Senate Report

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Calendar No. 242

114TH CONGRESS SENATE REPORT

2nd Session 104-341

TCPA: TELEPHONE CONSUMER PROTECTION ACTION

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NOVEMBER 9, 2017 – Ordered to be printed

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[Ziyi Yang], from the Senate Committee on [FCC],

submitted the following

REPORT ON COMMENTS

[To accompany, S. 1043]

The Committee on FCC Affairs has initialized and improved the proposed

regulation with the accompanying comments, and passes a list of rules to regulate

robocalls. Due to the rules TCPA from FCC and Do-Not-Call registry from FTC

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which aiming at limiting robocalls, several different parties and interest groups

are going on a debate for their own profits, pushing and pulling arguments

between consumers and businesses.

PURPOSE

To protect people’s privacy, Federal Communications Commission

decided to publish a list of the rule to limit the growing number of illegal

robocalls. The TCPA(Telephone Consumer Protection Act) enacted in 1991

gives the right to phone companies who can help consumers block certain

commercial calls from certain invalid phone numbers. Robocalls include

automatic telephone dialing systems and artificial or prerecorded voice messages.

In this act, the phone prohibition includes two parts. First, the dial-in calls which

contain unsolicited advertisement cannot be sent to a telephone facsimile machine

whose owner has requested not to be sent such future advertisements. Second,

utilizing a programmed phone dialing framework such that at least two phone

lines of a multi-line business are locked in at the same time is illegal. In 2003,

FCC revised the TCPA. A national Do-Not-Call registry, the FTC(Federal Trade

Commission) continued to extend this policy.

ESTABLISHING THE DEBATE

The problem of robocalls has national implications. Nowadays nearly

everyone in the United States has a cellphone, which means everyone is possible

to be disturbed by unsolicited calls. However, restricting robocalls will make the

telephone companies and the department stores who use robocalls as one way to

attract potential customers to lose their profit. As a result, different interest

groups always advocate for or against this rule intensely.

The biggest group who are benefited from TCPA is consumer who are

annoying at unwanted robocalls. In the research done by Kimball in 2014, "75%

of people listened to over 19 seconds of a robocall message and the vast majority

of people, 97%, listen to at least 6 seconds. Even when the recipient ignores or

declines the call, today spammers can send a prerecorded audio message directly

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to the recipient's voicemail inbox. Deleting a junk voicemail wastes even more

time, taking at least 6 steps to complete in a typical voicemail system" (Tu &

Doupe & Zhao & Ahn, 2016). About 97% people do not want to receive

robocalls at all and they just desire to hang up immediately. However, for these

group of people, they need to spend at least several seconds first to understand the

intention of the calls, and then hung up. This is just a waste of life to those who

do not want to such calls. This type of advertising will eventually lead people to

feel annoying. If wasting time is just a small case, the magnitude of the impact on

these groups will be a great deal when there are telephone scams. Some

fraudulent calls allure people to buy their products, and eventually, ask people to

tell them their credit card information. This will cause huge loss if customers are

cheated by such fraudulent calls. People's personal information is being exposed

under such condition. This group of consumers is victims of unsolicited robocalls.

Now TCPA helps this group of consumers strictly limit the robocalls. Telephone

companies who send robocalls to consumers without advanced consent will be

punished.

So how can consumers use the rule to protect themselves? In the case of

robocalls related to privacy issue, lawyers can always play an important role in

the court. Consumers need lawyers to defend their rights to get their wanted

compensation after being disturbed or hurt by robocalls. Also, at the same time,

intelligent lawyers rely on such consumer victims to making a living by appealing

for them and get part of compensation after the judge convict those illegal

robocalls from telephone companies and industries. According to a survey form

Bloomberg Law, “These rulings, coupled with the lure of uncapped statutory

damages (as much as $1,500 for each call in violation), have encouraged

consumer lawyers to file more and more TCPA claims. Class actions that can

aggregate the claims of thousands of consumers can potentially be worth

hundreds of millions of dollars—a tempting enticement for class action lawyers

who ordinarily take home a percentage of that recovery” (Deane & Williamson,

2017). The lawyers support for TCPA not only for consumers’ rights, but also for

their own profits.

