Court Strikes Down FCC Restrictions On Lead Generation

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Court Strikes Down FCC Restrictions On Lead Generation

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A federal appellate court late last week struck down a Federal Communications Commission order that would have curbed companies' ability to send robotexts to consumers.

The FCC order, issued in late 2023, would have required every company that robotexted or robocalled a consumer to obtain that person's consent. The order aimed to close what the agency identified as a “lead generator loophole” in the Telephone Consumer Protection Act -- a law that prohibits companies from sending robotexts or robocalls to consumers without their prior consent. The loophole identified by the FCC allowed one company to ask a consumer to receive robotexts or robocalls from numerous other companies.

Former FCC Chair Jessica Rosenworcel said at the time that the “lead generator loophole” was “a big reason why unwanted robocalls and robotexts are multiplying on our phones.”

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“Imagine you are shopping online,” she stated. “You give a business your number and in a single click you are also giving that business the right to sell and share your number with hundreds if not thousands of other businesses that may use it to send you robocalls and robotexts that you never asked for, do not want, and do not need. They bury it in the fine print, so you do not realize when you make that one click you are authorizing all kinds of incoming junk to your phone.”

The Insurance Marketing Coalition sued in the 11th Circuit Court of Appeals to strike down the FCC's order, arguing it would “reduce consumer choice, drive small businesses from the market, and devastate many companies that partner with and rely on comparison shopping websites to connect with potential customers.”

A three-judge panel of the 11th Circuit sided against the FCC, ruling on Friday that the agency lacked authority to require companies to obtain one-on-one consent for robotexting or robocalling.

“Under the 2023 Order, even if a consumer 'clearly and unmistakably' states, before receiving a robocall, that he is willing to receive telemarketing or advertising robocalls from multiple entities, the 2023 Order provides that consent cannot be given unless the consumer independently and separately consents to receive robocalls from each individual caller,” the judges wrote. “In so doing, the 2023 Order exceeds the FCC’s statutory authority.”

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January 28, 2025 at 05:30PM