Auto DialerSCOTUS Narrows Scope of TCPA to Only Systems that Use Random Number Generators

SCOTUS Narrows Scope of TCPA to Only Systems that Use Random Number Generators

In a long-awaited decision, on April 1, 2021, the Supreme Court of the United States released its opinion in Facebook v. Duguid et al., and unanimously adopted a narrow interpretation of the term “automatic telephone dialing system” or ATDS under the Telephone Consumer Protection Act (“TCPA”).  Hundreds of TCPA class action complaints are filed every year against defendants in all industries leveraging text message or calling consumers.  One of the central legal questions addressed in these litigations is whether the text messaging systems used to contact consumers are ATDS such that TCPA liability can stand. Specifically, if these databases are used to store, but not generate, numbers, can they constitute an ATDS?  The Supreme Court’s opinion answers this question in the negative, and provides necessary clarity to the ATDS definition, and its narrow holding is expected to benefit TCPA defendants nationwide.  

The Allegations in Facebook v. Duguid et al.

In Duguid, Plaintiff Noah Duguid alleges he received several text messages from Facebook alerting him that someone had attempted to access a Facebook account associated with his number from an unknown browser.  Duguid alleged that he did not have a Facebook account and never provided Facebook his telephone number.  As a result, Duguid asserted that Facebook violated the TCPA by maintaining a database that stored phone numbers and programing its equipment to send out automated text messages to those numbers each time the associated account was accessed by an unrecognized device or web browser.

Facebook argued that the database in which it stored telephone numbers was not an ATDS such that TCPA liability could be established, and the Supreme Court agreed.  As defined by the TCPA, an “automatic telephone dialing system” is a piece of equipment with the capacity both “to store or produce telephone numbers to be called, using a random or sequential number generator,” and to dial those numbers.  Based on Duguid’s allegations, at issue was whether that definition encompassed equipment that can “store” and dial telephone numbers, even if the device does not “us[e] a random or sequential number generator.”  The Supreme Court of the United States held that because Facebook’s database system did not involve a random or sequential number generator but simply stored numbers, the text messages sent from the system did not violate the TCPA.

What Now?

The Supreme Court’s holding has the potential to greatly limit the number and scope of putative TCPA class actions in the future as it eliminates from the definition of ATDS those systems which do not use a random or sequential number generator, but simply store numbers. 

Despite this added clarity, TCPA litigation remains complex.  Being proactive and building robust and scalable policies into the foundation of your organization will help mitigate legal risk. The Beckage TCPA team has handled numerous class actions litigations in this space and can help your business navigate this complex area of the law.

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Text MarketingTCPA Considerations When Starting Your SMS Marketing Campaign

TCPA Considerations When Starting Your SMS Marketing Campaign

Consent is the cornerstone of compliance with the Telephone Consumer Protection Act (“TCPA”).  It is imperative that business and marketing teams have a strong understanding of this before leveraging text messaging or automated calls into their marketing campaigns.  Similarly, it is critical to understand when prior express written consent is required, if any exceptions may apply to your text messaging campaign practices, the importance of documenting consent, and other best practices that can be leveraged for obtaining prior express written consent in an online environment.

Understanding the TCPA

The TCPA was enacted in 1991, amending the Communications Act of 1934, and sought to restrict unwanted telephonic solicitations from companies.  The TCPA grants the Federal Communications Commission (“FCC”) the authority to develop rules related to telemarketing, the use of automated telephone dialers, artificial or prerecorded voice messages, SMS text messages, and fax machines. 

Many businesses leverage text messaging or SMS marketing to reach out to current and potential customers and while this can be a great marketing tactic, careful attention should be paid when using SMS text messages to communicate with customers, even where a preexisting business relationship exists, as there are steep penalties involved for initiating improper text messages or calls. In fact, the statute provides for damages in the amount of $500 per improper text message, which can quickly add up when you are sending them out en masse.  With these hefty fines, compliance with the TCPA should be taken into consideration before embarking on any SMS text messaging campaign.

Affirmative, Written/Digital Consent & Opt-Out

Under the TCPA, you must obtain written or digital consent before sending promotional SMS text messages.  As such, you always want to be sure your teams are obtaining affirmative written consent before beginning any SMS text messaging marketing campaign.  It is mandatory to obtain this affirmative written or digital consent before sending promotional SMS text messages. 

