Legal Pitfalls of Unsolicited Texting and Calling

For businesses that use texting as a marketing tool, it is critical that they become familiar with the Telephone Consumer Protection Act (TCPA). Some of the largest well-known companies in the country have paid millions in settlements and verdicts for alleged violations of the TCPA. Capital One reportedly agreed to pay more than $73 million to settle a TCPA class action. Dish Network reportedly had a judgment entered against it for $61 million in a TCPA class action case, and AT&T Mobility reportedly paid $45 million to settle a TCPA class action. While the foregoing are just a few examples, if large companies with in-house legal departments have found themselves being required to pay these types of figures, it should be a red flag to the average business that knowledge of and compliance with the TCPA is a must.

So, how does a business avoid becoming the next victim of a TCPA violation? In simple terms, the TCPA makes it unlawful for any person to use an automatic telephone dialing system (ATDS) to call or text another’s cell phone except for emergency purposes or unless prior express consent has been given. Thus, there are several ways a business might begin to protect itself against potential multi-million-dollar TCPA judgments or settlements.

Assuming texting is an integral part of your business marketing and there is no desire to abandon or substantially limit the same, the first way to avoid liability under the TCPA is to not use an ATDS. Under the TCPA, an ATDS is defined as equipment that has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and has the ability to dial such numbers. While the statutory definition sounds relatively straightforward, it’s important to be aware that courts are divided on what constitutes an ATDS. Some courts have held that equipment that has the capacity to automatically dial numbers or send text messages from a stored list is an ATDS even though the system does not itself generate random or sequential numbers (e.g., the average smartphone) (Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018). Other courts still maintain the equipment or device used to send the text must be a random or sequential number generator. Thus, businesses should become familiar with how courts in the jurisdiction where they conduct business interpret the statute.

A second way businesses that utilize texting as a marketing tool can avoid TCPA liability is to obtain the express consent of their customers before sending texts. For an express consent to be valid and effective, it must be a clear and conspicuous written disclosure that the signer is authorizing the business to deliver telemarketing text messages using an ATDS. Thus, a customer supplying a business with his or her cell phone number is not sufficient. If a business is not one in which customers come in and sign a formal agreement that might contain such consent language, some businesses employ a “double opt-in” procedure. An example of a double opt-in is a consumer initially agreeing to receive text messages in a manner other than via a text from his or her phone, such as by completing an online form or verbally agreeing to join the campaign, and then receives a non-marketing text asking the individual to confirm the agreement to receive marketing texts.

For those who may suffer from sleepless nights just thinking about large TCPA verdicts or settlements or even attorneys’ fees that could cripple their business defending even a meritless TCPA claim, a prudent secondary form of protection is insurance coverage. Businesses should first check their existing policy to see if it covers TCPA claims. Note that many insurance companies have already carved out exceptions for TCPA violations in standard liability and cyber coverage policies and thus it cannot be assumed coverage exists for such claims in those policies. If it is not covered, businesses can inquire about the cost of adding such coverage.

The bottom line is, if an enterprise is going to use mass text messages to attempt to solicit new business, it is strongly recommended that its decision maker either familiarize him- or herself with the TCPA first or consult with an attorney familiar with this statute to avoid potential liability.

Garrett Olexa is a member with the law firm of Jennings, Strouss & Salmon, PLC. He practices in the areas of business law and commercial litigation.