August 29, 2012, 3:34 PM

Lawsuits underscore the risks of text marketing

New mobile technology has more consumers filing class action lawsuits regarding texts.

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The Telephone Consumer Protection Act—a law passed in 1991 to curb abusive telemarketing practices–originally did not cover mobile marketing  via text message. That’s because it didn’t exist. However, consumers have recently filed hundreds of class action lawsuits under the law citing unwanted texts and violation of privacy—and many consumers are getting large payouts in settlements, says David Almeida, a partner in the Chicago office of Sedgwick LLP, an international trial and litigation law firm.

The TCPA was judicially expanded in 2009 to include texts, Almeida tells Internet Retailer. Now, two new mobile texting technologies, friend forwarding and group texting, are changing the legal landscape for mobile marketers.

Almeida discusses how new advancements in mobile marketing technology is spurring a new wave of class action lawsuits against businesses in his report entitled “Mobile Marketing Class Action Litigation 2.0: Enterprising Plaintiffs’ Lawyers Assert Novel Class Claims Under the TCPA.”

Almeida says most companies understand what it takes to run a legal text-based mobile campaign under the TCPA’s mandate: clear disclosure and consent or opt-in by the consumer to receive such messages.  However, he says friend forwarding and group texting are muddying the waters.

For instance, in a friend forwarder campaign, a retailer usually offers its mobile subscribers (those that have already opted in) rewards such as discounts or coupons to forward certain messages to their friends or relatives. Almeida notes that despite the fact that the forwarded texts are outside the scope of the TCPA (they are not sent by an automated telephone dialing system, which is what the law covers), some “friends” are crying foul, and taking these companies to court.

Almeida is currently representing a Pizza Hut franchisee in a friend-forwarder text class action lawsuit in federal court in Florida, which he says is the first of its kind.  He says that the defendants have asked the court to dismiss the lawsuit contending that a text message that is forwarded by a friend is not actionable under the law, which was designed to regulate bulk or en masse solicitations.

Another mobile texting technology that has spurred several recent lawsuits is group texting, which enables users to sign up their friends to receive non-commercial text messages for purposes of communicating and staying in touch. These cases raise questions about the meaning of prior express consent under the TCPA, which the statute does not define, Almeida says. Companies using group texting have petitioned the Federal Communications Commission for a ruling clarifying the meaning of prior express consent.  But so far, the FCC has stayed mum.

And, Almeida adds, text message lawsuits aren’t ending with group texting and friend-forwarding suits. Several companies have been faced with what are coined confirmatory text class action lawsuits that allege that receipt of a text message confirming a former subscriber’s request to opt out is an unsolicited text message violating the TCPA. Plaintiffs claim they, and other consumers who received such messages, are entitled to damages of at least $500 each. 

Although one judge to date, in the case Ibey v. Taco Bell Corp., has decided that a singular, one-off text message is not the kind of en masse solicitation that TPCA was designed to regulate, others have not, Almeida says.

Almeida says marketers do have some grounds for defense against such text message lawsuits, including that the texts were not sent using an automated telephone dialing system as is required to state a claim under the TCPA, and that FCC regulations provide an exemption for messages sent to family, friends and acquaintances. Then again, TCPA also requires that consumers receiving mobile marketing messages give clear consent, or in other words, opt in to receive them.

Almeida says the friend forwarder case in Florida could set a precedent for similar lawsuits in the future.  However, regardless of how that case turns out, consumer litigation regarding various direct marketing channels is here to stay, Almeida says. He says companies considering using any new technology for marketing campaigns should carefully review all the possible legal implications.

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