The start of the year is a good time to assess and refine your telemarketing business practices (including automated text marketing) for success in 2024. This is particularly critical in light of recent government actions that caused a paradigm shift relating to how companies must obtain express written consent for telemarketing.
Businesses Must Now Obtain a 1:1 Consent for Certain Marketing Calls and Marketing Texts
Historically, a company, its marketing partners, and downstream sellers alike could make marketing calls and send marketing texts to a consumer upon obtaining a single prior written express consent – even if consent was obtained from an upstream party and it named multiple downstream parties. This practice did not run afoul of federal laws such as the Telephone Consumer Protection Act (TCPA), which mandates such consent for certain marketing calls and texts that (1) contain an artificial or prerecorded voice or (2) use an “automatic telephone dialing system.” Accordingly, businesses could rely on a written express consent that covered multiple third parties without directly interacting with consumers by relying on an upstream third party that obtained a broad, express written consent from the consumer. This practice may soon be no longer permitted under certain federal laws. While third parties can likely still obtain prior express written consent on behalf of another company if certain conditions are met, the company must be expressly named, and consent must be obtained on a 1:1 basis.
Last month, the Federal Communications Commission (FCC) amended the definition of “prior express written consent” under the TCPA to require that it “clearly and conspicuously authorize no more than one identifier seller to deliver or 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.” Consequently, each marketing partner must now secure a consumer’s prior express written consent separately and in response to a disclosure that is “apparent to a reasonable consumer.” In addition, the content of these marketing calls and marketing texts must be “logically and topically associated with the interaction that prompted the consent.” Although these rules will not take effect until January 2025, their adoption and justification by the FCC underscore that obtaining prior express written consent will no longer be as streamlined as it has been in the past.
The Federal Trade Commission (FTC) reinforced this requirement in a settlement last month resolving a lead generator company’s alleged violations of the Telemarketing Sales Rule (TSR) and Section 5 of the FTC Act. The complaint alleged that the company and its president did not qualify as “sellers” or legal agents of a “seller” under the TSR, yet operated misleading websites to acquire leads without consumers’ consent to receive robocalls “by or on behalf of a specific seller.” Despite the defendants’ assertion that they lawfully obtained consent for a number of entities, the parties’ Proposed Stipulated Order sets forth a $7 million penalty and bans the defendants from initiating, or assisting others in initiating, prerecorded calls and calls made to the National Do Not Call Registry. The settlement also bars the defendants from collecting any consumer’s information, or selling, transferring, or otherwise disclosing consumer information in connection with lead generation. These restrictions on consent are arguably even more stringent than the FCC’s new rules and confirm that businesses should re-examine whether they have directly obtained consent to continue their telemarketing campaigns.
State Law Increases the Risk to Businesses
In addition to the more stringent federal regulations, companies also face increased litigation risk by private parties relying on relying on new “mini-TCPA” state statutes. The TCPA prohibits use of “automated telephone dialing systems,” which the Supreme Court construed to mean a device that “must have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.” However, there has been an increase in the number of “mini-TCPA” state statutes, which could arguably expand beyond the TCPA. For example, Maryland’s new telemarketing law, the Stop the Spam Calls Act, took effect on January 1, 2024. The law prohibits telephone solicitations without prior express written consent of the called party and additionally prohibits the use of automated systems. As this act does not define “automated system,” Maryland’s prohibition could extend beyond the TCPA’s definition of an “automated telephone dialing system.” Although this Act has some exceptions, this new law will likely result in an uptick in consumer class actions in Maryland. This would be consistent with the uptick in telephone solicitation-related litigation in other states, such as Oklahoma, which passed its own “mini-TCPA” broadly defining an automated system in May 2022.
These new regulations and related actions signal that the days of relying on third parties to obtain a streamlined prior express written consent for marketing calls and marketing texts that are subject to the TCPA and the TSR have come, or are coming, to an end. As a result, the exposure in this space will continue to expand. Companies that use telemarketing to promote their business should:
- Immediately determine if they have relied on third parties to obtain prior express written consent under the TCPA or the TSR. If so, they should consider measures to mitigate this exposure.
- Confirm that all current methods of obtaining prior express written consent under the TCPA and the TSR that the company uses are compliant with these laws, including ensuring that the consent is obtained on a one-to-one basis.
- Verify that disclosures regarding consent are visible and directly available to consumers, avoiding fine print and accessibility only through a hyperlink.
- Ensure alignment between consent prompts and marketing content sent pursuant to that consent.
- Remain watchful for any additional telemarketing laws or clarification of existing laws.