U.S. Federal Communications Commission (FCC) Issues

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The freedom from automated calls at random hours of the evening may seem like the true American dream these days as more and more companies rely on these calls to reach out and communicate with customers.  Unfortunately, now that the Federal Communications Commission (“FCC”) voted to expand the Telephone Consumer Protection Act (“TCPA”) to include stringent yet vague restrictions on telemarketing robocalls, it may not be a dream for everyone. 

In June of this year, in a 3-2 vote, the FCC voted on adding the rule to the TCPA that entails barring companies from using “autodialers” to dial consumers, disallowing more than one phone call to numbers that have been reassigned to different customers, and mandating a stop to calls under a customer’s wishes.  These restriction may seem reasonable but dissenting Commissioner, Ajit Pai, recognized that the rule’s broad language will create issues because it does not distinguish between legitimate businesses trying to reach their customers and unwanted telemarketers.  Some attorneys have further commented on the rule stating that its use of “autodialer” opens up a can of worms of interpretations and can really be viewed as any device with even the potential to randomly sequence numbers, including a smartphone.  Companies using even slightly modernized tactics to reach out to their customer base are now at risk of facing litigation—and it won’t stop there.  Businesses that legitimately need to reach out to their customers will be caught between a rock and a hard place as they face a one-call restriction now and may also open themselves up to litigation if a customer decides to take that route.

The FCC Chairman, Tom Wheeler, attempted to quash concerns by stating that “Legitimate businesses seeking to provide legitimate information will not have difficulties.”  This statement unfortunately won’t stop plaintiff’s attorneys from greasing their wheels to go after companies who even make “good faith efforts” to abide by the new rule.  Attorneys who defend businesses have recognized that the rule is ridden with issues that could potentially harm companies that simply do not have the mechanisms to fully control and restrict repeated calls or the technology that makes those calls.  But, long story short, just because this rule has been put in motion, does not mean it will stand as is. Litigation and court action will likely be a natural consequence and that may result in changes for the future.  For now, businesses that utilize automated phone calls should be wary of the technology used and attempt to at least keep track of numbers and phone calls made.  When in doubt, talk to an attorney to make sure you are taking the appropriate precautions.

On October 24, the Federal Communications Commission (FCC) threw its hat into the data security regulation ring when it announced it intends to fine two telecommunications companies $10 million for allegedly failing to safeguard the personal information of their customers.

Both TerraCom, Inc. (TerraCom) and YourTel America, Inc. (YourTel) allegedly collected customers’ personal information, including names, addresses, Social Security numbers, and driver’s licenses, and stored it on servers that were widely available on public websites online through a simple Google search.  The information could be accessed by “anyone in the world” exposing their customers “to an unacceptable risk of identity theft and other serious consumer harms.”

According to the FCC, TerraCom and YourTel violated Sections 201(b) and 222(a) of the Communications Act of 1934 by:

  • Failing to properly protect the confidentiality of consumers’ personal information, including names, addresses, Social Security numbers, driver’s licenses;
  • Failing to employ reasonable data security practices to protect consumer information;
  • Engaging in deceptive and misleading practices by representing to consumers in the companies’ privacy policies that they employed appropriate technologies to protect consumer information when they did not; and
  • Engaging in unjust and unreasonable practices by not notifying consumers that their information had been compromised by a breach.

Whether the FCC’s announcement signals its intention to become yet another regulator of data security remains to be seen.  But companies that collect and store customer personal information must take the initiative to ensure information is stored properly with appropriate data security safeguards in place.  And safeguards are not enough.  If, after investigation, a company uncovers a breach, it must timely notify customers in accordance with state law and federal regulations.

For more information about the FCC’s announcement, click here.

 

Last week’s vote by the FCC on net neutrality rules raises new concerns and resolves very little about keeping an open internet. Let’s start with the basic issue of whether the FCC has jurisdiction to regulate the internet. Most commentators agree that the FCC has overreached its grant of authority and that legal challenges are all but certain. Is the FCC regulating or legislating? In all probability, providers that do not fare well under the proposed net neutrality rules may decide to challenge the FCC’s jurisdiction in court.

 

The new rules prohibit broadband or wired line providers from blocking access to services, applications and legal content, and from “unreasonably” discriminating against traffic on their networks – no such strict restrictions are placed on wireless or mobile broadband providers. Why should the FCC treat wireless providers differently than fixed line broadband providers? Do the so-called technological challenges faced by the wireless industry justify the disparate treatment?   Are we concerned that more consumers, including minorities and the poor, use wireless devices to access the internet?

 

Why does the FCC discourage but not flat out ban "paid prioritization" by wired line broad brand providers? Does this rule create a risk that two internets will develop – one for the moneyed haves and a second for the non-moneyed have-nots? 

 

The new rules are a tangible victory for ISPs, and give these providers the wiggle room to capitalize on usage based pricing. For example, a broadband provider could theoretically charge an access fee for a movie streaming service such as Netflix over a wireless connection. The FCC’s distinction between fixed-broadband and wireless networks may recognize that wireless networks are more constrained in terms of bandwidth, so under the new rules a smaller set of applications is offered protection specifically on wireless networks.

 

While the FCC maintains that it will monitor the markets for abuses and “discourage” them, the question is whether the FCC will be able to enforce the rules given that the language is so tame. In the meantime, the FCC’s apparent lack of jurisdiction over the internet begs for someone to pick this fight.