Keep Up with Telemarketing Compliance: State Law Roundup
For years, businesses grappled with the ever-changing federal Telephone Consumer Protection Act, which, among other things, restricted how, when and to whom calls or text messages could be made.
Armed with an expansive definition of an autodialer and the potential to recover statutory penalties of $500 or more per call or text message, enterprising plaintiffs filed class actions and individual lawsuits en masse, making the TCPA one of the most litigated statutes in federal courts throughout the country.
In 2021, however, in its seminal Facebook Inc. v. Duguid ruling, the U.S. Supreme Court held an autodialer should be narrowly construed to exclude equipment that dials from preexisting lists of numbers that are not randomly or sequentially generated.
Since the Supreme Court's clarification, several states have sought to fill the void by passing telemarketing statutes of their own. Some of these mini-TCPA laws regulate the type of equipment used to make calls and send texts, some restrict when and to whom calls and texts can be made, and some require that callers make certain disclosures at the outset.
This patchwork of state laws can easily lead to confusion and compliance traps. In this article, we discuss some of the amendments and bills passed in the last few months.
Florida: H.B. 761
Following Duguid, Florida amended its Telephone Solicitation Act, the FTSA, to require prior express written consent for any telephonic sales call made to a consumer using an automated system for the selection or dialing of telephone numbers.
This stood in stark contrast to the federal definition, which the Supreme Court confirmed requires the use of a random or sequential number generator to store or produce a telephone number and to automatically dial such numbers.
For example, devices that merely automatically dial numbers from a stored, preprogrammed list that do not have the capacity to use a random or sequential number generator to create or store telephone numbers, therefore, are not autodialers, and the use of such other devices were not subject to the TCPA's provisions. Florida's more expansive definition led to a wave of litigation in Florida's state and federal courts.
Recently, the Legislature amended the FTSA. As amended, to be considered an autodialer, a device must have the capacity to both select and dial telephone numbers, consistent with the federal definition.
Further, the FTSA narrows the applicability of its provisions to only unsolicited telephone sales calls, with several carveouts, including for calls made in response to a request of the called party and calls made pursuant to a prior or existing business relationship.
The amended FTSA also creates a new bar to litigation for consumers to satisfy prior to bringing an action arising from text messaging. Specifically, consumers must now reply "stop" to unwanted text message solicitations, and consumers must demonstrate that the soliciting party failed to honor the consumer's opt-out request within 15 days of receiving that request.
This provision, as well as the other amendments, apply retroactively, including to putative class actions that were pending — i.e., not certified — on or before the enactment of H.B. 761 on May 25.
Notwithstanding these changes, plaintiffs continue to file suits using the statute's old autodialer definition in a challenge to the constitutionality of the retroactivity provision. It remains to be seen how courts will respond.
Maryland: S.B. 90
Maryland Gov. Wes Moore signed into law S.B. 90, enacting the Stop the Spam Calls Act, which goes into effect Jan. 1, 2024.
Maryland's S.B. 90 requires the prior express written consent of a called party prior to any telephone solicitation made using an automated system, or a prerecorded or artificial voice message. The relevant definitions and provisions of S.B. 90 largely track those of the federal TCPA, with a few key exceptions that follow provisions found under the mini-TCPA laws of other states.
For example, the scope of regulated technology under Maryland's S.B. 90 includes the use of an automated system for the selection or dialing of telephone numbers, which is broader than the definition of "autodialer" under the TCPA.
The "automated system" term is one borrowed from Florida, prior to its recent amendment. S.B. 90 also restricts calling hours to between 8 a.m. to 8 p.m. of the called party's local time, prohibits spoofing, concealing or preventing the caller's identity from being transmitted; and limiting the number of calls on a single matter or issue to three calls per 24-hour period, regardless of the number used.
The inclusion of "artificial voice message" in addition to the standard prohibition against the use of a prerecorded message is unique to Maryland and may relate to emerging trends in the use of voices altered by artificial intelligence in scams.
Specifically, S.B. 90 adds that a person may not make or cause to be made a telephone solicitation using an intentionally altered voice in an attempt to disguise or conceal the identity of the caller in order to defraud, confuse or injure — financially or otherwise — a called party, or to obtain personal information from the called party that may be used in a fraudulent or unlawful manner.
Mississippi: H.B. 1225
Mississippi Gov. Tate Reeves signed into law H.B. 1225, to amend the state's existing telephone solicitation laws, effective July 1. The amendment transferred the administrative, investigative and enforcement authority powers relating to the state's no-call program from the Public Service Commission to the Mississippi Attorney General's Office.
On July 5, the office wasted no time commencing enforcement actions against various businesses regarding thousands of unauthorized calls allegedly made to Mississippians listed on the federal do-not-call registry. The federal registry now falls under a new umbrella "do not call registry" term to which Mississippi's telephone solicitation laws apply.
The office now serves as Mississippi's sole telephone solicitation authority, and Attorney General Lynn Fitch clarified in a recent statement that after July 1, telemarketers will no longer be required to register with the Public Service Commission, and must instead register with, and make the $75,000 bond payment to, the office.
