In late 2023, the Federal Communication Commission (FCC) adopted significant changes to its Telephone Consumer Protection Act (TCPA) regulations. The purpose of the changes was to address escalating consumer threats caused by scam robocalls and robotexts.
The FCC created new obligations for sellers/businesses that utilize text messaging and it imposed new requirements for mobile phone carriers. Most significantly, the manner in which (consumer) consent (to be contacted) is acquired has been revised. These revisions will have a profound effect on how third-party websites obtain consumer consent, and sellers/marketers will be accountable to strictly comply.
In recent years, consumers have realized an overwhelming increase of unwanted and illegal calls and text messages, which often are directly linked to scams and phishing, but also can be a source of malware delivered to unsuspecting consumers. The Federal Trade Commission (FTC) reports that text messaging scams cost consumers $86 million in 2020 and $326 million in 2022. Some estimates indicate that total business losses could exceed $20 billion annually.
The TCPA requires callers to obtain prior consumer consent for certain calls and texts sent using an automatic telephone dialing system (autodialer) or made using a prerecorded or artificial voice. If a robocall or robotext includes or introduces an advertisement or constitutes telemarketing, prior express consent must be obtained.
The FCC believes it can mitigate these issues by further restricting the manner in which consumers provide consent when using third-party websites, such as rate comparison sites. Those sites usually serve as a lead generator, and provide a conduit to deliver consumer information to a specific business for further contact. Use of these sites is lawful. However, if calls or texts will result from the data captured by these sites, then businesses will need to be vigilant about the manner in which consumers provide consent.
Closing the Lead Generator Loophole
While many comparison websites, which generate a consumer “lead” for a seller, benefit consumers by enabling them to quickly compare goods and services and discover new sellers, the “consent” obtained through those sites has been lacking. Under the updated rules, texters must now obtain specific prior express consumer consent at the time the consumer uses a lead-generating comparison website. The consent must be specific to the seller/marketer.
These revised FCC guidelines directly affect how a seller may use third-party lead generation/comparison websites. Previously, businesses could avoid strict compliance with the TCPA by hiding behind the activities of third-party lead generation companies. Those lead generation companies would attempt to obtain blanket consent for a consumer to be contacted by any one of its customers — the entities engaged in marketing. That form of consent was not sufficient, and it created harm for consumers in the form of scams, phishing, and unwanted contact.
Now, consumers must specifically consent to each specific entity that might follow up for marketing purposes (“one-to-one consent”). When consenting to be contacted, consumers must specifically identify the companies that are authorized to contact them. The FCC intends to demand strict compliance with “one-to-one” consent for all text messaging.
The new rules revised the definition of “prior express consent.” Explicit written consent must authorize only one identified seller to send telemarketing messages or advertisements via automatic systems or prerecorded voices. Consent must be associated with the interaction that prompted it and explicitly identify the authorized telephone number for these communications. While consumers may authorize more than one company to contact them, they must select each company as a separate and distinct action. Otherwise, any unsolicited phone or text contact from the seller can be considered unlawful.
To be clear: One-to-one consent requires consumers to intentionally select which sellers they wish to be contacted by. Third-party lead generators are prohibited from engaging in automatic matching of consumers to businesses, and consumers can no longer give consent by being asked to review broad lists of companies that might receive the consumer lead.
These regulations are an attempt to close the lead generator loophole. The FCC believes this will place control in the hands of the consumer, so that that consumers can dictate the types of robocalls and robotexts they receive and from whom. Liability runs to the “seller” or marketer. Penalties for violations can be severe. Therefore, it is incumbent on all businesses to verify the strict compliance of their lead generation vendors.
Compliance Action Items
Taft’s Financial Services team would be happy to assist your company with further guidance on this subject. Or on any subject involving the use of digital technology to create, deliver, or contact consumer leads. Feel free to reach out to David K. Stein for further assistance.
David is a partner in Taft’s Finance group. He advises businesses on consumer-facing issues, including real estate, privacy, credit reporting, technology, data security and e-commerce.
Arnold is an associate in Taft’s Lending and Finance group in the Columbus office and was a summer associate with the firm for two consecutive years.
