Does “Capacity” Really Define an ATDS?

If you are reading this post, I’m sure you are already aware that, effective October 16, 2013, any telemarketing call made to a consumer’s wireless telephone using an automatic telephone dialing system (ATDS) absent the consumer’s prior express written consent is prohibited. Calls made without the use of an ATDS are not subject to the TCPA’s consent requirements.

Although we are almost at the effective date, we are still fielding questions regarding what defines an ATDS as many companies are still in the process of determining whether the equipment they utilize makes them subject to the new express written consent requirements.

An ATDS is any technology which has the “capacity” to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers.

Previously, courts have liberally applied this definition citing that the “capacity” to store or produce numbers to be dialed without human intervention defines an ATDS; whether or not this function is being used at the times the calls are placed. However, according to a recent opinion by the Northern District of Alabama in Hunt v. 21st Mortgage Corporation,a system must be operating in the capacity as an autodialer or predictive dialer at the time the calls were made for such equipment to be considered an ATDS.

The Court stated the following opinion:

The  court  therefore  holds  that,  to  meet  the  TCPA  definition  of an  “automatic  telephone  dialing  system,”  a  system  must  have  a present capacity, at the time the calls were being made, to store or  produce  and  call  numbers  from  a  number  generator. While  a defendant can be liable under § 227(b)(1)(A) whenever it has such a  system,  even  if  it  does  not  make  use  of  the  automatic  dialing capability,  it  cannot  be  held  liable  if  substantial  modification  or alteration  of  the  system  would  be  required  to  achieve  that capability.
According to the Court, equipment does not fall under the definition of an ATDS if takes “substantial modification or alteration” for the system to be able to have such capacity.  This case provides important information for companies intending to use, or attempting to develop, equipment allowing them to place compliant telemarketing calls to wireless numbers that have not provided prior express written consent.

As presented in my previous blog post titled “Understanding the Definition of an ATDS,” you can see that other courts have not necessarily held the same opinion as we see here by the Northern District of Alabama. Although other courts may apply a similar interpretation in the future, by collecting and reviewing the FCC’s definition, and the case law relevant to the topic as a whole, we recommend applying the most conservative definitions which were previously applied by other courts. These previous definitions have concluded that any equipment that has the “capacity” to store and randomly or sequentially dial telephone numbers is considered an ATDS.

If you believe your company’s equipment would be considered a manual dialer, we further recommend having a qualified third-party analyze the equipment in question and document the findings as to why the equipment does not fall under the definition of an ATDS. Therefore, such telemarketing calls would not be subject to the TCPA’s new prior express written consent requirement. This should provide sufficient evidence should it ever be needed to prove your company is not required to have prior express written consent since the wireless numbers are not dialed with an ATDS.

For additional questions regarding the TCPA’s new consent requirements and/or the strategies to comply, please reach out to consulting@compliancepoint.com.