What The Supreme Court’s Ruling on ATDS Definition Means For Marketers

Over the years, there has been a tremendous amount of time and money spent arguing about the TCPA’s definition of an automatic telephone dialing system, or ATDS:

“…Equipment which has the capacity — (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”

The definition is important to marketers because if you are using an ATDS and placing a marketing call to a consumer on their cell phone, you must have prior express written consent from that consumer. Congress introduced the TCPA in 1991, at a time when cell phones were new technology and expensive to operate. The rules on an ATDS were intended to limit consumers receiving random calls on their cell phones and incurring the associated usage costs. Last week, the Supreme Court stepped in to provide some clarity in their opinion in Facebook, Inc. v. Duguid. The Supreme Court has unanimously decided that to qualify as an ATDS under the TCPA: 

“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.”

As always, TCPAWorld provided immediate coverage of the ruling. 

This is a big win for Facebook and marketers in general. With a narrower definition, there should be less legal risk, in theory, from the TCPA. Unfortunately, as Eric Troutman points out on TCPAWorld, there is still some ambiguity over the term “capacity” that plaintiffs will likely try to exploit at the expense of marketers. Nevertheless, this was a big step forward in ending this debate and providing more clarity over this matter. 

So what does this mean in the big picture? 

If you are calling consumers you still must have express written consent if the consumer’s phone number is on the National Do Not Call Registry. According to the FTC, “At the end of FY 2020, the DNC Registry contained 241.5 million actively registered phone numbers.” Meaning, this ruling really only applies to people that aren’t on that list. If you are calling numbers that aren’t on the national DNC list, you can now call them on their cell phone without prior express written consent as long as the device you are using doesn’t meet the definition of an ATDS and you aren’t using pre-recorded messages. In other words, if you are calling consumers without their consent, the pool of people you can legally call just got bigger. 

Personally, I can’t wait for this autodialer definition discussion to be over for good, because it distracts from the far more important discussion – consent. Marketers generally fall in one of two categories: 1) those that embrace consent-based marketing by only calling consumers who have given their prior express written consent to be contacted, and 2) those that call consumers without consent, also known as unsolicited outreach. How marketers will react to this ruling really depends on which of these two camps they are in. Let’s review both.

For marketers that embrace consent-based marketing, this ruling won’t change how they operate. It will be business as usual. These companies respect their prospective customers and their preferences. They will continue to capture and document consent from consumers. They will continue to verify that the leads generated by their partners gave consent. 

For these marketers, this news simply reduces the likelihood that they have to battle litigation by opportunistic litigators via some of the impossible technicalities of the TCPA.  Reputable companies trying to do everything the right way even had to petition the FCC for more reasonable rules. For these companies, this is welcome news that reduces their risk, but doesn’t change how they operate. These companies recognize that only contacting consumers who have given their consent is simply good business. They understand that prior express written consent is the golden ticket because with it, they generally don’t have to worry about the National DNC, the TCPA, or the various state laws governing contact. Most importantly, these marketers know that having consent helps protect them from the greatest risk to their brand: aggravating a prospect with an unwanted call. 

The other group of marketers generally try to navigate the complicated landscape of consumer protection laws to be able to reach out to consumers without their consent to sell their goods and services. These companies are less concerned about annoying many of their prospects with unsolicited outreach. This group will adjust how they operate based on this news, likely opening up who they call. If the consumer isn’t on the DNC, it is open season! Therefore, I think consumers should expect an increase in outreach from this group of marketers. 

The TCPA is an outdated law that was written to address concerns over what is now antiquated technology. The country needs federal laws that better protect consumer privacy and consider the various modern methods of communication. There is widespread public support for this issue, so perhaps this ruling will provide the catalyst for this to happen. From the perspective of the average consumer, this ruling probably seems silly. Does the average consumer care about the type of technology that was used to call them? When you are interrupted at dinner by an unsolicited marketing call, do you really care whether or not the call was made using an autodialer? “Excuse me, Mr. Telemarketer, did you randomly generate my number – or dial it from a list?” The real question is whether it is a welcome or unwelcome call. Did the consumer provide consent to receive the call?

At ActiveProspect, we believe only calling consumers who have given their consent to be contacted is the best path. With this approach, the technology you use for contact is irrelevant. More importantly, it is a better way to start the relationship with your customers.