Some welcome the New Year with new goals and new plans while others – the FCC, in particular, welcomes the New Year by wrapping up TCPA rulemakings and issuing other rulings. As expected, a number of TRACED Act items were included in orders issued in late December 2020. As we previewed, the FCC amended nine existing TCPA exemptions, imposing additional restrictions on pre-recorded/artificial voice calls placed to residential lines even for informational calling, and adopted new redress requirements on and safe harbor protections for carriers engaging in network-based call blocking. The FCC also denied two petitions for declaratory rulings, clarifying that “soundboard callers use a prerecorded voice to deliver a message” and that as a result, these calls made using soundboards are subject to TCPA restrictions. In light of these changes, we encourage business callers to carefully assess how they affect any existing calling protocols and compliance practices.

Amendments to TCPA Exemptions to Include “Three-Call” Limits

On December 30, 2020, the FCC released an Order announcing amendments to nine existing categories of TCPA calling or texting exemptions. As we previously mentioned, this rulemaking was initiated to address the TRACED Act’s requirement that the FCC specify three components in any of its TCPA exemptions: “the classes of parties that may make such calls,” “the classes of parties that may be called,” and “the number of such calls” covered by the exemption. The amendments are to impose new limits on exempted pre-recorded/artificial voice calls and texts placed to residential lines but do not affect how these and other exemptions apply to calls or texts using Automatic Telephone Dialing Systems, calls for emergency purposes, or calls made by the federal government.

For exempted non-commercial calls to a residence, the FCC affirmed its existing approach that the qualified callers would be “any caller that is not calling for a commercial purpose” and the qualified called parties would be “residential telephone users.” It then amended its rules “to limit the number of calls that can be made” under this exemption to “three artificial or prerecorded voice calls within any consecutive 30-day period.” For any callers that may wish to contact residential telephone users for more than three times in a month, the FCC recommended that they “use exempted calls to obtain consent.”

For exempted commercial calls to a residence that do not constitute telemarketing, the FCC affirmed its existing approach that the qualified called parties would be residential telephone users. It then amended its rules to specify that the qualified callers must be callers “making calls for a commercial purpose where the call does not introduce an advertisement or constitute telemarketing” and “to limit the number of calls that can be made” under this exemption to “three artificial or prerecorded voice calls within any consecutive 30-day period.”

For exempted calls from a tax-exempt nonprofit organization to a residence, the FCC affirmed its existing approach that the qualified callers would be “tax-exempt nonprofit organizations” and the qualified called parties would be residential telephone users. It then amended its rules to “limit the number of calls that can be made pursuant to this exemption to three artificial or prerecorded voice calls within any consecutive 30-day period.”

For exempted HIPAA-related calls to a residence, the FCC affirmed its existing approach that the qualified callers would be a “covered entity’ or its ‘business associate’ as those terms are defined in the HIPAA Privacy Rule” and the qualified called parties would be residential telephone users. It then amended its rules to “limit the number of calls that can be made pursuant to this exemption to one artificial or prerecorded voice call per day up to a maximum of three artificial or prerecorded voice calls per week.” The FCC noted that this limit on number of calls is identical to the existing condition imposed on exempted healthcare-related calls to a wireless number.

Notably, the Order did not address how the adopted limits on the number of exempted calls should be calculated when a business engages in different vendors placing texts or calls or when joint enterprises manage a calling or texting program. The Order also did not specify how it expects callers that make calls or send texts to a mix of residential, wireless, business, and personal-use numbers to separately treat residential telephone users for the purpose of complying with these “three-call” limits.

The FCC then clarified that these four categories of TCPA exemptions also must comply with certain opt-out requirements. Specifically, “where an artificial or prerecorded voice telephone message includes or introduces an advertisement or constitutes telemarketing,” any caller relying on these exemptions must allow the recipient to opt out of receiving future calls “by dialing a telephone number . . . to register his or her do-not-call request” and also “provide an automated, interactive voice and/or key press-activated opt-out mechanism.”

The FCC did not modify the other four categories of calls and text exemptions – package delivery-related calls or texts to a wireless number, exempted financial institution calls or texts to a wireless number, exempted healthcare provider calls or texts to a wireless number, and exempted inmate calling service calls or texts to a wireless number. Affirming its proposed finding that these exemptions already have explicit limitations on “the classes of parties that may make such calls,” “the classes of parties that may be called,” and “the number of such calls” that can be made under the exemption, the FCC concluded that they already satisfied the TRACED Act requirement. The FCC similarly declined to make any changes to the existing rules that exempt cellular carrier calls or texts to their own subscribers, but only after concluding that those rules do fall within the TRACED Act’s requirement.