The third party who supports for TCPA is Federal Communications

Commission. FCC is an independent government agency of the United States

who works for people and seeks to provide better service. It is “created by statute

(47 U.S.C. § 151 and 47 U.S.C. § 154) to regulate interstate communications by

radio, television, wire, satellite, and cable. The FCC works towards six goals in

the areas of broadband, competition, the spectrum, the media, public safety and

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homeland security, and modernizing itself” (Wikipedia,). One of FCC’s goal is to

ensure public safety, which is related to the issue that robocalls may cause

telephone scams. Thus, it is one of FCC’s responsibility to protect people’s

privacy and assets. It will absolutely maintain even expand TCPA. Based on the

data, “FCC and court rulings have interpreted the TCPA in an increasingly

expansive way” (Deane & Williamson, 2017). FCC desires to get consent from

consumers.

When the rule TCPA is beneficial for consumers, it must take off some

benefits from companies who depend on or use robocalls as one way to make

money. The first interest group who is directly affected by this policy is the

department stores who use robocalls as one way to appeal customers. They will

definitely be against this rule. Originally, using telephone calls to advertising was

one of the main ways which the enterprises could attract consumers. Before,

people could often receive calls from malls and department stores like Macy’s,

Nordstrom, Saks Fifth Avenue, Bloomingdale’s, Neiman Marcus, etc. These

companies and industries relied on robocalls to increase sales. After FCC

published this rule, part of the potential consumers has the right to block the calls

forever. As a result, as the advertisement decreases, the customers decrease.

Fewer customers imply fewer sales. Those firms’ output will decrease and make

less profit. If they put all the same input as before but get less money, in another

word, the cost increases.

The next interest group who earned money from those department stores

by helping them advertising are the telephone companies, and they are also

deprived part of the profits away by TCPA. In the past, the telephone companies

and the department stores always set a business relationship. At present, as the

department stores are strictly banned to advertising by robocalls, the telephone

companies are also cut off this way to make money. The telephone companies

now have no way to continue such a deal to get profit. As the department stores’

profits go down with cost goes up, the telephone companies’ profits go down with

cost goes up, as well.

President Donald J. Trump and his Republican governing may also be

against TCPA, despite he seems like to be totally different and irrelevant with the

two interest groups above. President Trump was a prestigious businessman

before he is elected as the president of the United States. His successful election

cannot deprive from the support from his business networking and support. After

he became president in 2016, the reform of the relationship between consumers

and business marks a pivot point, and his agenda “is rolling back what he deems

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to be government overreach. He has promised to revive the economy by removing

regulatory impediments to business success and growth” (Deane & Williamson,

2017).

COMMENTS FOR PROPOSED RULE

Consumers are the biggest victims of telephone scams. According to the

data above, 97% of people just do not want to receive such calls. However, to

hang up one robocall, people need to take at least several seconds, and may even

be interrupted at all when they are dealing with some very important the staff. In

a public place, a sudden robocall can disturb people around you, break the silence,

and embarrass you. All things describing above are just in small cases. The

biggest issue is telephone scam which can cause huge loss in both assets and spirit

to consumer. From IEEE Xplore Digital Library, the authors said that “Telephone

spam costs United States consumers $8.6 billion annually. In 2014, the Federal

Trade Commission has received over 22 million complaints of illegal and wanted

calls. Telephone spammers today are leveraging recent technical advances in the

telephony ecosystem to distribute massive automated spam calls known as

robocalls” (Tu & Doupe & Zhao & Ahn, 2016). As a result, one of the angry

recipient who receives “Congratulations! You’ve won a free cruise!” phone call,

“Philip Charvat, claims that Resort Marketing Group — the culprits behind some

of those robocalls — violated the Telephone Consumer Protection Act” (Scotti,

2017). On the other hand, with more and more advanced technology, customers

now are more used to reading advertisement such as e-mails and text messages.

