By Justine Lara Konicki and Kyle Hutnick
Whether you are an auto body shop reminding customers to schedule their next oil change, a retailer encouraging customers to redeem their reward points, or a restaurant sending reservation reminders – take caution before sending automated calls or texts to new or existing customers without written consent.
As the way businesses communicate with customers has evolved in recent years, the Federal Communications Commission (FCC) has responded to technological advances by expanding the reach of rules governing marketing strategies. Specifically, the FCC has interpreted the Telephone Consumer Protection Act (TCPA) to expand its scope, breadth and reach. Congress passed the TCPA in 1991 to address concerns with telemarketers’ use of automatic telephone dialing systems (ATDS), regulating:
- Telemarketing calls using an ATDS or an artificial or pre-recorded voice
- Unsolicited fax messages (“junk faxes”)
- Telemarketing calls to residential numbers on the national “do not call” registry
Under the TCPA, “calls” are defined as voice calls to landlines and cellphones – also now including text messages – that encourage consumers to purchase property, goods or services. Here’s what you should know now about the TCPA:
Change to “express written consent.” In 2012, the FCC added a new requirement that telemarketers who utilize an ATDS to call and text customers must now obtain “express written consent” and verbal consent is no longer sufficient. To meet this requirement, the writing must:
- clearly and conspicuously authorize the seller to make telemarketing calls using an ATDS, and
- include the consumer’s signature in print or electronic form.
Electronic forms of consent by email, website form or text are sufficient as long as it’s valid under applicable state or federal law. The 2012 amendments also removed the “established business relationship” exemption, which formerly allowed telemarketing calls from businesses to customers with whom they’ve previously done business.
Consequences for failing to comply. The TCPA allows individual consumers to sue companies directly to recover $500 in damages per violation. In addition, courts can triple a plaintiff’s damages when a defendant willfully or knowingly violates the statute. Because these messages are typically generated automatically to multiple customers, TCPA litigation often occurs through class action lawsuits and can leave companies vulnerable to liability. Best Buy and Uber recently learned the hard way that the TCPA can create financial headaches. Best Buy faced a class action lawsuit where the customers alleged that text messages informing them that their rewards points were about to expire violated the TCPA. The company ended up settling the case for $4.5 million. More recently, a class of potential drivers and passengers sued Uber for sending unsolicited text messages. A judge approved a settlement in January for $20 million.
Tips for staying in compliance. Complying with the TCPA requires that you stay educated on these rules and take caution in how you communicate with customers. Here are some tips:
- If you use an outside vendor to send appointment reminders, be sure that they are fully compliant with the TCPA.
- If you are sending appointment reminders on your own, you’ll have to determine if the equipment you use meets the FCC’s definition of an ATDS, which varies based the level of automation it uses. (more about this definition)
- Obtain express written consent from all customers who want to receive text message reminders, and keep accurate documentation and records of each customer who consents to receive messages.
- Offer an opt-out mechanism for customers who no longer want to receive text message reminders, and keep accurate records of customers who opt out.
- Be sure that your staff is properly trained to obtain express written consent from all customers who want to receive text message reminders.
To discuss possible strategies to help your business comply with the TCPA or assess your business’s exposure to unwanted TCPA litigation, contact Justine Lara Konicki (jlk@kjk.com) and Kyle Hutnick (kah@kjk.com).