Appeals court nixes some FCC rules on robocalls

MENLO PARK, Calif. — A federal appeals court rolled back rules intended to deter irritating telemarketing robocalls, saying they were too broad.

The U.S. Court of Appeals for the District of Columbia Circuit said that 2015 regulations from the Federal Communications Commission could wrongly classify every smartphone as an autodialing device subject to anti-robocall fines. Those 2015 rules attempted to graft modern definitions onto a 1991 law that predated the iPhone by more than 15 years.

The court also struck down rules that could levy fines on telemarketers who repeatedly call phone numbers reassigned to people who have opted out of such calls.

FCC Commissioner Jessica Rosenworcel said in a tweet the ruling was "not good." In a statement, she said, "robocalls will continue to increase unless the FCC does something about it."

The court said the FCC's Obama-era rules were "unreasonably expansive" and could have swept up just about anyone. Its ruling offered the example of someone organizing a get-together and texting 10 people without obtaining their prior consent, which under the rules could subject her to a potential fine of $500 per person.

While it agreed smartphones could be used as autodialers by installing an app, the court said the FCC's rules did not make a clear enough distinction between phones that had downloaded such software and those that hadn't.

In voiding a one-strike rule intended to prevent telemarketers from dialing reassigned numbers more than once, the court found it would be difficult for companies to avoid calling a second time even if they were acting in good faith. It also said the current rule was being abused, citing reports of a new phone customer who waited to receive 900 text alerts intended for a previous subscriber in order to rack up potential penalties before filing a lawsuit.

Lawyer Megan Brown, whose firm Wiley Rein represents Fortune 500 companies sued for such violations, said the court's ruling will "stop the litigation harassment of a bunch of regular companies for crippling damages" when the worst actors behind scams and spoof calls are overseas.

Current FCC Chairman Ajit Pai said in a statement that the ruling would not deter the FCC's stepped up crackdown against illegal robocalls. He cited $200 million in fines the FCC initiated last year against two U.S. firms in so-called "spoofing" scams, in which they disguised their caller IDs in order to sell vacation packages and health insurance.

The FCC is also working to require telecoms companies to report when numbers have been reassigned, and passed rules last year that allow phone companies to proactively block calls that are likely to be fraudulent.

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