Reading is much quicker than listening to the same content of words. By sending

text messages, people can save their time and feel less disturbed and may be more

willing to make an order. This concerns from the victims’ comment contribute a

lot to the progress of TCPA.

Next, the group of lawyers support TCPA and since they need to defend

their victim consumers. According to a In-House Counsel at a higher education

institution, “TCPA Guardian from Jornaya helped me dismiss a large Class

Action TCPA lawsuit that I estimate saved our business $500,000 in legal fees

alone” (JORNAYA). It is the fact that they make huge profit for those victims of

robocalls. However, they also make money for themselves when they treat

defense as their job, which makes them less “innocent”. They have the incentive

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more than just to maintain a healthy market. They are driven by TCPA to find

more and more robocall cases even including legal one, because “these rulings,

coupled with the lure of uncapped statutory damages (as much as $1,500 for each

call in violation), have encouraged consumer lawyers to file more and more

TCPA claims. Class actions that can aggregate the claims of thousands of

consumers can potentially be worth hundreds of millions of dollars—a tempting

enticement for class action lawyers who ordinarily take home a percentage of that

recovery” (Deane & Williamson, 2017).

The official group who are for TCPA is FCC who wrote this rule. FCC

desires to protect the right of consumers, and it does protect people’s privacy by

restricting robocalls. In the recent years, “the Federal Communications

Commission voted on Thursday to expand the scope of the Telephone Consumer

Protection Act in an effort to crack down on robocalls from telemarketers”

(Hoover, 2015). It does get certain big success that according to a survey in Feb.

2004, 92% got fewer calls. However, FCC sometimes may be too restrict to the

free market with hypercorrection that “dissenting Commissioner Ajit Pai said it

does not properly distinguish between legitimate businesses trying to reach their

customers and unwanted telemarketers but rather lumps them all together despite

‘good faith efforts’ to conform to the TCPA” (Deane & Williamson, 2017).

COMMENTS AGAINST PROPOSED RULE

Many business interest groups have comment against the existing TCPA,

and among them, the typical one should be The National Retail Federation (NRF).

NRF is the world's biggest retail exchange affiliation, and it represents discount

and department stores, home goods and specialty stores, and Main Street

merchants in the United States and more than 45 nations. Those department

stores who built a friendly and benign relationship with customers are being

largely affected by the negative parts of TCPA. It claims that those department

stores have the incentive to provide the better custom service due to free market

competition. There are enough different telephone companies, and they will

compete with each other to provide better service to the consumers. If Company

A always sends robocalls automatically, the people who do not want to receive it

will feel disturbed and upset. Then Company B knows the situation. It can

smartly attract people with the choice of not receiving robocalls. Part of

consumers originally from Company A will give it up and find Company B for

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service. After Company A realizes its mistake, it will immediately design new

project to satisfy all of their potential costumers. As a result, there is always a

competition between companies. To exist in the free market and make more

profits, they will definitely always improve themselves and provide better and

better service to consumers. Because of the competitive market, “with these

factors in mind, many retailers strive to deliver only those communications that

their customers want or reasonably expect to receive, and to make this experience

as seamless as possible and not needlessly complicated. Communicating with

customers as they prefer is good for consumers and good for business”(NFR,

2017). NFR’s goal is to create a competitive advantage both for industries and

consumers if there is less restriction to the existing beneficial relationship

between them. Its reasonable argument will encourage a healthier free market.

Furthermore, many organizations point the problem of reassigned numbers.

Among this associations, Noble System Corporation can be a representative.

