Background

The federal TCPA imposes certain restrictions on parties that place calls to consumers and customers. Among them is a requirement that, if a caller uses ATDS to place marketing calls or texts, it must have the prior express written consent of the called party. In addition to the auto-dialer rules, the TCPA has rules relating to the use of pre-recorded voice messages and imposes restrictions on calls to individuals who have placed their numbers on the national Do Not Call (DNC) Registry. Companies that fail to comply with the TCPA face significant class action risk, as the statute has a private right of action and allows for recovery of statutory damages of $500 per negligent violation and $1,500 per reckless or intentional violation.

The Supreme Court issued its ruling in Facebook v. Duguid, 141 S. Ct. 1163 (2021) in April 2021 in order to resolve a Circuit Court split on the definition of an ATDS under the TCPA. In doing so, the Court narrowed the type of dialing systems that qualify as an ATDS, ruling that a device must have the capacity either to store a telephone number using a random or sequential number generator or to produce a telephone number using a random or sequential number generator. The Supreme Court found that dialers that simply dial numbers from stored lists do not constitute an ATDS. The Supreme Court recognized that if ATDS were to apply broadly to any device with the capacity to simply store and dial numbers, the TCPA could expose even 'ordinary cell phone owners in the course of commonplace usage' to liability.

Although Duguid led to a downturn in the number of auto-dialer claims, it has not stemmed the tide of complaints alleging violations of other TCPA requirements. In addition, following Duguid, several states enacted or amended their own telemarketing laws, sometimes referred to as 'mini-TCPAs.' This has created a patchwork of continually changing telemarketing legislation across the country.

States

Arizona

On April 12, 2023, Arizona Governor Katie Hobbs signed into law House Bill 2498.

This bill amended the existing Arizona telemarketing law to address the use of text messages by solicitors. Arizona law previously prohibited solicitors from calling a number on the DNC Registry without consent, employment agreement, or a 'personal relationship.' The bill defines the last exception as 'in response to a referral from a natural person with whom the consumer has a personal relationship.' The amended law now specifically prohibits solicitors from transmitting text message solicitations to telephone numbers on the DNC, without such consent or relationship.

The Arizona Attorney General (AG) has the power to enforce this bill and violators may be fined up to $1,000 per violation.

The bill became effective immediately upon signing.

Connecticut

On June 26, 2023, Connecticut Governor Ned Lamont signed into law Senate Bill 1058. This law amends provisions of Connecticut's previous telemarketing law.

The amended law contains some of the most restrictive prohibitions against telemarketing of any state statute, generally restricting any telemarketing call to a consumer. The law provides that 'no telemarketer may make, or cause to be made, a telephonic sales call to a consumer without such consumer's prior express written consent.' Prior to the amendment, Connecticut's law was more in line with other state statutes that prohibit telemarketing calls only if they were automatically dialed and recorded, as well as made without prior written consent.

Connecticut's law broadly defines 'telemarketing sales call' as calls 'made by way of a live voice, an automated dialing system, a recorded message device, soundboard technology, over-the-top messaging or text or media messaging.' As defined, the law appears to cover every type of call. Text message is defined as 'a message that consists of text or any image, sound or other information that is transmitted by or to a device that is identified as the device that sent or received such text.'

The Connecticut statute also mandates that within the first 10 seconds of all telemarketing calls, the telemarketer identifies themselves and the calling party (i.e., the company), and the purpose the call.

The Connecticut mini-TCPA allows for recovery of statutory damages of up to $20,000 per violation, as well as remedies available under the Connecticut Unfair Trade Practices Act. Since the law is enforceable under Connecticut's consumer protection statute, this includes potential class actions to recover actual damages and attorneys' fees. This is far beyond almost any other state mini-TCPA or the federal TCPA.

The amendments took effect on October 21, 2023.

Florida

In the time since Duguid was decided, Florida has broadened the scope of its state mini-TCPA and then re-narrowed it to be back in line with the federal standard.

On May 25, 2023, Florida Governor Ron DeSantis signed a significant amendment to the Florida Telephone Solicitation Act (Fla. Stat. § 501.059) into law. The amendment reversed plaintiff-friendly changes to Florida's telephone solicitation laws by rolling back some of the key provisions of the statute to be more in line with federal standards.