These rule amendments require approval from the Office of Management and Budget (OMB) and will take effect six (6) months after a notice of that approval is published in the Federal Register. As these new rules impose additional restrictions on pre-recorded/artificial voice calls placed to residential lines, even for informational calling, existing calling protocols and compliance reviews are recommended.

Additional Redress Requirements and Safe Harbor under the “Call Blocking by Default” Framework

Also on December 30, 2020, the FCC released the Fourth Report and Order to advance its “call blocking by default” framework on the eve of the TRACED Act’s deadline when the FCC must “take a final agency action to ensure” that this framework provide “transparency and effective redress options” to “both consumers and callers.”

The FCC adopted several proposals in the Fourth Further Proposed Rulemaking, which we discussed in detail here. At the outset, the FCC adopted three less-controversial requirements that all carriers must: 1) respond to traceback requests from the [FCC], civil and criminal law enforcement, and USTelecom’s Industry Traceback Group; 2) take several required steps to mitigate illegal traffic when having received a written notice to that effect from the FCC’s Enforcement Bureau; and 3) “adopt affirmative, effective measures to prevent new and renewing customers from using their network to originate illegal calls.” The first and the third requirements above will take effect thirty (30) days after the Fourth Report and Order is published in the Federal Register, which has not occur as of print time. The second requirement needs to be approved by the OMB and will not take effect until thirty (30) days after a notice of that approval is published in the Federal Register.

One of the most contentious parts of the original proposal – whether the FCC should expand a carrier safe harbor protection that it established in August 2020 for call blocking by default, but at the network level – was adopted with some significant modifications. These rules, once they go into effect, will permit carriers to use “network-based blocking based on reasonable analytics that incorporate caller ID authentication information designed to identify calls that are highly likely to be illegal, if this blocking is managed with human oversight and network monitoring sufficient to ensure that blocking is working as intended.” During the comment period, several commenters urged that the existing “market solutions” of blocking analytics and services have not been producing the intended results of curbing illegal calls, that there is no notice provided of calls being blocked, and thus, there is no way to address, prevent or remedy erroneous blocking. For that reason, they urged the FCC to require carriers to take additional steps before expanding additional safe harbor protection to carriers and their blocking analytics service providers. The FCC declined those urgings, giving more credit to one carrier that reported it only “received a small handful of complaints” and found the “low complaint-to-blocking ratio probative” rather than callers who demonstrated that legitimate calls had been blocked without notice or prompt redress.

Significantly, the FCC made plain that this extended safe harbor is different in scope than the safe harbor it adopted in August 2020, which protects carriers from liability under the FCC’s call completion rules when offering default blocking of unwanted calls to consumers on an opt-out basis. “To get the benefit of this safe harbor, a terminating [carrier] must ensure its network-based blocking targets only calls highly likely to be illegal, not simply unwanted.” Accordingly, the FCC highlighted that carriers “must have in place a process to reasonably determine that the particular call pattern is highly likely to be illegal prior to blocking calls.” When a blocking takes place based on that process and the caller disputes it in good faith, the carrier “may continue to block under this safe harbor while investigating a dispute.” Then, if a carrier has “obtain[ed] information that indicates the calls are likely lawful,” “that voice service provider must immediately cease network-based blocking.”

This notable addition appears to be the result of evidence shown and arguments raised on the record about lawful robocalls being blocked without notice. While acknowledging that erroneous blocking is a concern, the FCC reasoned that some commenters “fail[ed] to acknowledge that [the FCC’s] existing rules clearly permit blocking of calls that are unwanted, rather than illegal, so long as the consumer has an opportunity to opt in or out.” The FCC believed that this addition “should assuage those commenters that are concerned that the safe harbor as initially proposed did not establish objective standards” but declined to go as far as finding that the current state of erroneously blocking of lawful calls means that existing blocking solutions are “inconsistent with [its] rules.” The extended safe harbor protection will take effect thirty (30) days after the Fourth Report and Order is published in the Federal Register.

