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Advertising by Phone or Text Message? You’d Better Ask Permission

By J. Derek Kearl

March 12, 2014

The Telephone Consumer Protection Act (TCPA) of 1991, with few exceptions, makes it unlawful to use an automatic telephone dialing system or an artificial or prerecorded voice message to call a wireless number or other service for which the recipient is charged for the call. The act also generally prohibits using artificial or prerecorded voice message to call residential telephone lines and to send unsolicited advertisements to fax machines. Though originally intended to address telephone calls and faxes, the TCPA also applies to short message service or “SMS” text messages.

Businesses that violate the TCPA are subject to actions by private parties for actual monetary loss for such a violation or statutory damages of $500 per call, whichever is greater. For willful or knowing violations of the act, they may be liable for up to $1,500 per call. Businesses that violate the act may also be subject to enforcement actions by state attorneys general and the Federal Communications Commission (FCC).

\Recently, the FCC adopted sweeping changes to the rules implementing the TCPA. These changes, the most important of which took effect in October 2013, significantly impact the way some businesses may market their goods and services to consumers. Companies would be wise to adhere to the increased requirements of the revised rules. Violations of the TCPA have become fertile ground for class-action lawsuits. Thus, businesses that ignore these recent revisions do so at their own peril.

An Established Business Relationship Is Not Enough

Effective October 16, 2013, the new rules eliminate the longstanding “established business relationship” (EBR) exception for prerecorded telemarketing calls to residential lines. The EBR exception previously permitted such calls to be made to consumers with whom the caller had an established business relationship within 18 months of the time the call was made. As a result of the change, businesses can no longer rely on the EBR exception as a substitute for consent to make such calls.

Prior Express Written Consent

Having eliminated the EBR exemption, new rules require a business to obtain a consumer’s prior express written consent before making an autodialed prerecorded or telemarketing call to a wireless number or prerecorded telemarketing call to a residential line.

A consumer’s written consent must be signed and sufficient to show that the consumer (1) received “clear and conspicuous disclosure” of the consequences of providing the requested consent (i.e. that the consumer will receive future calls that provide prerecorded messages by or on behalf of a specific seller) and (2) having received this information, unambiguously agrees to receive such calls at a telephone number the consumer designates. A business must obtain such consent prior to such calls being made and without requiring that it be signed as a condition of purchasing good or services.

Prior express written consent need not be in paper form. Consent obtained in compliance with the federal E-SIGN Act will satisfy the requirements of the revised rule, including permission obtained via email, website form, text message, telephone key-press or voice recording. However, if any question arises as to consent obtained, it is the callers’ burden alone to demonstrate that a clear and conspicuous disclosure was provided and that unambiguous consent was obtained.

Exemption for Healthcare Messages

Perhaps the most welcome change to the TCPA’s rules is the exemption for prerecorded healthcare-related calls to residential lines. Under the revised rule, a call that delivers a healthcare message, made by a covered entity or its business associate as those terms are defined by the Health Information Portability and Accountability Act of 1996 (HIPAA), is exempt from the TCPA’s consent, identification, opt-out and other requirements. Although not expressly discussed by FCC’s order, which adopted the exemption, the revised rule, on its face, appears to extend the HIPAA exemption to wireless calls.

The FCC recognized that since such are calls placed by the consumer’s healthcare provider concerning the consumer’s health, they are generally welcomed and do not tread heavily upon consumer privacy.

An Opt-Out Mechanism

Although it became effective in January 2013, another critical requirement of the new TCPA rules is that businesses establish an automated, interactive opt-out mechanism for autodialed and prerecorded telemarketing calls to wireless and residential lines. The opt-out mechanism must be announced at the outset of the message and made available throughout the duration of the call. If the consumer opts-out, the business must automatically add the consumer’s number to its do-not-call list and immediately disconnect the call. Where the call is answered by the consumer’s voicemail, the message must also include a toll-free number that enables the consumer to call back and directly connect to an automated opt-out mechanism.

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