Removing Barriers Blog

Credit Unions See Relief as D.C. Circuit Issues Split Ruling on TCPA
Posted March 16, 2018 by Chandler Schuette

After more than a year, the long-awaited ruling by the United States Court of Appeals for the District of Columbia challenging the Federal Communications Commission’s (FCC) 2015 Omnibus Telephone Consumer Protection Act (TCPA) order was finally released on March 16, 2018.  CUNA participated in this litigation in a joint Amici brief with the ABA and ICBA. The brief outlined the following concerns with the Order to the court: 

  • The inability to use automated calling methods delays institutions' ability to contact credit union members about fraud and identify theft and other important account information that can help members avoid hardship or embarrassment; 

  • The expanded scope of the definition of autodialer, which effectively prohibits financial institutions from using many efficient dialing technologies, leaves financial institutions with no useful guidance as to the kinds of dialing devices they may use to contact their members or customers with communications that must be made promptly and in substantial volume; 

  • The ruling provides a strong disincentive for a financial institution to make calls to its customers or members as a result of the onerous guidance about calling reassigned numbers. The potential liability for calls made in good faith to parties who have consented to receive them, but whose telephone number has subsequently been reassigned without notice to the financial institution, threatens to curtail important and valued communications; 

  • The problematic guidance about how a consumer can revoke consent. The brief notes that the TCPA order requires financial institutions to receive revocations through any and all communication channels by which institutions receive communications and by any employee who works for the institution or, potentially, who works for a partner of the institution; and

  • The practical limitations of the financial institutions exemption. The exemption is of particular concern to small financial institutions, and as articulated in the TCPA order offers very limited relief. The brief states that some small financial institutions have concluded that the restrictions established by the FCC in the TCPA Order result in a de facto ban on their ability to utilize the exemption. 

The most important aspect of the D.C. Circuit ruling for credit union is that the opinion agrees with our concerns surrounding the overly broad definition of autodialer and reversed the FCC on its interpretation of the definition of an autodialer.  The court held that that FCC’s interpretation was “utterly unreasonable in the breadth of its regulatory [in]clusion,” rendering the FCC’s action outside the zone of its delegated authority. The court also rejected the FCC’s argument in its briefing that it did not reach a definitive conclusion that smartphones would qualify as autodialers. 

The opinion mirrored a number of the concerns voiced by credit unions stating that the FCC held contradictory views on whether equipment must have the ability to generate random or sequential numbers.  It highlights that the FCC indicated that equipment must have that ability, but also has found that equipment that calls preselected lists of numbers (so-called predictive dialers) constituted ATDS, even if they had no capacity to generate random or sequential numbers.  The court also faulted the FCC for failing to clarify whether human intervention in the dialing process disqualified equipment from the ATDS definition. 

Ultimately, the court suggests that the FCC “could choose to revisit the issue in a future rulemaking or declaratory order, and a party might then raise the issue on judicial review.”   

Another important aspect of the ruling is that it vacates the FCC’s approach to reassigned numbers. The primary issue on appeal was the FCC’s definition of the “called party” as the party that is currently subscribed to the number, not the party the caller was intending to reach. On this important issue, the court upheld the FCC’s definition of called party as the party that currently subscribes to the number.  Importantly for further action on this issue, the court concluded that the FCC was not compelled to define the called party this way. The court’s decision thus affords the FCC room to revisit the definition and reach a contrary finding if reasonably supported and explained. 

Importantly, despite upholding the FCC’s called party definition, the court vacated the FCC’s reassigned numbers ruling on the ground that the agency’s one-call safe harbor was arbitrary and capricious. This was a concern that CUNA has been continually voicing surrounding the TCPA Omnibus order. 

While we are pleased with many aspects of the court’s opinion, it unfortunately did uphold some concerning issues with the TCPA Omnibus order. Most notably, it sustains the agency’s ruling on revocation of consent to receive calls and its limited exemption for certain calls such as those for health-related purposes (notably there is also an exemption in the TCPA Omnibus order for certain calls for financial institutions that also have limited exemptions). 

Overall, the ruling appears to invite further FCC action on remaining questions around what constitutes an autodialer and places pressure on the FCC to act on its reassigned numbers database proceeding.  

This ruling is a very significant step forward towards clarity and provides some much need relief. However, as CUNA contemplated, there are outstanding issues that need additional clarity from the FCC. The TCPA petition filed last fall seeks specific credit union relief and CUNA has also outlined to the FCC a number of ways it can provide clarity on outstanding issues for credit unions.  

Now that we have a court ruling, CUNA will continue its engagement with the FCC to seek additional relief through FCC interpretations of the TCPA and continue to push for complete clarity for credit unions as outlined in our Petition.