Lead Generation Industry Facing Massive Change: Are You Ready?

Whether you have been naughty or nice this year, if you are buying or selling leads or otherwise are a participant in the lead generation industry, you may be getting a lump of coal in your stocking. Don’t get upset just yet with Santa because this unwanted gift is expected to get delivered straight to the doorsteps of the lead generation industry in 2024 courtesy of the Federal Communications Commission (“FCC”).

The FCC recently released its Second Report and Order, Further Notice of Proposed Rulemaking, and Waiver Order (“NPRM”) which contained a number of proposed rules intended, if adopted, to help combat “unscrupulous robocallers and robotexters [from] inundating consumers with unwanted and illegal robocalls and robotexts”. The proposed rule that has sent shockwaves throughout the lead generation industry relates to closing the so-called “lead generator loophole.”

The lead generator loophole is a strategy (often utilized by comparison shopping websites) to obtain prior express written consent to make automated marketing calls or texts to a consumer from multiple potential sellers of goods or services. Since under the Telephone Consumer Protection Act of 1991 (as amended, the “TCPA”) prior express written consent is required to initiate a marketing call to a consumer using automated technology, the lead generator loophole has been used for years to allow for a single point of lead collection and consent from a single consumer to serve as the means for multiple potential sellers to contact a consumer with the requisite TCPA-compliant consent.

While the NPRM still needs to be voted on by the Commission (which is anticipated to occur at the next open Commission meeting scheduled for December 13, 2023), it is expected to pass and when it does, it will go into effect six months following its publication in the Federal Register (as early as August and as late as October 2024).

So how exactly will the NPRM close the lead generator loophole and in its wake demolish a massive subset of the lead generation industry? As summarized in the NPRM, it will “unequivocally [make] clear that comparison shopping websites must get consumer consent one seller at a time.” The high-level takeaways that stakeholders in the lead generation industry must be aware of concerning the NPRM are the following:

One-to-One Consent

The NPRM requires that texters and callers must obtain a consumer’s prior express written consent from a single seller at a time. The term seller means the ultimate person or entity that will provide the goods or services to the consumer and does not necessarily include the lead generator (i.e., the person or entity collecting the consumer’s information) or the telemarketer (i.e., the person or entity initiating the telemarketing call or text), to the extent they are different than the seller. In other words, the term prior express written consent will mean an agreement, in writing, that bears the signature of the person called (or texted) that clearly and conspicuously authorizes no more than one identified seller to use automated means to deliver a marketing call or text. While the NPRM clearly puts an end to the current (and common) practice of many lead generators of obtaining consent from multiple (even hundreds) of potential sellers (often through a hyperlink), it does leave the door open for lead generators to obtain consent for multiple sellers to contact a consumer so long as the prior express written consent is clearly and conspicuously obtained for each seller separately. An example the NPRM provides for properly collecting one-to-one consent from multiple sellers is by offering a consumer a check box list that allows the consumer to specifically choose each individual seller that they wish to hear from.

Clear and Conspicuous Disclosure

In addition to one-to-one consent, the NPRM seeks to adopt a clear requirement that 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 seller. The NPRM defines “clear and conspicuous” as notice that would be apparent to a reasonable consumer. Further, the NPRM makes clear that compliance with the federal Electronic Signatures in Global and National Commerce Act (the E-Sign Act) satisfies the requirements of obtaining a “signature” for purposes of sufficient prior express written consent so long as all the elements of E-Sign are established.

Logically and Topically Related

The NPRM further provides that consumer consent obtained through online lead generation must be “logically and topically related” to that website. Therefore, for example, a consumer giving consent on a car loan comparison shopping website would not be deemed to have also consented to robotexts or robocalls about loan consolidation. This requirement is intended to protect consumers from calls or texts that go beyond the scope of consent. While the NPRM expressly does not provide for a definition of the new “logically and topically related” standard, it does make clear that texters and callers should be capable of implementing this standard and, when in doubt, should err on the side of limiting that content to what consumers would clearly expect.

Lastly, it is also important to point out that the NPRM reiterates that the burden of proving valid TCPA-compliant consent rests with the texter or caller. Thus, businesses directly collecting consumer’s information on their own behalf, working with third-party marketing partners, or buying leads from third-party vendors must, in all instances, ensure they are obtaining and retaining the requisite proof of consent, otherwise these businesses risk being exposed to significant penalties and other financial consequences.

Conclusion

Ultimately, businesses involved with online lead generation (whether lead buyers, lead sellers, or others in the lead generation business) should familiarize themselves with the NMRP and most importantly maintain (and continuously take proactive steps to update) a robust lead generation, marketing, and telemarketing compliance policy.

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