In a ruling with far-reaching implications for home improvement pros who depend on lead aggregators to fill their marketing funnels, the Federal Communications Commission issued an order Dec. 13 that ‘closes the lead-generation loophole’ in the 1991 Telephone Consumer Protection Act or TCPA.

The lead-generation loophole, which allowed businesses to use certain exemptions in the TCPA, has long been a point of contention. Marketers have been utilizing lead-generation firms to navigate TCPA restrictions, allowing them to contact potential customers via phone without obtaining the necessary consent.

The FCC order, however, marks a significant departure from this practice. The regulatory body now requires a more stringent approach to how businesses acquire and use consumer data for marketing purposes.

One of the key aspects of the ruling involves the requirement for explicit ‘one-to-one’ consent from consumers before their information can be shared or used for telemarketing. An excerpt from the FCC ruling lays it out clearly.

Businesses that have heavily relied on lead-generation strategies are now faced with the challenge of adapting to the new regulatory landscape. Industry analysts predict that this ruling will encourage businesses to invest in more targeted and personalized marketing approaches, as obtaining explicit consent becomes a prerequisite for engaging with potential customers.

Burden is on Home Improvement Pros

Attorney D.S. Berenson, managing partner of Berenson LLP, says his firm has been defending home improvement companies from more than a dozen class-action lawsuits related to the TCPA over many years. He believes that lead-aggregation firms will be free to continue sending the same leads to multiple partner companies when the new ‘one-to-one’ rule takes effect by the middle of next year. It will then be up to each home improvement company or marketer of any type that receives group leads to ensure that ‘automatic dialers’ are not used to reach out to the consumer with a phone call or text message, says Berenson. And for a marketer to be on firm ground legally, they must be able to prove that the consumer was not robocalled.

“What the FCC order has come out and done—and we were expecting it—when you go to a lead site, the lead aggregator must obtain the proper telemarketing authorization and identify a particular company that will call you, the consumer,” said Berenson. “This order only applies to the extent that when I pick up the phone to call you that first I’m likely calling your cell phone and second that I’m using the automatic telephone dialing system in my CRM. But if either of those don’t apply, this is not even an issue. The vast majority of leads are hitting cell phones. So, the question is, are we using an automatic telephone dialing system in our CRM or not? So you can try to get proof that your CRM doesn’t use an a TDS—and there are ways of doing that—or you can have enough manual manipulation in making the call that you can argue it’s a hand dialed-phone call.”

Qualified Remodeler will be covering this issue in depth throughout 2024 as the new ruling takes effect. For now, Berenson makes the following recommendation to small home improvement companies.

“As far as advice to smaller contractors the easiest and simplest thing is to make sure that whatever dialing system you’re using doesn’t contain a random or sequential number generator, because that’s what makes it an automatic telephone dialing system,” said Berenson. “If you’re able to show that your CRM doesn’t have that capability or that that capability has been permanently disabled you don’t have to worry about this at all.”  

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