Insurance Group Touts Major Victory Over FCC Rule That Would Have Limited Robocalls

A federal appeals court and the Federal Communications Commission, in one of its first actions under the new presidential administration, have handed down major decisions that many in the insurance industry may see as a double-edged sword.

On the one hand, the decisions give new freedom to insurance companies, agencies, quote-comparison sites and others that engage in telemarketing and robocalls to reach out to consumers. On the other hand, the action is likely to mean an uptick in annoying telemarketing calls to small businesses, including insurance agencies, that may want to keep their phone lines open for policyholder calls.

The Jan. 24 decision by the U.S. 11th Circuit Court of Appeals “will hurt consumers, small businesses and the American phone system,” Chris Frascella, counsel at the Electronic Privacy Information Center, said in a statement.

The appellant in the case was the Insurance Marketing Coalition, representing more than 50 firms, including some well-known insurance companies as well as agencies and brokers, marketing firms and tech companies. The coalition would not release the names of its members, but representatives said the court ruling and the FCC’s change of heart is a victory for many businesses that need to reach out to consumers and generate leads.

“The 11th Circuit’s decision will benefit comparison-shopping websites and the consumers who use them, for example, by making it easier, cheaper, and faster for consumers to connect with small businesses than if the rule had taken effect,” explained Kevin King, one of the attorneys who led the coalition’s appeal.

The controversy began in 2023 when the FCC said – under the authority granted by the Telephone Consumer Protection Act (TCPA) of 1991 – it was proposing a new rule to help stem millions of robocalls.

The new rule would have required most firms that engage in automated calling to obtain express written consent from the consumer. Without the proposed rule, a quote-comparison site, for example, had to rely on a more general disclosure statement on its website, to which the consumer could click “agree.”

The rule would have prohibited telemarketers and lead generators from asking consumers to agree to receive calls about a product from “our partners” – and revealing only in a hyperlink that the partners actually numbered in the hundreds or even thousands, said Margot Saunders, senior attorney with the National Consumer Law Center, who penned an amicus brief in support of the FCC rule change.

The NCLC explained that lead generators often sell the “consents” to other companies, which resell them to others, “resulting in a flood of unwanted calls, often regarding products that have nothing to do with the product the consumer was seeking.”

“The rule would have required consent to be collected for calls from one seller at a time – in other words, lead generators and telemarketers would have to get specific consent for each company the consumer wanted to hear from,” Saunders noted in a statement.

The amicus brief provided comments from several small business owners who said they had been swamped by telemarketing calls, many of which “spoof” local phone numbers. But the businesses dared not ignore the calls for fear of missing calls from clients.

The Insurance Marketing Coalition (IMC) said the proposed “one-to-one” consent requirement amounted to overreach, was too burdensome to businesses that need to reach consumers, and would overstep the FCC’s legal authority. IMC filed an appeal with the 11th Circuit Court of Appeals, in Atlanta, asking it to vacate the rule.

On Jan. 24, one day before the rule was to take effect, the court agreed wholeheartedly with the IMC and vacated the FCC’s regulation.

“After careful review and with the benefit of oral argument, we agree with IMC that the FCC exceeded its statutory authority under the TCPA because the 2023 order’s new consent restrictions impermissibly conflict with the ordinary statutory meaning of ‘prior express consent,'” a panel of the 11th Circuit wrote in the opinion.

The TCPA requires only express consent, not multiple, repeated express written consents, the judges noted.

The same day the court decision came down, the FCC, under new leadership and a new U.S. president, had itself thrown in the towel and decided to scrap the rulemaking altogether.

The rule would have applied to some but not all telemarketing calls that involve human callers. Many telemarketing firms utilize automated dialing, in which a computer automatically calls the next consumer in the list the moment a human worker finishes a previous call. King said those calls are, in fact, considered to be robocalls that would have fallen under the proposed FCC rule.

For calls in which human telemarketers dial the number themselves, a different FCC rule applies, Saunders said. And, ironically, one-to-one consent already is required for those calls and the wording of that rule is almost identical to the proposed regulation on robocalls, she added. So far, FCC has made no effort to vacate that human-caller regulation.

It’s uncertain how much of an impact the decisions will have on the volume of telemarketing calls. The National Consumer Law Center has said that Americans endure some 1.4 billion telemarketing calls every month, a number that has increased in recent years, according to a recent report by YouMail Inc. That same report and a coalition member, Spencer Elg, said the number of robocalls has dropped in the last year by about 6%.

In a webinar shortly after the ruling was released, King said his team had chosen to file the appeal with the Atlanta-based appeals court because of its politically conservative reputation. For decades, challenges to federal regulations were heard only in the District of Columbia Circuit Court of Appeals. But in recent years, groups fighting federal rules have figured out that U.S. law and the rules of court do not prohibit rules appeals from being heard by other circuits, and a few other federal appeals courts, including the 11th Circuit, the 5th Circuit and the 6th Circuit, seem to be more open to the rule challenges, Saunders said.

Despite the consumer groups’ warnings that the court decision will be harmful to consumers, the coalition is not concerned that its efforts could give member insurance firms a bad look in the eyes of the public.

“As the court’s ruling makes clear, the FCC’s rule restricted consumer choice and prohibited one-stop shopping in many instances,” King said. “The decision is a win for consumers because it gives them greater choice and makes it easier for them to connect with businesses that offer the goods and services they want.”

“This was a hanging cloud over the industry,” Chris Michelson, with the IMC, said in the webinar. “We’ve proven that when this industry unites under a common purpose, we can achieve extraordinary results.”

King cautioned that the TCPA remains complex and urged businesses that use telemarketing to consult with a knowledgeable attorney to navigate the rules.