April 19, 2013

A New Surge of TCPA Suits Based on Text Messages

Do your business communication and marketing practices comply with the Telephone Consumer Protection Act (TCPA)?

Costly TCPA suits are on the rise. Changes in technology, particularly text messaging, and new FCC regulations have contributed to a dramatic rise in TCPA suits, mostly class actions. FCC regulations with new requirements go into effect October 16, 2013.

The TCPA, a federal law enacted in 1991 to protect consumers and emergency service providers from intrusive and aggressive telemarketing, is codified at 47 U.S.C. Section  227 and regulations promulgated by the FCC can be found at 47 CFR Section 64.1200. Broadly stated, the TCPA prohibits three categories of marketing communications without the prior express consent of the recipient:

  1. Non-emergency calls to wireless phones and devices (purportedly even non-commercial, informational calls and text messages)
  2. Artificial or pre-recorded calls to residential wire line subscribers
  3. Facsimile messages to fax machines, computers and other devices

Among other enforcement mechanisms, the TCPA creates a private right of action. The TCPA is notable for its liquidated damage and statutory penalty provisions, which have made it very appealing to plaintiffs’ attorneys. Recent verdicts and settlements demonstrate why—two recent class action settlements based on text messaging  by Jiffy Lube International, Inc.  and Steve Madden Ltd. resulted in settlements of $47 million and $10 million respectively. 

Now, more than 20 years after the enactment of the TCPA, the FCC has at last issued final rules and regulations implementing the TCPA. Those final rules change the legal landscape in some unexpected ways—they require prior express written consent in most instances, and they eliminate the “established business relationship” exemption that was in the draft regulations businesses have relied upon for years.

As reported recently in Bloomberg, the new regulations, along with changes in technology, have resulted in a sharp increase in TCPA suits over the past year. That trend will likely continue when the TCPA rules become final on October 16, 2013.

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