May 23, 2022

Volume XII, Number 143


May 23, 2022

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Merchants Don't Be Caught Off Guard: Unsolicited Advertising in Faxes and Text Messages Expose You to Class Action Litigation

Although the Telephone Consumer Protection Act (TCPA) is nothing new, class action litigation alleging violations of the statute is apparently still thriving. As an example of just how prolific TCPA cases are, the Seventh Circuit observed earlier in 2011 that the single plaintiff in CE Design Limited v. King Architectural Metals, Inc. had filed over 150 TCPA class actions. A word to the wise: there are plaintiff firms ready, willing and able to file these types of cases, and failing to comply with the TCPA may expose your business to hundreds of thousands of dollars or more in potential liability. For that reason, it is important to take steps now to ensure your business is complaint.

TCPA Prohibits Unsolicited Fax Advertising

Most people know the TCPA generally restricts telephone solicitations. What some people apparently do not know is that under the TCPA, it is also illegal to use a fax machine, computer or any other device to send unsolicited advertisements. The recipient of an unsolicited fax advertisement may sue to recover "actual damages" or $500 per fax, whichever is greater. If the defendant's conduct is found to be "willful," the court may treble damages to a potential $1,500 per fax. In a class action suit involving hundreds—or even thousands—of fax recipients, the damages can skyrocket.

The TCPA does allow merchants to send solicited fax advertisements under certain circumstances. However, if sued, the merchant will have the burden to show that the faxes were solicited, or that they fell within some other exception. Unfortunately, motions to dismiss and motions for summary judgment are repeatedly denied in these cases. Therefore, if you are sued for violations of the TCPA, you will likely be forced to settle or risk trial.

In addition, as insurance carriers have seen the explosion of this type of litigation over the years, they have attempted to exclude coverage for TCPA violations. Thus, you may end up not only defending against a TCPA claim but also in litigation with your insurance carrier over coverage. Your best bet is to consult with an attorney before you engage in any fax advertising campaign. And, if you occasionally send out marketing material via fax in response to requests, make sure you keep a record of the requests as proof that you are not violating the TCPA.

TCPA Prohibits Unsolicited Text Messaging

The social media arena has become the latest target of TCPA lawsuits. Merchants—including many well-established and prominent ones—have tapped into social media as a way to market their products and services via text messaging and Facebook. The problem? Courts are consistently holding that the TCPA prohibits unsolicited advertising in text messages.

As with faxes, the exposure to your business for sending unsolicited advertising in text messages is up to $1,500 per text. Given the ease with which thousands of these messages can be sent with a press of a button, the potential exposure can be astronomical. Nevertheless, text messaging can be an attractive option because it is the often the simplest and most effective way to reach your target market. Thus, if you decide to utilize text messaging, it is important to consider compliance with the TCPA, which requires that you obtain explicit permission from customers and potential customers before you send them offers and other marketing material. There are a variety of ways to obtain the required permission, and an experienced marketing vendor may be helpful in setting up a system that works for your business. However, some vendors may not understand—or even be aware of—the latest developments in the law and will likely disclaim any liability if your campaign is not compliant.

No matter what precautions you take on your own, it is still wise to consult an attorney before engaging in a fax or text messaging campaign. In the end, the potential costs of a TCPA violation and related class action litigation are great and could put your business at significant financial risk.

© 2022 Much Shelist, P.C.National Law Review, Volume I, Number 321

About this Author

Melinda J. Morales, Complex Commercial Litigator, Much Shelist Law firm

Melinda J. Morales is an accomplished litigator with 20 years of experience representing businesses and individuals in a broad range of complex class action and commercial litigation matters involving, the Employee Retirement Income Security Act (ERISA); the Fair Labor Standards Act (FLSA); the Fair and Accurate Credit Transactions Act (FACTA); the Truth in Lending Act (TILA); the Telephone Consumer Protection Act (TCPA); and related consumer protection statutes.

Having started her career working exclusively on class action litigation in the areas of securities, antitrust and...