December 31, 2012

KEEPING CURRENT: FCC Clarifies that a Text Confirming "Opt-Out" Does Not Violate the TCPA

Does your company use mobile text messages for marketing and promotions? If so, the Federal Communications Commission ("FCC" or "Commission") clarified that the common practice of sending one final confirmation message after consumers opt out of a mobile marketing campaign does not violate the Telephone Consumer Protection Act (TCPA) or FCC rules - if sent within five minutes of an opt-out request. This mobile opt-out practice, required by industry self-regulation, has given rise to numerous state class action lawsuits that argue that the practice violates the consumer consent requirements of the TCPA. Alleged TCPA violations have spawned hundreds of class actions leading to hundreds of millions of dollars in settlement payments in recent years. This declatory ruling by the FCC will help mobile marketers comply with complex TCPA mandates.

By way of background, the TCPA (47 U.S.C. ยง 227 et seq.) generally prohibits the use of "autodialers" to send non-emergency calls to consumers without their prior express consent. The TCPA applies equally to landline and mobile telephones, and in the mobile context, it has been held to prohibit the sending of unsolicited advertising messages via text (SMS) or other mobile protocol to consumer mobile devices. Under the law, such messages may only be sent to consumers who "opt-in" (i.e., provide express consent) to receive marketing content from a particular company; consumers can revoke that consent at any time and "opt-out" of receiving future messages from the marketer. Following opt-out, it has been industry practice for many years to send one final message confirming removal from the relevant marketing list. Indeed, these types of final confirming messages are required under the U.S. Consumer Best Practices guidelines issued by the nonprofit trade group the Mobile Marketing Association (MMA), which serve as an industry benchmark; compliance with the MMA guidelines is encouraged, if not required, by most mobile carriers. Nonetheless, in the last two years, a number of putative class actions have been filed in federal district courts, each alleging that final confirming messages sent after opt-out are illegal. Although none of the plaintiffs from the various suits has as of yet prevailed in a decision on the merits, mobile marketers have nonetheless been faced with an unfortunate dilemma: do they continue to send industry standard opt-out messages and risk a class action lawsuit; or do they discontinue the practice and risk having their mobile programs terminated by carriers?

Now the FCC's November 29, 2012, declaratory ruling has helpfully clarified that good faith opt-out messages are not per se illegal. Specifically, opt-out messages do not violate the TCPA as long as: (1) the consumer has previously given express consent to receive mobile messages from the sender, (2) the confirmatory message does nothing more than confirm the consumer's request to opt-out of receiving future mobile communications (i.e., it does not include any additional marketing), and (3) the confirmatory message is the final one sent to the consumer. Additionally, the Commission ruled that as long as a confirmatory text is sent within five minutes of receipt of the opt-out request, the message is presumed to be part of the consumer's prior express consent to receive messages. On the other hand, if the confirmatory text is sent more than five minutes after opt-out, there is no presumption and the sender will be required to show that the delay was reasonable.

The FCC's ruling grants a petition filed in February 2012 by SoundBite Communications, Inc. (SoundBite), whose business involves sending text messages to mobile subscribers on behalf of a number of companies. Citing the MMA's Consumer Best Practices guidelines, SoundBite, along with several commenters in the proceeding, argued that opt-out confirmation texts are actually pro-consumer and, therefore, are not prohibited by the TCPA.

The Commission agreed, and found that a consumer's initial express consent to receive mobile marketing messages also covers a single confirmation message sent after the consumer opts-out of a marketing campaign. First, the FCC looked to a report from the House of Representatives about the law. That report provided an exception when a customer has provided her phone number for "normal business communications" that are "expected or desired . . . between businesses and their customers" including communications when "a service was scheduled or performed." The FCC found that confirmation texts are normal business communications of the sort contemplated by Congress. Second, the FCC reviewed actual consumer complaints received over a year-long period and discovered no complaints from consumers about receiving such confirmation texts. Rather, the Commission found several complaints from consumers about not receiving such confirmation texts.

The FCC did place some limitations on what messages they consider to be confirmation texts permissible under the TCPA. As noted above, the FCC's holding is limited to a single mobile message sent within minutes of receiving the opt-out request from the consumer, and the final message must not contain any additional marketing content. Furthermore, the ruling does not apply to any follow-up calls to confirm a consumer's opt-out request.

While this ruling provided a welcome measure of certainty as to the permissibility of text confirmations of opt-outs, other issues raised were not answered. The Commission did not address SoundBite's contention that its confirmation texts are not covered by the TCPA because the software they use to send the texts should not be considered an "autodialer" as defined by that law. Though the FCC declined to address the argument here, as mobile communications become more pervasive and the technologies used to send these communications evolve, questions about fitting new technologies into old legal definitions will continue to come before the FCC and other regulatory agencies.