Why does big business want the FCC to ease telemarketing rules?

February 3, 2015

For about a year, dozens of petitions from businesses and trade groups have been piling up at the Federal Communications Commission, asking the commission to tighten the standards for liability under the Telephone Consumer Protection Act of 1991. On Monday, the U.S. Chamber of Commerce and about 30 other trade associations sent a letter urging the FCC to act on requests for rule changes that would, for instance, exempt companies from TCPA class actions if they mistakenly autodial reassigned telephone numbers. On Tuesday, the American Association of Healthcare Administrative Management (which also signed the Chamber letter) reminded the FCC of its pending petition for a declaration that patients be deemed to have consented to calls from doctors and healthcare companies if they have provided their cellphone numbers.

Harold Kim of the Chamber’s Institute for Legal Reform told me that FCC staff members assured him in a meeting last fall that the commission would rule soon on some of the pending petitions but hasn’t come through. Meanwhile, Kim said, the Chamber gets calls at least once a week from members – small businesses as well as large companies – worried about the TCPA.

The problem, according to Kim, is baseless class actions. (Baselessness is in the eye of the beholder, of course.) The Chamber and other businesses lobbying the FCC to modify its interpretation of TCPA regulations cite data that shows the rise of suits asserting statutory damages for violations of the law, which was enacted to protect consumers from unwanted telephone calls and faxes. In 2009, plaintiffs filed only 39 TCPA suits. In 2014, they brought 2,336 cases. (Those stats come from a company called WebRecon, which sells products and services to marketers concerned about being sued.)

“The defendants in these cases are no longer just the telemarketers that Congress targeted; they are businesses, big and small alike, forced to choose between settling the case or spending significant money defending an action where the alleged statutory damages may be in the millions, or even billions, of dollars,” the Chamber letter said. “The wide-spread litigation and the specter of devastating class action liability has or may spur some businesses and organizations to cease communicating important and time-sensitive non-telemarketing information via voice and text to the detriment of customers, clients, and members.”

Consumer groups, including the National Consumer Law Center and the National Association of Consumer Advocates, suspect another motive for the big business assault on the TCPA: Companies want to expand their telemarketing and debt collection operations. Margot Freeman Saunders, of counsel at the NCLC, told me that if the FCC assents to petitions asking for less stringent regulation, “that will release a flood of robocalls.”

In their letters to the FCC, the most recent sent on Jan. 28, more than 80 public interest groups argue that the so-called tsunami of TCPA class actions is really a trickle, considering how many telemarketing calls consumers receive and how often they notify authorities about the calls. “It’s kind of ridiculous to talk about frivolous lawsuits considering how many complaints there are to the FCC,” said Ellen Taverna of NACA. Nor does it make sense, Saunders told me, to respond to increasingly abusive telemarketing tactics by rolling back the regulations intended to curb the abuses. (State attorneys general, who frequently field consumers’ complaints about telemarketers run amok, also oppose weakening the FCC’s interpretation of TCPA rules.)

Both sides can whip out anecdotes to back their arguments. Chamber lawyer Kim told me about a Florida dentist whose business is on the brink because he was sued after a telemarketer sent out unsolicited faxes on his behalf, and a California restaurant that was forced to settle a TCPA class action after it mistakenly sent text messages to someone who had taken over the phone number of one of its employees. Saunders, on the other hand, described loan collectors that deliberately call wrong numbers to fish for information and banks that demand consumers prove they don’t have accounts before they agree to stop calling.

The business lobby is certainly winning on sheer volume. Consumer advocates have had to pick and choose which petitions to respond to, Saunders told me. “We can’t keep up – we just don’t have the capacity to match industry,” she said. She’s had one meeting with FCC staff, earlier this month; businesses have had dozens of opportunities to press their arguments in person.

“I don’t know why it’s happening now, but I know it is now,” Saunders said. “The FCC is under tremendous pressure.”

Kim, the Chamber lawyer, said the eventual goal is for Congress to revise the TCPA to reflect changes in telephone habits. The Chamber backed a 2011 bill but it died in the House of Representatives.

I left a message with the FCC’s public information office but didn’t hear back.

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