Lawsuits highlight potential risks in text message programs

A judge sides with Wal-Mart, while Papa John’s faces a class action lawsuit.

Katie Evans

Two recent lawsuits against Wal-Mart Stores Inc. and the Papa John’s pizza chain are the latest examples of why retailers should proceed with caution when sending text messages to their customers.

A Huntsville, AL, consumer sued Wal-Mart this September after she provided her telephone number to a store employee at a Wal-Mart pharmacy and then received several text messages from the pharmacy. When she questioned why she was receiving the messages, Wal-Mart said they had enrolled her in a text message program. A district judge recently threw out the case, but the case is a reminder to retailers to carefully think through all the details when considering a text message program.

The text messages were not marketing messages, a Wal-Mart spokesman says. All the messages the retailer sent had to do with her pharmacy order. The consumer was merely receiving texts instead of phone calls, Wal-Mart, No. 6 in the Internet Retailer Mobile 400, says. The shopper sought to represent everyone in Alabama who had received a text message from Wal-Mart in the state of Alabama in the past six years and sought statutory damages of $1,500 per message.

A judge in a case involving Papa John’s, meanwhile, last month certified class action status on a lawsuit against the chain alleging it sent some 500,000 text messages over several years that consumers never opted in to receive, according to court documents. Papa John’s could face paying as much as $250 million in damages. The messages were sent by a text messaging vendor called OnTime4U hired by Papa John’s franchisees. Papa John’s did not return a request for comment on the case.

More such cases are popping up since The Telephone Consumer Protection Act was judicially expanded in 2009 to include texts, says David Almeida, a partner in the Chicago office of Sedgwick LLP, an international trial and litigation law firm. Since then hundreds of consumers have filed class action lawsuits under the law citing unwanted texts and alleged violations of privacy.

Almeida says under the TCPA’s mandate retailers must get clear disclosure and consent or opt-in by the consumer to receive such messages. However, consent is often at the discretion of the judge. In Wal-Mart’s case, the judge determined it was the responsibility of the shopper when providing her number to make it clear exactly what she was and was not consenting to.

Almeida adds that new mobile technologies are blurring the lines further. Group texting, for example, enables users to sign up their friends to receive non-commercial text messages for purposes of communicating and staying in touch. Texting lawsuits in these cases raise questions about the meaning of prior express consent under the TCPA, which the statute does not define, Almeida says. In another mobile marketing tactic called friend forwarding, 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.

The companies being sued in friend-forwarding cases typically contend the text message that is forwarded by a friend is not covered under the law, which was designed to regulate bulk solicitations. And, 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. 


David Almeida, legal/regulatory, m-commerce, Mobile, mobile commerce, Papa John's, SMS messaging, text messaging, Wal-Mart Stores Inc.