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Take Caution: TCPA violations could make your marketing and text message campaigns more costly than ever

Almost everyone has been on the receiving end of an unsolicited telemarketing call — usually in the middle of eating dinner. In recent years, companies have also been using text message campaigns to direct their efforts toward the 91 percent of adult Americans who own cellphones. While most individuals would probably not think to sue the person or company behind the call or text for the momentary interruption, violations of the Telephone Consumer Protection Act (also known as the TCPA) have recently become the en vogue legal claim due to the TCPA’s imposition of automatic statutory damages for each call, text or fax found to violate the statute. The recent upswing in TCPA claims has made for some costly marketing efforts for an increasing list of businesses.

Purpose of the TCPA

Often referred to as the Junk Fax Act after its amendment in 2005, Congress enacted the TCPA in 1991 to protect telephone consumers from the nuisance and privacy invasion of telemarketing calls. As the modes of modern communication have developed over the last two decades, Congress and the courts have expanded the Act’s reach to include both “fax-blasting” and text message advertising campaigns.

The TCPA provides for automatic statutory damages for each unwanted call, text or fax sent to an individual or company that does not already have a business relationship with the sender, or that has not consented to contact from the sending company. Individuals can bring a private action in state or federal court, and, under the statute, damages are set at a minimum of $500 per violation and can be upwards of $1,500 per violation, depending on whether the seller “willfully or knowingly” violated the statute.

Costly violations

There is no limit on how high the damages can go and no requirement that the recipient suffer actual damages in order to bring a claim. In recent years, many of these claims have been brought as class actions, which cause the sending company’s potential damages to multiply quickly. No company, large or small, escapes the reach of the TCPA. Large national retailers such as Taco Bell, Gap Inc., Coca-Cola and the J.C. Penney Co. have been among the companies sued in recent years for these alleged violations.

Defenses under the TCPA

Only two defenses to TCPA violations exist: the consent defense and the established business relationship defense. Most companies accused of sending these unsolicited marketing materials believed that, not only did they have an established business relationship with the recipients, but the recipients previously consented to receiving the communications. Unfortunately, the existence of an established business relationship is a non-factor in phone call and text message cases (but is a defense in fax-blasting cases), and while the Federal Communications Commission has clarified some of the consent issues, the water is still murky. Recently, the FCC issued rulings that text messages sent in confirmation of a consumer’s opt-out request do not violate the TCPA, and that an individual consents to receiving text messages when he or she voluntarily sends the first message to the company.

What should businesses do?

While the FCC has taken some action to minimize the potential breadth of the TCPA, an FCC rule set to go into effect in October could be the impetus for even more TCPA lawsuits. The new rule requires written consent for prerecorded or automated calls and imputes a higher standard of proof for those fighting TCPA violation allegations. Ultimately, companies need to be careful in using mass marketing techniques that could subject them to TCPA liability. They must be able to demonstrate that the customer specifically consented to receiving the calls, texts or faxes, and that the marketing materials are the type of offers that the customer consented to receiving. Without clear evidence of consent, or an established business relationship in fax-blasting cases, companies risk having to pay potentially unlimited damages for these seemingly innocuous statutory violations.

Costs associated with TCPA violations, especially those filed as class action lawsuits, can potentially decimate a company’s bottom line. With the recent surge in these claims, companies should thoroughly vet their mass marketing campaigns, including those managed by third-party vendors, to ensure that they comply with the TCPA and other consumer protection laws.

If you have questions about how the TCPA affects you or your business, please contact a member of the Litigation group at Bingham Greenebaum Doll LLP

DISCLOSURE REQUIRED BY CIRCULAR 230. This Disclosure may be required by Circular 230 issued by the Department of Treasury and the Internal Revenue Service. If this article, including any attachments, contains any federal tax advice, such advice is not intended or written by the practitioner to be used, and it may not be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. Furthermore, any federal tax advice herein (including any attachment hereto) may not be used or referred to in promoting, marketing or recommending a transaction or arrangement to another party. Further information concerning this disclosure, and the reasons for such disclosure, may be obtained upon request from the author of this article. Thank you.

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