FCC Rules Companies May Be Vicariously Liable for Telemarketer TCPA Violations | Practical Law

FCC Rules Companies May Be Vicariously Liable for Telemarketer TCPA Violations | Practical Law

The FCC recently adopted a declaratory ruling holding that companies may be vicariously liable, under federal common law principles of agency, for the acts of third-party telemarketers who violate the Telephone Consumer Protection Act or FCC rules.

FCC Rules Companies May Be Vicariously Liable for Telemarketer TCPA Violations

Practical Law Legal Update 7-528-8187 (Approx. 4 pages)

FCC Rules Companies May Be Vicariously Liable for Telemarketer TCPA Violations

by PLC Commercial
Published on 15 May 2013 • USA (National/Federal)
The FCC recently adopted a declaratory ruling holding that companies may be vicariously liable, under federal common law principles of agency, for the acts of third-party telemarketers who violate the Telephone Consumer Protection Act or FCC rules.
On May 9, 2013, the FCC adopted a declaratory ruling holding that companies may be held vicariously liable under federal common law principles of agency for the acts of third-party telemarketers who violate the Telephone Consumer Protection Act (TCPA) or FCC rules. The FCC made its determination in response to joint petitions resulting from Charvat v. EchoStar Satellite and United States v. DISH Network.
The TCPA and FCC rules prohibit telemarketers, subject to certain exceptions, from initiating calls:
  • That consist of pre-recorded messages without the prior approval of the consumer.
  • To consumers on the National Do-Not-Call Registry.
The FCC found that companies using third-party telemarketers do not initiate calls within the meaning of the TCPA. Companies are deemed to initiate a call when they take steps to physically place the call and generally do not include companies who hire third-party telemarketers to place the calls. However, the FCC ruled companies may nonetheless be vicariously liable under federal common law principles of agency, including:
  • Formal agency.
  • Apparent authority.
  • Ratification.
The FCC clarified that a call made by a telemarketer on behalf of a company, without more, does not trigger vicarious liability. However, the company may be held vicariously liable where it:
  • Authorized the telemarketer to market its goods or services, for example by:
    • allowing access to its information on the nature and pricing of the its products and services or to the its customer information;
    • providing the ability to enter customer information into the its sales or customer systems;
    • authorizing use of the its trade name, trademark or service mark; or
    • writing or reviewing the telemarketing script.
  • Knew or reasonably should have known that the telemarketer was violating the TCPA or FCC rules.
To help minimize the risk of vicarious liability under the TCPA or FCC rules, companies can seek to:
  • Engage a reputable telemarketer who is less likely to violate the TCPA or FCC rules in the first instance.
  • Obtain an indemnity from the telemarketer.
For more information on indemnification, see Practice Note, Indemnification Clauses in Commercial Contracts.
For a sample indemnification clause, see Standard Clauses, General Contract Clauses: Indemnification.
For more information on telemarketing and the do-not-call registry, see Practice Note, Direct Marketing.
Court documents: