FCC’S COMMERCIAL PURPOSE EXEMPTION UPHELD: D.C. Circuit Court of Appeals Refuses to Strike Down FCC’s Recent TRACED Act Handiwork Following Hobbs Act Challenge

Whenever I heard “FCC” and “D.C. Circuit Court of Appeals” I think of ACA, Int’l and the stunning reversal of the FCC’s 2015 TCPA Omnibus ruling.

What a remarkable day.

But while this ruling is far narrower in scope–and less TCPAWorld changing–it is always important to pause and take note of the D.C. Circuit’s review of an FCC Order.

Back in December, 2020 the FCC issued its ruling setting strict limitations on the number of consent-less prerecorded calls that can be left for “commercial purposes” to residential numbers. While the previous limit was infinity–i.e. there were no FCC imposed limits as all such calls were exempted from the TCPA–the new limit was just 3 per month. This is even less than the 7/7/7 rule adopted by the CFPB in the debt collection context. 

Oddly, in the event the caller wanted to make more than 3 calls a month they were required to obtain EXPRESS WRITTEN CONSENT–even if the calls were merely informational in nature. And that’s just odd.

But the challenge to the D.C. Circuit Court of Appeals involved whether the FCC should even have left the Commercial Purposes exemption in place, at all. And the petitioner was not–as one would expect–a trade organization complaining about the tight restrictions placed on them without reason, but rather a consumer who argued the meager 3 call hall pass was still 3 calls too many.

In the view of Vincent Lucas–the fellow who challenged the FCC’s ruling–any consentless calls are too many. He urged the FCC acted arbitrarily and capriciously in retaining any part of the Commercial Purposes exemption. And he likewise argued that 3 was just too many calls a month.

The D.C. Circuit Court of Appeals rejected both arguments. They concluded that the FCC properly built a record and elected to retain the commercial purposes exemption. As to 3 per month, the Commission was free to fix a reasonable limitation on calls under the TRACED ACT rules: The Commission found that these limits “strike the appropriate balance between these callers reaching consumers with information and reducing the number of unexpected and unwanted calls consumers currently receive.” 2020 Order, at *4 ¶ 15. Lucas contends that different numerical limits should be applied to different types of calls. Yet as the Commission noted in its Order, “[c]ommenters”—including Lucas—“did not submit any specific cost or benefit data on potential call limits” demonstrating that different limits are necessary for any subcategory of commercial non-telemarketing calls. Id. at *5 ¶ 19. Moreover, as an additional safeguard, the opt-out mechanism “give[s] consumers more say in how many calls they receive.” Id. at *6 ¶ 23. Finally, the Commission intends “to monitor these limits to determine whether they may require adjustment in light of [its] experience.” Id. at *4 ¶ 15. As such, the implementation of the same numerical limits for all subcategories of commercial non-telemarketing calls was reasonable.

So, in short, the FCC’s limitations on the number of prerecorded calls that can be made to landlines after the TRACED Act survives Hobbs Act review. While the rules have been on hold since 2020, I suspect they may now end up proceeding and becoming part of the CFR.

Let us hope the Commission reconsiders that PEWC issue before they do.


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