Florida's mini-TCPA became one of the broadest telephone consumer protection statutes in the country when it was amended in 2021, following the Supreme Court's decision in Duguid. The 2021 amendments broadened Florida's mini-TCPA to define autodialer to include 'an automated system for the selection or dialing of telephone numbers or the playing of a recorded message.'

The amendment also created, among other things, a private right of action, allowing consumers to sue and collect damages up to $1,500 per violation of the statute. Not surprisingly, plaintiffs filed hundreds of putative class actions in the short time the 2021 amendments were in place. That spike in litigation created a backlash to which the Florida Legislature reacted by effectively rolling back the prior amendments almost immediately after they went into effect.

Specifically, the amended law's definition of ATDS is once again consistent with the narrower federal standard. As noted above, Florida's mini-TCPA contained an expansive definition of autodialer that encompassed practically any form of ATDS and required prior written consent from the customers. The amended autodialing restrictions now apply only to 'automated system[s] for the selection and dialing of telephone numbers.' Changing the language of an autodialer to a system that both automatically selects and dials numbers will allow businesses to use many forms of ATDS previously banned under the Florida mini-TCPA.

The newly amended law also has an expanded definition of what constitutes a 'signature' sufficient to convey consent to receive telemarketing messages. Customers and consumers can now provide their consent to receive calls and texts through several different methods, including swiping up on Instagram, checking an online box, or responding affirmatively to receiving text messages.

The bill further amends the safe harbor provision for text messages. Consumers who do not wish to receive texts from a business can reply with 'stop,' and businesses now have 15 days to unsubscribe that user. Only if the customer continues to receive texts after the 15-day mark will the customer have standing to sue.

Finally, the amendments apply retroactively to any pending action brought under the mini-TCPA that is styled as a class action but is not yet certified as such before the effective date of the amendments. Whether this retroactive change will survive scrutiny by the courts is an open question.

Maryland

On May 3, 2023, Maryland Governor Wes Moore signed the Stop the Spam Calls Act of 2023 into law.

Maryland's 'mini-TCPA' prohibits a person from 'making or causing a telephone solicitation, including a call made through automated dialing or recorded message' to both cell phones and landlines without prior express written consent. This definition of auto-dialer is broader than what the federal TCPA provides, and nearly identical to the definition in Florida's mini-TCPA prior to its recent amendments, discussed above.

The Maryland statute also defines 'prior express written consent' as a 'written agreement' that 'bears the signature of the called party,' 'clearly authorizes the person making or allowing the placement of a telephone solicitation by telephone call, text message, or voicemail,' and includes the telephone number to be called. In addition, the consent has to contain a 'clear and conspicuous disclaimer' warning that the called party is not required to purchase any property, goods, or services as a result of their consent.

Furthermore, the Maryland statute includes a strict prohibition on the use of any caller identification technology to block the identity and number of telemarketers. The statute also prohibits a telemarketer from intentionally displaying a different telephone number on a caller ID.

Although the Maryland statute does not contain a separate penalty provision, a violation of the law constitutes a violation of Maryland's Consumer Protection Act (MPCA). Violations of the MPCA allow Maryland's AG or any person (including on behalf of a putative class) injured by a violation to bring an action to recover damages of up to $2,500.

The new law came into effect on January 1, 2024.

New York

On December 6, 2022, New York Governor Kathy Hochul signed into law S.8450-B/A.8319-C, amending New York's telemarketing laws.

The amended law requires telemarketers to provide consumers the option to be added to their internal DNC list at the beginning of a telemarketing call. The New York law now requires that telemarketers give customers this option immediately following the telemarketer's name and company's name.

This is in contrast to most other states, which also have requirements that the telemarketer gives customers the option to be added to an internal DNC, but only after the telemarketer has stated a particular reason for the call.

Then, on September 13, 2023, New York again amended its telemarketing law to allow for an increase in the civil penalties for DNC violations. The New York AG now has the authority to level a fine of up to $20,000 per violation. The previous maximum fine amount was $11,000.

These amendments became effective immediately upon signing.

