCC refers to this as the lead generation loophole.
The FCC has previously ruled in an enforcement action that consent obtained through a lead generator website linking to thousands of “partners” is invalid. The case involved prerecorded calls for student loan services where consent was ostensibly obtained from health care websites. As described by the FCC:
“The websites included TCPA consent disclosures whereby the consumer agreed to receive robocalls from “marketing partners.” These “marketing partners” would only be visible to the consumer if the consumer clicked on a specific hyperlink to a second website that contained the names of each of 5,329 entities. We find that listing more than 5,000 “marketing partners” on a secondary website is not sufficient to demonstrate that the called parties consented to the calls from any one of these ‘marketing partners.’”
The One-to-One Consent Requirement
The FCC’s new consent rule requires consent be obtained from a single seller at a time, what the FCC calls one-to-one consent. As stated by the agency, “sharing lead information with a daisy-chain of ‘partners’ is not permitted.” The FCC’s order revises the TCPA’s written consent rule for telemarketing messages to read: “The term prior express written consent means an agreement, in writing, that bears the signature of the person called or texted that clearly and conspicuously authorizes no more than one identified seller to deliver and cause to be delivered to the person called or texted advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice.” The one-to-one consent must come after a clear and conspicuous disclosure to the consenting consumer that they will get robocalls or robotexts from the specifically identified seller.
Moreover, the telemarketing message must be “logically or topically” associated with the website that collected the consent. The FCC provided as an example that a consumer giving consent on a car loan comparison website does not grant consent to get robocalls or robotexts about loan consolidation.
Applying One-to-One Consent on Comparison Websites
The FCC recognizes that comparison websites, such as for loans or real estate transactions, benefit consumers. To enable their use while also garnering consent for one seller at time, the FCC suggests that comparison websites may offer a check box list that allows consumers to choose each seller from whom they wish to receive calls. Or a comparison shopping website could offer the consumer a clickthrough link to a business so that it may obtain the consumer’s consent directly. There are no limits on the number of sellers that can be presented in this way.
Moreover, the rule only applies to calls or texts that require consent in the first instance – those using an ATDS or prerecorded or artificial voice. Comparison websites can still provide information on various sellers and leave it to consumers to reach out to companies, or leads may be presented to sellers who can contact the consumer by manually dialing a call or using other means of communication such an email or postal mail to provide information and solicit consent.
Live agent call hand offs can also be utilized as long as the initial call is made with consent or without using an ATDS or prerecorded or artificial voice. The FCC also confirmed that third party debt collection callers may continue to rely on consent provided to the initial creditor.
Enforcement
The rule increases TCPA risk for sellers that rely on lead generators or otherwise obtain consent through a third party. The FCC confirmed that the burden of proving consent lies with the caller or texter. Businesses that robocall or robotext consumers relying on consent from lead generators (consistent with single seller requirement) cannot rely on the lead generator to retain proof of consent. They must obtain and retain documentation demonstrating validly obtained consent. If relying on lead generator supplied consent, sellers must also be sure that the lead generator is compliant with the single seller rule, otherwise the consent may be deemed invalid. We expect the plaintiff attorney bar to test the limits of this new rule with aggressive class actions and individual suits. In addition, lead generators that fail to comply may also face enforcement action from the FCC.
Effective Date
The new rule requires approval by the Office of Management and Budget (“OMB”). The rule will become effective 12 months following the later of Federal Register publication of the FCC’s order or 30 days after announcement of OMB approval. The FCC will announce the effective date by public notice.
Next Steps
The FCC’s one-to-one rule drew strong objections from entities operating comparison websites and a dissent from Commissioner Simington, who objected to the adoption of the rule on a “thin record” and insufficient justification for “upending the consumer financial industry.” It is therefore possible that the order will be appealed. To appeal this rule, parties that participated in the FCC proceeding may file a petition for review in a federal circuit court of appeals under the Hobbs Act.
The FCC also seeks further comment on ways to minimize the economic impact of the rule on small businesses. The comment date is 30 days after the notice’s publication in the Federal Register.
Lead generators and sellers that typically rely on lead generation websites to identify potential customers should consult with counsel on how to restructure their operations to remain compliant with the new rule. In addition, lead generators and affected businesses may wish to submit comments on the small business impact.
This document is intended to provide you with general information regarding the FCC's efforts to stop illegal or unwanted robocalls and robotexts. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.