The Telephone Consumer Protection Act Complying with the 2015 FCC Omnibus Order and Other Efforts to Restrict Borrower Communications Mark W. Brennan November 2017

Disclaimer Nothing in this slide deck is intended to provide legal advice. In addition, nothing in this slide deck is intended to provide legal conclusions about how a court’s or the FCC’s language should be interpreted, nor have we sought to apply decisions to specific entities or specific circumstances. Hogan Lovells

Overview The TCPA is a C-Suite Issue Key Requirements TCPA Myths On the Horizon Additional Steps to Protect Your Organization Q&A Hogan Lovells

The TCPA is a C-Suite Issue

The TCPA is a C-Suite Issue One of the most sued-under consumer protection statutes A new study by the U.S. Chamber Institute for Legal Reform found that TCPA litigation has increased 50% since the FCC released its July 2015 “Omnibus” Declaratory Ruling and Order. Approximately 1/3 of these cases are nationwide class action lawsuits that seek millions (or billions) in damages. This TCPA litigation has affected companies in more than 40 different industries, with the financial and collections industries seeing the most lawsuits. 44 plaintiffs’ law firms were responsible for approximately 60% of the TCPA cases, with a single law firm filing 263 TCPA lawsuits (most of them class actions). Hogan Lovells

The TCPA is a C-Suite Issue $500 $1,500 TCPA Violations Can Be Costly Hogan Lovells

The TCPA is a C-Suite Issue Rapid Growth in TCPA Cases Filed Source: WebRecon LLC Hogan Lovells

Key Requirements

Key Requirements WHO WHAT HOW Voice/Text/Fax? Technology? Prerecorded? B2C v. B2B? Wireless or Landline? WHAT Marketing or Informational? HOW Voice/Text/Fax? Technology? Prerecorded? Hogan Lovells

Key Requirements No autodialed or prerecorded or artificial voice calls to wireless telephone numbers, absent an emergency or “prior express consent.” Applies regardless of content (e.g., includes registration and transactional messages) Applies to text or short message service (“SMS”) messages Additional FCC “written consent” rules apply to marketing calls and texts New federal debts exemption Hogan Lovells

Key Requirements No prerecorded or artificial calls to residential telephone numbers without “prior express written consent.” Exceptions Not a solicitation or telemarketing Not made for a commercial purpose Emergency calls By or on behalf of a tax-exempt nonprofit Healthcare calls subject to HIPAA Federal debts FCC rules impose additional requirements Hogan Lovells

Key Requirements Wireless rules increasingly important, particularly when serving younger Americans NOTE: Adults are aged 18 and over; children are under age 18. SOURCE: CDC/NCHS, National Health Interview Survey. Hogan Lovells

Short Codes In addition to the TCPA, there are other voluntary industry standards that may apply to the texts you send. For texting campaigns that use short codes (i.e., five- or six-digit shortened phone numbers that can only be used to send and receive text and multimedia messages), wireless carriers require compliance with the CTIA Short Code Monitoring Handbook. For example: Call-to-Action Disclosures Confirmation Message. When an individual opts-in to a recurring text message program, the individual should immediately receive a confirmation message containing certain specific information. Keywords.  Message sender needs to recognize a number of keywords, such as HELP and STOP. Hogan Lovells

TCPA Myths

Myth: Transactional Calls/Texts Are Safe Fact:  Some TCPA requirements apply to non-marketing communications. Consent, disclosure, and more. The Compliance Challenge: Need to make sure you have consent arguments for all relevant communications. And separate business functions may mean separate calling/texting technologies. Have you reviewed each of your non-marketing communications programs and technologies? The Enterprise Risk: Non-marketing calls are not necessarily lower- risk calls and, like marketing calls, may be done as “campaigns” that could produce a class. Hogan Lovells

Myth: Relatives and Friends Can Provide Consent Fact: It’s not that simple.  Parties may obtain consent through an intermediary but cannot rely on that intermediary’s representations if a person disputes consenting to receive calls. The Compliance Challenge: Leverage intermediary opportunities while making sure the consents provided are reliable. The Enterprise Risk: Gaps in consent. Bad recordkeeping only makes it harder to demonstrate consent. Hogan Lovells

