An appeals court threw out part of a Federal Communications Commission regulation aimed at reducing automated telephone pitches, weakening a 2015 effort to squelch the scourge of so-called robocalls.
The rule was aimed at calls generated by auto-dialing devices. But its language was too broad, and could be construed to prohibit calls from any smartphone, the U.S. Court of Appeals for the District of Columbia Circuit ruled in a unanimous opinion Friday.
"Consumers, already inundated by robocalls, will be hit with even more unwanted calls," Maureen Mahoney, policy analyst for Consumers Union, the advocacy division of Consumer Reports, said in an emailed statement.
Unwanted calls, including robocalls, are the top consumer complaint to the FCC, with more than 200,000 such comments received annually, according to the agency. Some private analyses estimate that U.S. consumers received about 2.4 billion robocalls per month in 2016.
The FCC's 2015 rule would have extended a law originally intended to deal with hundreds of thousands of telemarketers into one constraining hundreds of millions of everyday callers, the three-judge panel wrote in a unanimous opinion.
Because under the FCC's rule "any uninvited call or message from the device is a statutory violation," regular smartphone users could face a $500 penalty for calls—such as inviting a person to a party—without first getting consent to contact them, the judges said.
The rule was passed under Democratic leadership at the FCC. Current Republican leadership welcomed Friday's ruling.
"As the court explains, the agency's 2015 ruling placed every American consumer with a smartphone at substantial risk of violating federal law," Chairman Ajit Pai said in an emailed statement. Pai, as a commission member, dissented from the FCC's 2015 vote.
The rule exposed companies to liability "for simply attempting in good faith to communicate with customers who previously provided valid consent to be contacted," according to a statement from the law firm Gibson Dunn, which took part in the case on behalf of the U.S. Chamber of Commerce.
"This is a huge win that allows American businesses and consumers to communicate with each other," Helgi Walker, a Gibson Dunn partner, said in an emailed statement. "The decision will help to avoid increasingly onerous class-action liability."
The judges affirmed part of the FCC rule that lets people revoke consent to be called through "any reasonable means."
That was "a significant victory" because it puts consumers in control of when and how they can be contacted, Alan Butler, senior counsel for the Electronic Privacy Information Center, said in an email. Butler's policy group helped defend the FCC.
In addition to the Chamber of Commerce, opponents of the FCC's rule included Sirius XM Radio, the Consumer Bankers Association, the drugstore chain Rite Aid and ACA International, the Association of Credit and Collection Professionals—a Minnesota-based nonprofit corporation with nearly 3,700 members including collection agencies.
'Good for society'
"We applaud the court for making the right decision today because it supports legitimate, law-abiding businesses and recognizes that technological advancements in the ways people communicate are good for society as a whole," Mark Neeb, ACA International's chief executive, said in an emailed statement.
Pai, the FCC chairman, said the agency will continue to fight robocalls.
"Instead of sweeping into a regulatory dragnet the hundreds of millions of American consumers who place calls or send text messages from smartphones, the FCC should be targeting bad actors who bombard Americans with unlawful robocalls," Pai said.
Michael O'Rielly, a fellow Republican commissioner, agreed. "This will not lead to more illegal robocalls but instead remove unnecessary and inappropriate liability concerns for legitimate companies trying to reach their customers who want to be called," he said.
FCC Commissioner Jessica Rosenworcel, a Democrat, said in a statement that the agency "is now on the hook for protecting you from the invasion of annoying robocalls."
"The D.C. Circuit Court invalidated core protections that help give consumers reasonable control over their mobile devices," said Senator Ed Markey, a Massachusetts Democrat. "It is now the FCC's obligation to use its existing authority to reestablish robust, enforceable protections to enhance the precious zone of privacy created by the law."
-- Bloomberg News