That is an impressive class-action settlement number, particularly when you consider that the automated calls and texts triggering the litigation and settlement arose from a single auto dealership. The auto dealer allegedly (link to complaint) violated the federal Telephone Consumer Protection Act (TCPA) by engaging a third party to deliver ringless voice and text messages to the cell phones of prospective buyers. Beyond the lessons learned by this individual business, the broader message for all organizations is a.) that it continues to be easy to violate the TCPA if you are not careful, and b.) that the class-action bar and federal regulators continue to be active in this space.
What the TCPA Permits and Prohibits
The TCPA regulates telemarketing calls, auto-dialed calls, prerecorded calls, and text messages. Specifically, auto-dialed advertising messages – whether these are phone calls, direct-to-voicemail calls, or text messages – are typically permitted only if the consumer has given prior express consent. While there are exceptions for messages that are not strictly advertising, or that are made in response to a request from an individual, these may not be helpful if a member of the sales team is simply working from a list of prior shoppers, website visitors, or others.
Of course, none of this anticipates a sales person – auto dealer or any other sector – sitting at a desk and sending out individual texts. More often, the business has engaged a third party to coordinate and process the innumerable messages on behalf of the business. And how great is it to have any number of service providers in the automated marketing space offering their services and compliance with applicable law? There are two problems with this.
What Exactly Is an Auto-Dialer?
First, the law and its interpretations evolve over time. For example, the Ninth Circuit Court of Appeals recently published a decision that interpreted the TCPA with a more expansive view as to what the statute prohibits. The TCPA text prohibits calls made via an automatic-telephone-dialing system if that system can generate phone numbers randomly or sequentially. The Ninth Circuit panel of judges now views that as meaning auto-dialers “with the capacity to dial stored numbers automatically” as falling within the definition of an auto-dialer system. Although the interpretation reflects the evolution of technology, it also means that class-action litigation is no longer hamstrung by the TCPA textual definition – at least in those western jurisdictions within the Ninth Circuit.
We Can’t Blame the Service Provider?
In the auto dealer’s litigation mentioned above, the business engaged a service provider to handle the messaging. While we do not have access to a copy of that agreement, it is easy enough to presume that the business expected the marketing service to understand what the applicable rules are. A casual search of marketing providers touts the compliance expertise of each. However, any business should understand that the legal terms associated with the service will certainly disclaim any obligation to advise the client business as to the law, or to do anything but follow the instructions of the client business.
Furthermore, there is a strong premise within the law that a service provider is indeed acting at the behest of the client, even if the service provider might have a better understanding of applicable law. So, unless the business has negotiated the legal terms of the services, it is unlikely that any liability can be shifted to the marketing service provider.
So, Maybe, Do Not Call or Text Me…
… unless I have given my consent and you have a clear record of that. If your business wants to use a consumer’s cell phone for voice or text messages, provide a notice of what data will be collected and for what purpose. If this is on a web page, be clear that in providing a cell number, the business may use it for advertising. And recall the TCPA’s requirement of “prior express consent,” which typically means a specific opt-in tick box.
What to do with purchased marketing lists? Make sure the list vendor has assured you that it has obtained appropriate consents and can provide evidence confirming such. Because this area is ripe for error and litigation, be sure to press for an indemnity and confirm the provider’s insurance coverage.
Privacy rules generally concern managing expectations of consumers. Businesses of all types – whether auto or consumer retail – are well served by having an internal policy for how to engage in consumer marketing, and the dos and don’ts for engaging vendors for such services. The class action and regulatory enforcement risk is simply too high.