Today, we’re diving into a crucial topic that’s making waves in the lead generation industry: the Federal Communication Commission’s (FCC) decision to close the lead generator loophole. To provide some insight, I had a conversation with John Henson from Troutman Amin. Here’s a summary of what we discussed.

The Current Status

As of mid-June, we are six months away from the implementation date of the new FCC rule aimed at closing the lead generator loophole. Despite some industry rumblings suggesting potential delays or significant alterations, John Henson believes the rule will remain substantially similar to its current form when it goes live in January.

The Rulemaking Process

John highlighted that while there’s ongoing chatter about possible changes, the FCC has not made any public announcements indicating such intentions. The final rule, as it stands, appears to be the rule we should prepare for. The FCC has shown a clear intention to allow the industry ample time to adjust to the new regulations, minimizing the likelihood of abrupt changes as the implementation date approaches.

Political Considerations

With the presidential election just four and a half months away, some wonder if the election outcome could impact the rule’s implementation. John noted that the final rule date is set for seven days after Inauguration Day. Given the timing, it is unlikely to be a week-one priority for either administration. Therefore, companies should not delay their compliance preparations based on the election results.

Key Takeaways

1. Timeline: The new rule is set to go live in January, and significant changes are unlikely.
2. Preparation: The industry should continue preparing for the rule as currently written.
3. Election Impact: The upcoming presidential election is not expected to affect the rule’s implementation timeline.

Final Thoughts

As John Henson pointed out, the lead generation industry must stay proactive. Waiting until November to make necessary adjustments could prove detrimental. The FCC’s commitment to providing sufficient lead time underscores the importance of starting preparations now.

• The FCC said it agreed with the Online Lenders Alliance that extending the implementation period will help mitigate some of the challenges to implementing the new rules. The Online Lenders Alliance had requested an implementation period of 12-to-18 months.
• When it first announced the proposed rule, the FCC was going to put it into effect six months after it was published in the Federal Register, which is expected to happy at some point in the coming days.
• In a footnote, the FCC said the Consumer and Governmental Affairs Bureau would announce the effective date for Section 64.1200(f)(9) at a later date. That section provides that prior express written consent for a call or text message must be directly to one seller at a time. Consumer consent to be contacted by one seller is not consent to be contacted by another seller who purchased the lead from the first seller.

Why This Matters: Depending on when the rule is published in the Federal Register, it might not go into effect until after the presidential inauguration on January 20, 2024. If a Republican wins the White House in November, there may be a chance to prevent the rule from ever going into effect.

Specifically, Section 64.1200(f)(9) of the Telephone Consumer Protection Act is amended to read:

• The term prior express written consent means an agreement, in writing, that bears the signature of the person called or texted that clearly and conspicuously authorizes no more than one identified seller to deliver or cause to be delivered to the person called or texted advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice. Calls and texts must be logically and topically associated with the interaction that prompted the consent and the agreement must identify the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.
  • (i) The written agreement shall include a clear and conspicuous disclosure informing the person signing that:
    • (A) By executing the agreement, such person authorizes the seller to deliver or cause to be delivered to the signatory telemarketing calls or texts using an automatic telephone dialing system or an artificial or prerecorded voice; and
    • (B) The person is not required to sign the agreement (directly or indirectly), or agree to enter into such an agreement as a condition of purchasing any property, goods, or services. The term “signature” shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law.

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1. Companies need to ensure they are obtaining one-to-one express consent from consumers before contacting them.
2. The burden of proof for consent is now on the party contacting the consumer, rather than the lead provider. Documentation of consent will need to be verified in real-time.
3. The definition of “entity” in terms of consent is still unclear, but it likely refers to specific companies or brands rather than large corporate families.
4. The “logical and topical” requirement for consent is still vague and will likely be defined through future legal cases and precedent.
5. Changes to practices and systems need to be made proactively to comply with the new FCC rules slated to take effect in mid-2023, including reviewing contracts and technologies.

Click here to access a recording of this webinar.

How it Will Work: Consumers will have to provide their prior express written consent under the Telephone Consumer Protection Act to receive calls and text messages from one seller that is topically and logically connected to the company selling the lead. The consent must be provided in a clear and conspicuous disclosure.

• This could present problems for comparison websites and other tools that provide consumers who are looking for products and services with multiple offers.
• A seller is defined as an entity that provides a good or service to a consumer.
• Under the rule, consent is not transferrable and the burden is on the entity placing the calls or text messages to prove it has consent to communicate under the TCPA.
• The rule only applies to calls and texts that are subject to the TCPA.

How it Voted: The FCC’s five commissioners voted 4-to-1 to approve the measure. Commissioner Nathan Simington was the lone dissenting vote, saying that while he hates receiving robocalls and robotexts, the way the rule is written, the FCC “clumsily rushed” into the rulemaking, which could be considered “capricious” because of the impact it may have on small businesses.

• In announcing her support for the measure, FCC Chair Jessica Rosenworcel noted that consumer groups, members of Congress, and state Attorneys General supported the rulemaking.

What Happens Next: The rule will go into effect six months after it is published in the Federal Register. That means companies will have until late June or early July, most likely, to prepare for the rule’s enactment.

The proposal is due to be voted on at the FCC’s next meeting, on December 13.

“Requiring one-to-one consent will end the current practice of consumers receiving robocalls and robotexts from tens, or hundreds, of sellers – numbers that most reasonable consumers would not expect to receive,” the FCC said in its proposal. Furthermore, whatever consent is provided by the consumer, the buyer of that lead must provide a similar service. For example, a consumer giving consent on a car loan site can not receive robocalls or robotexts about loan consolidation, the FCC noted.

The FCC did say that its requirement does not specify how many sellers can be listed on a webpage. With respect to how comparison sites can continue to operate going forward, the FCC offered the following alternatives:

• The website may offer a consumer a check box list that allows the consumer to specifically choose each individual seller that they wish to hear from.
• Alternatively, the comparison shopping website may offer the consumer a clickthrough link to a specific business so that the business itself may gather express written consent from the consumer directly.

The FCC said that closing this loophole will result in “only small additional costs” for comparative shopping websites, but that such practices may lead to greater customer satisfaction, which may actually benefit the sites.

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