April 28, 2017
This past Monday, the United States District Court for the District of Columbia upheld a Federal Trade Commission (“FTC”) interpretation of the Telemarketing Sales Rule (“TSR”) which held that marketing calls placed through use of soundboard technology constitute “robocalls” under the statute. Although the FTC originally found that telephone calls using soundboard technology do not constitute robocalls, in 2012 the regulatory agency shifted its position and declared that, after further investigation, telephone calls made with soundboard technology do constitute “robocalls” under the TSR. The underlying lawsuit was commenced by a trade group representing companies that manufacture and use soundboard technology, and sought a declaration that the subject FTC interpretation was unlawful because the FTC did not allow for a notice and comment period before issuing its holding. The trade group also argued that the interpretation violates the First Amended of the Constitution. The federal court rejected both arguments and upheld the FTC soundboard technology opinion.
Why do calls made with Soundboard Technology Constitute Robocalls under the TSR?
According to the Court’s decision, soundboard technology “involves two-way communication between sales agent and consumer, in which the sales agent plays pre-recorded audio clips in response to the consumer’s statements. Soundboard technology also allows the sales agent to break into the call and speak directly to the consumer, if needed.” In September 2009, the FTC issued an “informal” opinion letter, concluding that, because calls using soundboard technology enable the caller and recipient to have a two-way conversation, such calls are not subject to the FTC’s robocall regulations, which require that the consumer first consents in writing to receipt of the call. However, in 2012, the FTC reversed course. After receiving complaints that consumers were not receiving appropriate responses to their questions and comments from the soundboard “avatars,” that live operators were not intervening during calls, and that sales agents using soundboard technology were handling more than one call at a time, the FTC investigated soundboard technology further. Following its investigation, the FTC ultimately concluded that marketing calls made through use of soundboard technology do constitute robocalls within the meaning of the TSR, and gave the marketing industry until May 12, 2017, “to make any necessary changes to bring themselves into compliance.”
The trade group quickly sought to block the FTC’s enforcement of this new interpretation. It argued that because the FTC holding constituted a final agency action and was a legislative rule, the FTC was required to provide notice and a comment period before implementing this change. Although the Court agreed with the trade group that the interpretation does constitute a final agency action, it held that this was an interpretive rule and not a legislative rule, and, therefore, no notice and comment period was required.
In addition, the trade association argued that the new FTC interpretation violates the First Amendment, because the so-called “robocall rule” applies to not-for-profit organizations calling first time donors, but does not apply to previous donors. The Court dismissed this argument, finding that “the restriction is content-neutral because its applicability ‘turns on the caller’s relationship with the consumer rather than what may be said in the calls.’”
Marketers Using Soundboard Technology: Protect Yourself
Just weeks ago, the FTC lost a legal challenge concerning its Solicited Fax Rule. However, the FTC won this battle: calls made using soundboard technology will constitute robocalls under the TSR. Accordingly, marketers using soundboard technology must be sure to now obtain prior express written consent before calling consumers with this avatar technology.
If you are interested in learning more about this topic, please visit the Telemarketing Law practice area of our website. If you have been served with process concerning your telemarketing practices in general, please e-mail us at firstname.lastname@example.org or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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