Myth: I Can Call at the Number They Gave Me Without Risk Fact:  No real protection for calling a reassigned number. Tens of millions of numbers are reassigned each year. The Compliance Challenge: How do you limit calls to reassigned wireless numbers? The Enterprise Risk: Liability for all calls after the first one. No safe harbor. Hogan Lovells

Myth: My Business Partners Will Keep Me Compliant Fact: Terrible strategy. The Compliance Challenge: Making sure you are protected when your partners violate the law. The Enterprise Risk: Companies may be unaware that their partners use improper dialing equipment, fail to obtain consent, make calls without consent, or fail to recognize revocation of consent. Hogan Lovells

Myth: No State Laws Fact: States may impose their own TCPA-like requirements, which pose their own compliance challenges. The Compliance Challenge: Examples Some states have autodialer and prerecorded voice laws that differ from the federal requirements. Some states impose limits on the days and times of day that calls may be placed. Some states have texting laws. The Enterprise Risk: Need a robust compliance approach. Hogan Lovells

Myth: Federal Debt Collection Calls Are Exempt Hogan Lovells

Myth: Federal Debt Collection Calls Are Exempt Hogan Lovells

Myth: Federal Debt Collection Calls Are Exempt Hogan Lovells

FCC Efforts to Implement the Budget Act Amendment On August 2, 2016, the FCC adopted rules implementing Section 301 of the Bipartisan Budget Act. The rules apply to all callers, including the federal government and its agents. No more than three calls within a 30-day period. Calls must concern a loan that is in default, in delinquency, or at imminent risk of delinquency. Debtors can stop autodialed artificial voice and prerecorded-voice servicing and collection calls at any time. Calls and text messages must be limited to 60 seconds and 160 characters, respectively, excluding required disclosures. Hogan Lovells

FCC Efforts to Implement the Budget Act Amendment Covered calls may be placed by either the debt owner or its contractor. Covered calls may be placed only to the debtor or another person or legal entity legally responsible for paying the debt. Covered calls may be placed to three types of numbers: Those provided by the debtor at the time the debt was incurred Those subsequently provided by the debtor to the owner of the debt or its contractor; and Those that the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor’s telephone number. Hogan Lovells

FCC Efforts to Implement the Budget Act Amendment Federal agencies may request a waiver of the new rules. For example, a federal agency may seek a waiver to allow it and its agents to place more than three calls per month without consent of the called party. The Consumer and Governmental Affairs Bureau may act on such waiver requests on delegated authority. The FCC noted that, to the extent waiver proceedings demonstrate that a “genuine conflict” exists between the three-per-thirty-days call limit and another federal law, it is likely to view that as probative of the good cause needed to justify a waiver. Hogan Lovells

Petition for Reconsideration Filed December 16, 2016 More calls are needed – 3/week or 10/month. Calls to parties other than the debtor should also be exempt. Fix the jurisdiction/legal authority analysis. Student loans may need a unique framework. Hogan Lovells

On the Horizon

On the Horizon D.C. Circuit Appeal of 2015 FCC Order (ACA International v. FCC) The July 2015 FCC Order was controversial and hotly contested Appeal filed just days after Order was issued Petitioners challenge: ATDS Calls to reassigned numbers and one-call safe harbor Revocation of consent Oral arguments held in October 2016 /decision expected 2Q 3Q 4Q 2017. Hogan Lovells

Autodialer??? Hogan Lovells

New FCC Leadership – Chairman Ajit Pai On the Horizon New FCC Leadership – Chairman Ajit Pai Spoofing Reassigned Numbers Federal Contractors / Federal Debts Trump Congress Hogan Lovells

Some Senators Want a Reassigned Number Database Callers currently have no way to completely avoid calling reassigned numbers). The FCC initiated a proceeding in July 2017 to explore how reassigned number data can be made available to callers. Senators Thune and Markey have taken an active interest in this issue, encouraging the FCC and others to establish a database: The issue came up during a May 18, 2016, Senate Commerce Committee hearing on the effects of TCPA litigation on consumers and businesses. On October 3, 2017, the Senators sent a letter to FCC Chairman Pai applauding the decision to initiate a proceeding and encouraging it to consider certain features as it explores a database. Hogan Lovells

Additional Steps to Protect Your Organization

Additional Steps to Protect Your Organization Regular Board Briefings Board-Approved Policy Compliance Audit Employee Training Proper Risk Evaluation Hogan Lovells