Legal Articles

FCC Proposes New Rule Eliminating Lead Generator Loophole

FCC Rule Change Aims to End "Lead Generator Loophole", impacting robocall consents.

As if sadistically calculated to ruin the Thanksgiving break for thousands of people in the lead generation industry, on the afternoon of Wednesday November 22nd, the FCC released a long anticipated Report and Order that included a new rule that would effectively close the so-called “lead generator loophole” which seemed to permit websites to secure a consumer’s consent to receive robocalls and automated texts from multiple companies.

While the Report and Order covered other matters as well, this article will be focusing on the one aspect likely to have a profound impact on the lead generation industry.

What is the Lead Generator Loophole?

To better understand the meaning and impact of this ruling, it is necessary to first unpack what the FCC’s meaning of the term “Lead Generator Loophole.” According to the FCC, “lead-generated communications are a large percentage of unwanted calls and texts and often rely on flimsy claims of consent to bombard consumers with unwanted robocalls and robotexts.”

On November 10, 2022, the FCC’s Enforcement Bureau announced an Orderauthorizing all U.S.-based voice service providers to cease carrying any traffic originating from a company called Urth Access, LLC, which the Industry Traceback Group (ITG) identified as being responsible for a flood of scam robocalls related to student loan debts.

In an earlier response to an ITG notice regarding the robocalls, Urth Access claimed that its customers had properly obtained the called parties’ consent and as proof of this provided the ITG with “consent logs” that included websites that were purportedly used to secure the required consent. In reviewing these websites, the FCC noted that:

  1. None of them seemed to have anything to do with the purpose of the calls at issue (student loan relief); and
  2. They failed to provide consumers with “clear and conspicuous disclosure” that would constitute effective consent as required by FCC rules. Instead, the websites included TCPA consent disclosures whereby the consumer agreed to receive robocalls from “marketing partners” whose identities would only be visible to consumers via a clicked hyperlink to another website that listed the names of over 5,000 companies, which the FCC found insufficient to demonstrate that any consumer consented to be contacted by any one of the marketing partners” listed.

Then on February 23, 2023, the issued a Notice of Proposed Rulemaking (NPRM) proposing to “ban the practice of obtaining a single consumer consent as grounds for delivering calls and text messages from multiple marketers on subjects beyond the scope of the original consent.” Last week’s ruling was the result of that NPRM.

What the Proposed New Rule Does for Lead Generator

One Lead Per Form: In its ruling, the FCC attempted to make it unequivocally clear that websites used to generate leads can only obtain a consumer’s prior express written consent to be contacted by a single “seller” at a time. By “seller,” the FCC is technically referring to the party that ultimately purchases the lead, but for all intents and purposes it should be read as the party placing the call or text.

The FCC also adopted two additional protections to further guard against “consent abuse.”

  1. Clear and Conspicuous Disclosure: The one-to-one consent must come after a clear and conspicuous disclosure to the consenting consumer that they will get robotexts and/or robocalls from the named caller. “Clear and conspicuous” means notice that would be apparent to a reasonable consumer. And, because the rules require consent to receive prerecorded calls to be secured via a signed, written agreement, all the elements required by the Electronic Signatures in Global and National Commerce (E-Sign) Act must be present. This effectively ends the practice of listing multiple parties in a marketing partners link inserted into a TCPA consent disclosure on a website form.
  2. Logically and Topically Related: Robotexts and robocalls triggered by an online form submission from a lead generator website must be “logically and topically related” to the subject addressed by the website. Thus, a consumer giving consent on a car loan comparison website does not consent to get robotexts or robocalls about student loan consolidation. As for how far the scope of such consent would extend, the FCC basically stated that the scope could always be reasonably inferred from the purpose of the website, and thus refrained from adopting a formal definition of “logically and topically” as used in the ruling.

This implies that websites that address consumer needs in a general fashion (e.g., sites offering resources for consumers in financial distress) can gather consent for a wider range of topics than websites that focus on a particular vertical. However, whether consent extends to the subjects of some calls and texts will doubtless be the subject of much future litigation.

The current rule governing consent to contact someone with a prerecorded marketing message defines the term “prior express written consent” as:

an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.

The FCC proposes to revise that definition to mean:

an agreement, in writing, that bears the signature of the person called that clearly and conspicuously authorizes no more than one identified seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice. Calls 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 (changes are set forth in bold).

Six-Month Implementation Period: The proposed rule further stated that texters, callers, and any third-party websites they obtain consent through will have a six-month implementation period to make the necessary changes to ensure consent complies with the new rule.

Burden of Proof Remains on the Caller: The FCC took pains to reiterate that the burden is on the texter or caller to prove that they have consent that satisfies the TCPA and the new rule, stating that they “may not, for example, rely on comparison websites or other types of lead generators to retain proof of consent for calls the seller makes,” and in all cases, “the consent must be from the consumer.” In addition, the consumer’s consent is not transferrable or subject to sale to another caller because it must be given by the consumer to the seller.

lead generator illustration drawing converting to customers

What the New Rule Does Not Do

Multiple Sellers Can Still be Listed: While the new rule requires consent to be limited to one seller at a time, the FCC made it clear that this requirement does not specify how many sellers can be listed on a website. Therefore, websites can list multiple parties and obtain consent for one or more of them by having the consumer check a box next to a listed company name.

Likewise, a consumer can be presented with multiple offers while navigating a website, each of which can include a consent to be contacted by a particular company, as long as the consent is limited to a single caller. This seems to offer room for co-registration and sweepstakes sites to continue operating, albeit differently.

Live (Non-ATDS) Calls and Texts: The new rule governs consent to send “calls and texts sent using an automatic telephone dialing system (ATDS) or made using a prerecorded or artificial voice,” and does not address calls featuring a live agent’s voice that are dialed by means other than a system that qualifies as an ATDS as that term is defined in the TCPA and subsequent court decisions.

In Section 39 of its explanation of the new rule, the FCC stated that callers and texters “may avail themselves of other options for providing comparison shopping information to consumers, e.g., manually dialed or non-prerecorded or artificial voice calls or texts,” which seems to imply that a lead generator website can still secure consent for multiple callers at the same time, as long as none of them use an ATDS or send prerecorded calls or automated texts.

What Happens Next?

The proposed rule will be finalized December 13, 2023. Afterwards it will need to be reviewed and then published in the federal register, which will trigger the six-month implementation period. This will likely happen sometime in January or February of next year.