NSC is provides customers with contact center software and service in a variety

of industries and applications. In NSC’s opinion, it first recognizes that TCPA

has the good theory, “but misguided attempt, to solve a tangential and relatively

minor problem related to the overall problem of illegal robocalls. While illegal

robocalls are the number one consumer complaint to the FCC and the FTC, this

should not be conflated with the problem of inadvertent calls being made to

reassigned numbers. The problem of inadvertent calls to reassigned numbers

comprises a relatively small problem that is overshadowed by the larger problem

of illegal robocalls in general. These are different problems, and the scope of the

problem of the latter (illegal robocalls) does not justify the solution proposed for

the former (reassigned number problem)” (NSC, 2017). NSC is not the only

organizations who holds this argument. Other interest groups, such as American

Bankers Association, Edison Electric Institution, and The Electronic Transactions

Association all worry about the problem of resigned numbers. This is the bad

effect TCPA brings to the industries, especially direct to contacting system and

companies.

The last one, President Trump also desires to loose the act of TCPA. One

of the reason is to build a better relationship between business and customer in a

more free market. Although President Trump has not specially mentioned TCPA,

he once said early 2017 that “I will keep working with Congress, with every

agency and most importantly, the American people, until we eliminate every

unnecessary, harmful and job-killing regulation that we can find... . We have a lot

more coming” (Trump, 2017). However, there is deeper reason behind his policy

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that “President Trump's outline for his proposed 2018 budget includes deep cuts

to several federal departments and agencies known for their strict regulatory

regimes aimed at protecting individuals against business interests” (Deane &

Williamson, 2017). People are not sure about where the cut budgets will be used

at and whether the situation will be better or worse when there is looser regulatory.

FINAL RECOMMENDATION

Problems of robocalls should not have any government intervention

because it could be resolved by the market on its own. Although at first, the

customers are victims, after a period of development and competition, the market

will finally lower the price to the marginal cost, which maximizes consumer

surplus. There are enough different telephone companies, and they will compete

with each other to provide better service to the consumers. This progress may

require some time, but the government's excessive interference just leads the

market to another worse condition, which has caused huge losses for both

industries and part of consumers who want to receive robocalls, also to the

originally benign business relationship. On the other hand, based on evidence,

there will be more and more advanced technology appearing in the market. Malls

and department stores all offer people with the chance of subscribing to their

newsletter by email. In a word, in today's society with more and more

improvement, robocalls are being transformed to a more efficient way like emails

and text messages to attract customers.

To the old who still do not learn the new technology and do not know how

to read and write emails, collecting information from robocalls is their usual way

to see an advertisement in daily life. Those old people really need this. Our

policy should not ignore them at all. Although this group of people is just a small

proportion, the market has the ability to resolve the issue on its own to satisfy all

the people. Thus, why do we not just let the market have positive free

competition? The telephone companies can send a default robocalls to the house

telephones holder who is older than 50 years old. If they are happy to receive

future calls, both phone companies and the older will be benefited. The

government should allow the free market and allow everyone to choose his or her

own desired lifestyle.

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References

8, 2. M. (n.d.). The Uncertain Future of the TCPA in the Trump Era. Retrieved

November 9, 2017

Federal Communications Commission. (2017, November 05). Retrieved

November 9, 2017

Hoover, J. (n.d.). FCC Expands TCPA To Robocalls Despite Litigation Fears -

Law360. Retrieved November 9, 2017

J. (n.d.). Jornaya TCPA Guardian. Retrieved November 9, 2017

National Retail Federation. COMMENTS OF THE NATIONAL RETAIL

FEDERATION. Retrieved November 9, 2017

Noble System Cooperation. COMMENTS OF NOBLE SYSTEMS

CORPORATION. Retrieved November 9, 2017

Scotti, A. (2017, August 18). Victim of a 'free cruise' robocall? You might be

owed $900. Retrieved November 9, 2017

Tu, H., Doupe, A., Zhao, Z., & Ahn, G. (216). SoK: Everyone Hates Robocalls: A

Survey of Techniques against Telephone Spam. Retrieved October 12, 2017