Oklahoma

Similar to Florida, the Oklahoma legislature has enacted its own mini-TCPA, which similarly expands the definition of ATDS. Oklahoma's proposed law contains nearly identical language to Florida's, defining ATDS as 'an automated system for the selection or dialing of telephone numbers or the playing of a recorded message.'

Both Florida and Oklahoma's laws also contain provisions that prohibit calls before 8 am or after 8 pm in the consumer's local time zone. The laws include a rebuttable presumption that calls or text messages made to a number with an Oklahoma or Florida area code are made to residents of those states. The burden of proof will thus be on the defendant's business to prove that a person may not be a Florida or Oklahoma resident at the time of the call. Further, both statutes contain provisions limiting the number of phone calls to no more than three in a 24-hour period.

Additionally, both Florida and Oklahoma's mini-TCPAs create a private right of action that allows for uncapped statutory damages at $500 per violation, as well as potential treble damages. Florida's mini-TCPA also expressly allows for attorneys' fees. Oklahoma's statute does not address attorneys' fees.

The Oklahoma statute took effect on November 1, 2022.

Virginia

Even prior to Duguid, Virginia enacted the Virginia Telephone Privacy Protection Act and amended it in 2020. The amended law tracks several of the other laws discussed above. The 2020 amendments clarify the law's definition of 'telephone solicitation call' to include text messages in addition to voice calls to landline and cell phone numbers.

In addition, the Virginia law requires a telephone solicitor who makes a telephone solicitation call to identify themselves 'promptly' by first and last names and the name of the person on whose behalf the telephone solicitation call is made.

The 2020 amendment increased the fine per violation so that it is $500 for the first violation, $1,000 for the second violation, and $5,000 for each subsequent violation. The law allows for individuals to bring actions, as well as the Virginia State AG.

Finally, companies should also note that this law has a somewhat unusual vicarious liability provision. The law states that a 'seller on whose behalf or for whose benefit a telephone solicitor makes or initiates a telephone solicitation call in violation of any provision of [the Virginia mini-TCPA] and the telephone solicitor making or initiating the telephone call shall be jointly and severally liable for such violation.' Thus, third-party telemarketers and consumer-facing companies alike may be held equally liable for violations of the Virginia mini-TCPA.

Washington

Washington Governor Jay Inslee signed HB1051 into law on April 20, 2023. The Washington amendments expanded the definition of 'automatic dialing and announcing device' to mean a system that 'automatically dials telephone numbers and transmits a recorded or artificial voice message once a connection is made.' Further, the definition specifically includes that a 'recorded or artificial message is transmitted even if the recorded or artificial message goes directly to a recipient's voicemail.' This is a broader definition of an autodialer than is indicated in the TCPA.

The Washington mini-TCPA also now applies to anyone who 'assists in the transmission' of unwanted 'commercial solicitation' subject to the Washington Consumer Protection Act (WCPA). Although there are some exemptions to this general rule, the bill defines 'assist in the transmission' as providing 'substantial assistance or support, which enables any person to formulate, originate, initiate, or transmit a commercial solicitation when the person providing the assistance knows or consciously avoids knowing that the initiator of the commercial solicitation is engaged, or intends to engage, in any practice that violates' the WCPA.

Other key provisions of the amended Washington law include prohibitions on a person from initiating or causing the initiation of a telephone solicitation to a telephone number on the federal DNC Registry. The law also allows for a private right of action to enjoin further violations of the law and increases the damages for repeated violations from $100 to $1,000.

Importantly, the Washington mini-TCPA does add an affirmative defense for 'telecommunications provider' if it both acted in compliance with the federal TCPA and implemented a 'reasonably effective plan to mitigate origination initiation or transmission of a commercial solicitation.'

The legislation took effect on July 23, 2023.

Impact of the mini-TCPAs

The enactment of state mini-TCPAs that, in some cases, are more restrictive than the TCPA, can make compliance more challenging and may expand the scope of potential liability for companies that place marketing calls and texts to consumers and customers. A healthy compliance program should take these new laws into consideration, as simple compliance with the TCPA may no longer be sufficient to avoid class action liability.

Francis Nolan Partner
[email protected]
Amy Albanese Associate
[email protected]
Eversheds Sutherland, New York