H.B. 1225 also added a new "do not call registry" term, which means the federal registry created and maintained by the Federal Trade Commission or any other telemarketing registry created by the federal government, as well as the prior Mississippi do-not-call list previously maintained by the Public Service Commission.
However, the AG's office intends to otherwise end the state's do-not-call list program in favor of using the federal registry. All telemarketing solicitors making calls to Mississippi consumers must obtain a monthly copy of the federal registry list and affirm that they have obtained the list during the registration process.
Tennessee: S.B. 868
Tennessee Gov. Bill Lee signed into law S.B. 868, effective July 1. Tennessee's S.B. 868 extends existing prohibitions, requirements and penalties relating to telephone solicitations to also apply to text message solicitations.
S.B. 868 provides a comprehensive definition of the term, which generally means a text communication over a telephone originating from a location within Tennessee that engages in activities similar to those listed under the definition of a telephone solicitation.
However, there are a number of exceptions, including business phone numbers, calls from a member of a not-for-profit organization on that organization's behalf, and solicitations by a business that does not sell or engage in telephone solicitation and does not make more than three such calls or texts in any one calendar week.
The Tennessee Public Utility Commission, which operates the state's do-not-call program, will also operate the new do-not-text program, with a combined do-not-call and do-not-text register.
New Jersey: S.B. 921
Effective Dec. 1, New Jersey will require callers to make certain disclosures within the first 30 seconds of a call. Among other things, callers must identify the name and telephone number of the company on whose behalf they are calling.
In addition, if the company placing the call owns any websites and refers the consumer to the website during a call or makes any written communications to consumers following a call, they must include the mailing address on the website and in those written communications.
Calls placed "in response to a customer's phone call or contact with the telemarketer's website, in which the customer affirmatively requests a follow-up telemarketing sales call or other contact from the telemarketer," are excepted.
The amended statute imposes new penalties: a violation constitutes a disorderly person offense, which is punishable by up to six months in jail and up to $1,000 in fines, in addition to any other penalties imposed by law.
Washington: H.B. 1051
Washington Gov. Jay Inslee signed into law H.B. 1051, also known as the Robocall Scam Protection Act, which will take effect July 23.
H.B. 1051 expands the scope of the Consumer Protection Act to encompass injuries arising from the transmission of a commercial solicitation using an automatic dialing and announcing device intended to be received by customers within the state of Washington.
H.B. 1051 also brings Washington's telemarketing regulations closer in line with the TCPA by adding provisions that track the TCPA's do-not-call registry restrictions.
Under the Robocall Scam Protection Act, consumers may seek injunctive relief and/or damages through a private right of action, and the law increases the statutory award for damages for repeated violations from $100 to $1,000 per violation.
H.B. 1051 also establishes a private right of action for consumers to hold third parties liable for assisting in the transmission of a commercial solicitation.
Assistance in this context means providing assistance while knowing or consciously avoiding knowing that the initiator of the commercial solicitation is engaged, or intends to engage, in an unlawful commercial solicitation.
However, H.B. 1051 specifically exempts the following third-party categories of activities:
Activities that relate to the design, manufacture, or distribution of any technology, product or component for commercial use other than to violate or circumvent the law;
Activities by telecommunications providers or other entities that provide internet access services for purposes other than initiating a telephone communication; and
Telephone communication activities of a telecommunications provider that provides voice services to an end-user customer.
The Legislature, in passing the Robocall Scam Protection Act, noted that the most effective way to prevent illegal robocalling is to stop it at its source, and the intent of passing H.B. 1051 is to "extend liability to those persons who provide substantial assistance or support in the origination and transmission of [unlawful] robocalls."
Georgia: S.B. 73
Georgia's Legislature passed S.B. 73, which, if signed into law, would amend the state's existing laws relating to telephone solicitations to provide a private right of action; clarify when liability may be imposed on third parties that make or cause to make any telephone solicitation "on behalf of" another party; remove the requirement for violations to be done with knowledge; and reduce the per se damages amount from $2,000 to $1,000 per violation.
Importantly, S.B. 73 allows individuals to file suit on behalf of a putative class, to which the $1,000 per violation limitation would not apply.
S.B. 73 also establishes a new defense for actions arising from telephone numbers dialed in error if such numbers were provided by another subscriber, so long as the defendant did not know or have reason to know that the number was provided in error.
The amendment specifically provides that this defense is not available if there are "established policies and procedures to effectively prevent telephone solicitations in violation of this Code section and mandated and enforced compliance with such policies and procedures."
Arizona: H.B. 2498
Arizona Gov. Katie Hobbs signed into law H.B. 2498, which became effective immediately on April 12. The law extends Arizona's existing regulations to apply to text messages. Civil penalties under this statute may be as high as $1,000.
The foregoing recently passed laws make up just a small sample of the many state laws governing telemarketing. Other states, like Oklahoma and New York, place additional and different restrictions upon businesses, and provide for certain penalties and remedies.
As more states enact laws to seemingly fill the void left by Duguid, compliance will become an increasingly difficult game of whack-a-mole. Companies that conduct business in multiple states should keep up to date before falling victim to avoidable traps.
"Keep Up with Telemarketing Compliance: State Law Roundup," by Harrison Brown, Ana Tagvoryan, and Ann Huang, was published in Law360 on July 21, 2023.