Authors: Attorney John C. Mitby & Attorney Elizabeth L. Spencer

Phone: 608-575-4077

Email: jmitby@hbslawfirm.com, espencer@hbslawfirm.com

Businesses are constantly looking for new ways to connect with both current and potential customers. Through social media sites such as Twitter or Facebook to more directed advertisements such as email lists, businesses are able to keep customers informed of promotions and changes. Many now request customer phone numbers so that they may send information directly to a customer’s pocket. However, there are strict regulations about the type and to whom this type of messaging may occur. This article is to help businesses become aware of types of advertising they should be monitoring closely for compliance with the Telephone Consumer Protection Act.

The Telephone Consumer Protection Act

The Telephone Consumer Protection Act (“TCPA”) was enacted in 1991 to restrict telemarketing and the use of automated telephone equipment by all persons and entities to make phone calls or send text messages. Enforced by the Federal Communications Commission (“FCC”), the TCPA is meant to balance protecting consumers from undesired communications and providing a way for businesses to connect with consumers who want contact. The TCPA limits the use of automatic dialing systems (“autodialers”), artificial or prerecorded voice messages, SMS text messages, and facsimile machine advertisements.

The TCPA permits private rights of action by individuals, actions by the FCC, and certain state agencies against violators. Under the TCPA, individuals have a right to enjoin the violating conduct and recover actual monetary losses or receive up to $500 in damages for each violation, whichever is greater. These damages may be even greater if the violation is found to be willful and knowing. In practice violations are commonly pursued as class actions.

There are exceptions to the TCPA. An entity may make calls or send texts for emergency purposes, with the prior express consent, or the prior express written consent of the receiving party. The type of express consent required will vary depending on the communication and the applicable section of the TCPA. A prior business relationship with the communication recipient is not necessarily enough to make a given communication exempt from the TCPA but, it is available as an exception in some situations.

The TCPA has been addressed and interpreted numerous times throughout the country in different jurisdictions.  As a result, the application of the TCPA has become complicated and often murky as courts have attempted to apply the TCPA to changing technology and marketing schemes. For example, recently the Seventh Circuit discussed the issue of what qualifies an autodialer and consent to receive advertisement.

Application

In Blow v. Bijora, 855 F.3d 793 (7th Cir. 2017), Akira, a women’s boutique clothing retailer with stores in the Chicago area, employed the text message marketing services of Opt It. Akira customers who signed up via providing their phone numbers to in-store representatives or texting “AKIRA” to a central number received texts with promotions, discounts and special in-store events. Opt It gathered the information of about 20,000 Akira customers and over a period of about 1.5 years Akira sent 60 messages. Blow alleged that Akira violated the TCPA prohibition against using an automatic telephone dialing system to make call or send texts without the express consent of the recipient.

On a motion for summary judgment, the lower court held that no autodialer was used and thus there was not TCPA violation. The plaintiffs appealed on the basis in that in the answer to the plaintiff’s complaint Akira, in one instance, did not deny that the system was an autodialer therefore, the district court erred in allowing Akira to amend the answer and the belated motion to amend prejudiced Blow as she had relied on the admission. The Seventh Circuit dismissed this argument in the basis that no other exchanges supported the “admission” and it could, reasonably be concluded to be an inadvertent omission.

The more complex issue on the merits was what constituted an autodialer and whether Opt It’s system qualified as one. As technology has evolved the FCC has expanded the definition of an autodialer. The TCPA defines autodialer as “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. 227(a)(1). While historically telemarketing has relied on the random number generating system described in the TCPA, the industry has evolved to where it is more cost effective to use lists of numbers. The FCC observed that based on statutory language and legislative history that Congress anticipated the potential future need to consider advancing technology. Akira relied on statements from Opt It’s CEO that it was not an autodialer as the program required human action to draft messages and to decide when to send the messages and does not store numbers nor is it capable of using a random or sequential number generator. The court stated while this does establish Opt It’ s present capabilities the FCC has concluded that equipment need not possess the current capacity to use a random number generator. 2015 FCC Order at 7972.

While summary judgment was not available to Akira on the basis of Op It’s capabilities the court nevertheless found it appropriate on the basis Blow consented to the text messages. The TCPA’s prohibition on using an autodialer applies “absent the express consent” of the recipient. 47 U.S.C. 227 (b)(1)(A)(ii). The FCC explained in the initial rulemaking that “persons who knowingly release their phone number have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.” 7 FCC Record at 8769, P 31. Here, Blow gave her phone number to Akira on numerous occasions in order to receive promotions and discounts. She provided her number on specific forms that stating this promotional purpose. The initial text also gave her the option of opting out whenever she desired. Blow’s consent was “tied to the type of messages she received.”

What should your business do?

First, if your business uses automatic dialing software, prerecorded messages in calls or sends text messages, or engages in telemarketing or facsimile advertising, you should evaluate the system you are using and consider consulting with an attorney on compliance with the TCPA. Second, if you are using an outside marketing service inquire with them about how they comply with the TCPA and the type of systems they are using.

You may be able to continue using such communication if you have consent from your customers that expressly allows it. If you already have consent forms, review them to ensure that they are in compliance with the applicable section of the TCPA and covers the marketing actions you plan to engage in. Due to the complex nature of the TCPA and related rulings it is important to recognize that your case may different from others, and consulting with someone familiar with the Act and your facts may ensure the best protection.

Finally, you should develop a policy for marketing communications with customers, and ensure that sales and other customer-facing staff are familiar with it.  A single salesperson armed with a fax machine and a customer list can inadvertently expose the organization to severe penalties, so it is important that those who communicate with customers, particularly to market and solicit business, have clear guidelines for how they can engage with the public.