In connection with a series of inquiries in the Fourth Further Notice of Proposed Rulemaking, the FCC also imposed on carriers several affirmative obligations to provide “transparency and effective redress options” to lawful callers.

The first of such adopted transparency requirement obligates carriers to immediately notify callers of blocked calls “us[ing] specific, existing codes.” The FCC found prompt notification by a signal that is “uniform, clear, and distinct from other signals” to be critical after balancing the “significant benefit to legitimate callers” that “otherwise may not know why their calls are not reaching the intended recipient and therefore may be unable to access redress” against “the potential harm” of tipping bad actors. When notifying callers of a blocked call, the FCC requires carriers to return SIP Code 607 (for calls identified as unwanted by the intended recipient) or 608 (for calls rejected by an analytics engine) when the call transmits on an Internet-Protocol-based network and to return ISUP Code 21 when the call transmits on a Time-Division-Multiplexing network. But that signal does not have to “include more information . . . , such as the reason the call was blocked, or a website or phone number for resolution,” as advocated by some commenters. As welcoming as this immediate notification requirement may be for many business callers, callers may not expect to begin encountering these notifications until sometime near January 1, 2022 – the delayed compliance date specifically set for this new requirement.

The second transparency requirement mandates carriers “that block calls on an opt-in or opt-out basis to provide, on the request of the subscriber to a particular number, a list of all calls intended for that number” that the carrier or its blocking analytics provider has blocked. That list should contain, at a minimum, the calling number and the date and time of all “calls blocked in no fewer than the twenty-eight (28) days prior to the request.” Related to this requirement, “voice service providers must retain records of blocked calls for a minimum of four weeks or 28 days.” This rule amendment also requires approval by the OMB and will not take effect until thirty (30) days after a notice of that approval is published in the Federal Register.

The third, an effective redress requirement, provides that carriers must “respond to blocking disputes they receive through their established point of contact by providing a status update to the party that filed the dispute within 24 hours.” To many commenters’ dismay, this requirement only specified the time in which carriers must respond to a blocking dispute but the FCC declined to adopt a specified timeframe for resolving call blocking disputes. Instead, the FCC reiterated the requirement it adopted in August 2020 that “disputes are resolved in a reasonable amount of time and at no cost to the caller, if the complaint is made in good faith.” The FCC noted that, when callers believe carriers did not resolve complaints “as quickly as callers would like,” callers “may, of course, use [the FCC’s] existing mechanisms, such as filing a complaint or a petition.” This “response” timing rule will take effect thirty (30) days after the Fourth Report and Order is published in the Federal Register.

Soundboard Technology Is Treated the Same as Other Technology in Applying the TCPA

Finally, on December 18, 2020, the FCC issued a Declaratory Ruling and Order on two year-long petitions seeking interpretative guidance on whether outbound telemarketing calls made through soundboard technology are prohibited calls if made without prior consent under the TCPA. Despite the petitioners’ carefully crafted description that soundboard technology allows callers to engage in a live call “using audio clips specifically selected and presented by human operators in real-time” and therefore do not make “wholly prerecorded calls,” the FCC plainly stated that “soundboard callers use a prerecorded voice to deliver a message.”

As expected, the FCC took a consistent position as that taken by the FTC in 2016. It reasoned that “[t]here is no doubt that soundboard technology uses a prerecorded voice to deliver a message to the consumer,” which the petitioners themselves admitted. That, in the FCC’s view, falls squarely within the TCPA as a practice requiring prior express consent and “[n]owhere does the TCPA text exempt calls where a human selects a prerecorded voice message for the called party.”

This declaratory ruling took effect upon publication of the order on December 18, 2020. It may have lasting effect, beyond the use of soundboard technology itself, on businesses that intend to defend certain use cases in outbound communications campaigns by arguing that an automated platform or software simply aids “in the functional equivalent of a conversation between the consumer and another human.” Rejecting this argument, the FCC noted that “the TCPA does not carve such functional equivalents out from its dictates” and found it significant that “soundboard agents routinely monitor multiple telephone calls simultaneously while rarely, if ever, speaking on these calls, and that the prerecorded messages they use are sometimes nonsensical to the consumer.” The FCC has arguably opened the door for arguments that platforms or software that use some preprogrammed content and that allow an individual to engage in more than one conversation at the same time may result in a call being regulated under the TCPA as “using an artificial or prerecorded voice.”