FCC Chairwoman Seeks to Regulate E-commerce Use of AI
Introduction
Last week, Federal Communications Commission (FCC) Chairwoman Jessica Rosenworcel released a draft of a Notice of Proposed Rulemaking (NPRM). If adopted, this NPRM would initiate a formal rulemaking process that could lead to regulations concerning the use of AI by marketers in automated calls and text messages. The full Commission will consider whether to proceed with the rulemaking process during its next open meeting, scheduled for August 7, 2024. It is likely the proposal will pass, formally kicking off a rulemaking process that is unlikely to conclude before this November’s election.
Background
Under the Telephone Consumer Protection Act (TCPA), the FCC has the authority to regulate calls sent using an automatic telephone dialing system (ATDS) or that use an “artificial or prerecorded voice.” Although text messages did not exist when Congress adopted the TCPA in 1991, the FCC has repeatedly concluded that it has the authority to regulate text messages sent using an ATDS. Its rules require that marketing texts sent using an ATDS be sent only after the business receives prior express written consent.
The FCC first signaled its interest in expanding its regulatory footprint into AI when it issued a Notice of Inquiry in November 2023. This inquiry sought information on the implications of emerging AI technologies for calling and texting, focusing on potential revisions to the TCPA rules to address AI risks and benefits. In February, the FCC issued a Declaratory Ruling stating that AI-generated voices fall within the definition of “artificial” voices, thus requiring prior express written consent for their use in phone calls.
As Chairwoman, Rosenworcel has been recently challenged by powerful House Committee Chairs for “promulgating rules that significantly expand the power of the FCC beyond the boundaries set by Congress,” and enacting rules “based on overreaching interpretations of statutes enacted by Congress years ago, before the issues now regulated were even imagined.” The proposal released last week to regulate AI – a term never mentioned in the TCPA or even contemplated by Congress when the TCPA was enacted – would seem to similarly go beyond the boundaries set by Congress while imposing new disclosure and consent requirements on ecommerce marketers.
Proposed Regulations on AI-Generated Communications
The draft NPRM proposes to define an “AI-generated call” as “a call that uses any technology or tool to artificially generate a voice or text using computational technology or other machine learning, including predictive algorithms and large language models, to process natural language and produce voice or text content to communicate with a called party over an outbound telephone call.”
The draft NPRM proposes amending the FCC’s TCPA rules to require new disclosures and written consent from consumers. Specifically:
Calls using AI-generated artificial or prerecorded voice messages would need to include a clear and conspicuous written disclosure at the time of opt-in that the consumer’s consent to receive artificial and prerecorded calls may include consent to receive AI-generated calls.
Calls using AI-generated artificial or prerecorded voice messages would also be required to inform consumers of the use of AI at the beginning of any AI-generated voice message.
Callers sending autodialed text messages that include AI-generated content must provide a clear and conspicuous written disclosure at the time of opt-in that the consumer’s consent to receive SMS includes consent to receive AI-generated content.
The Commission clarifies in the draft NPRM that these AI-specific disclosures would be required when receiving initial consent to place these calls and texts.
While proposing these new disclosures at the time of opt-in, the NPRM noticeably fails to articulate why these new rules are necessary to protect consumers. The draft NPRM does not explain how consumers who consent to receive marketing SMS campaigns are negatively impacted when AI is used to help marketers develop message content. Similarly, it does not clarify how consumers will benefit from additional legal disclosures. EcMA believes that while there may be legitimate concerns about AI-generated voices, the FCC has not articulated a clear need for more regulation of marketing SMS.
Potential Implications for the E-commerce Community
If adopted (and upheld by the courts), Chairwoman Rosenworcel’s NPRM could have significant implications for e-commerce businesses. The proposed regulation’s focus on additional disclosures at the time of opt-in raising concerns about whether companies could use AI for automated messages sent to their existing subscriber base. EcMA’s stance is that businesses that have invested in building a compliant subscriber list for marketing campaigns should not face the challenge of gaining new consent from these individuals to leverage AI for a better customer experience. If adopted, any regulations should clarify that subscribers who have already provided prior express written consent to receive marketing SMS may be informed of the company’s current or intended use of AI and advised on how to opt-out, without requiring new affirmative consent.
Conclusion
The FCC’s proposed rules on AI-generated robocalls and robotexts mark a significant potential expansion of regulation without a clear explanation of the need for such rules or how consumers will benefit from additional opt-in disclosures. Once the rulemaking process is officially underway, EcMA intends to file comments with the FCC and meet with FCC staff to address the potential impact of new regulations on the e-commerce community. We encourage all stakeholders to review the proposals and participate in the FCC’s process to help shape a balanced regulatory framework that supports innovation and consumer protection.