In Vandenberg & Sons Furniture, Inc. v. Alliance Funding Grp., a California corporation that provided financing for equipment leasing to small businesses faxed a Michigan corporation that is in the furniture business in 2012.  No. 1:15-CV-1255, 2021 WL 222171 (W.D. Mich. January 22, 2021).  At the bottom of the two-page fax, there was an opt-out notice that provided that the fax recipient with instruction on how to opt out of future fax advertisements.  Id. Over the next four years, the equipment leasing business sent out hundreds of thousands of fax advertisements to the furniture business and others.  Id.  The Western District of Michigan recently held that as the equipment leasing business failed show any evidence it had obtained affirmative written consent from the individuals it sent faxes to, a class potentially worth over a $100 million dollars could be formed.  Id.

Best SMS Practices to Follow for Text Marketing

As stated, obtaining (and documenting) proper consent is foundational.  One recommendation for obtaining affirmative consent is to present a just-in-time notice at the point of collection of a telephone number.  A small dialogue box should confirm that the individual is authorizing the collection of the phone number and consents to be contacted by text messages.  The TCPA recommends marketers retain the consent for a minimum of four years.  This affirmative consent needs to be duly signed by the customers, which can be written, digital or a simple opt-in for a campaign.  Moreover, under the TCPA, customers must also be provided with an option to opt of out any such marketing campaign, being presented with the choice of continuing to receive messages.

To best align with TCPA guidelines, here are some additional best practices that your business should be following when undertaking text messaging as part of your marketing campaign:

  1. We recommend mentioning the details regarding opting out of your campaign at least once every month.  Include a small message addressing the same at the end of your marketing text.
  2. Look into the opt-out requests and process them as soon as possible (it is advisable to acknowledge in real time).  This provides your customers with a sense of reassurance and makes your activities more organized.
  3. Along with the details regarding opting out of your campaigns, it is important to include contact details for your customer care services at least once every month.  If the details are precise, you can add them to every marketing SMS you send to your customers.
  4. Always keep a track of an opt-out request once it has been received.  Ensure all the procedures are carried out efficiently and the concerned customer is successfully opted out of receiving your messages.  Also, inform the customer through a final SMS, confirming the fact that they will stop receiving similar messages from you in future.  It is also advisable to provide details of opting back in for your SMS campaign, in case the customer feels the need to do so in future.

Like many areas of compliance, building an infrastructure within your organization to address the new and evolving legal landscape surrounding the use of text messages under the TCPA can help your business stay ahead of the curve and prevent costly litigation.  Being proactive and building robust and scalable policies into the foundation of your organization will help mitigate legal risk. Our TCPA team has handled numerous class actions litigations in this space and can help your business navigate this complex area of the law.

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CAN-SPAMCAN-SPAM, TCPA and CASL – Best Practices for Marketing Teams

CAN-SPAM, TCPA and CASL – Best Practices for Marketing Teams

Using digital communications to reach customers has never been more popular, especially as the pandemic pushes more businesses to make consumer interactions contactless. From email to SMS, marketing teams have taken business online—but doing so brings a specific set of risks regarding data security and privacy. It is easy to get tripped up if you do not have a good grasp of the basic legal guidelines that govern commercial emails.  

In the U.S., the most relevant law when launching a digital marketing campaign is CAN-SPAM. This law sets the rules that all companies need to follow when sending marketing messages via email. The Telephone Consumer Protection Act of 1991 (TCPA) covers SMS messages and phone calls. Canada’s Anti-Spam Legislation (CASL) covers digital communications originating in that country. If you are wondering why businesses should be paying attention to these regulations, take note: according to the FTC, each separate email in violation of the CAN-SPAM Act is subject to penalties of up to $43,280.

What Kinds of Emails are Regulated?

Under CAN-SPAM, the rules only apply to commercial emails (or Commercial Electronic

Messages (CEM) under CASL). These are messages sent with the purpose of advertising or promoting a product or service. When evaluating the overall purpose of an email, it is important to look at the content of the message, hyperlinks and even contact information. In general, ask if the message:

• Includes offers to purchase, sell, barter or lease a product, goods or a service

• Includes offers to provide a business or investment opportunity

• Promotes a person who can do any of the above things

If the email contains both commercial sales promotion and transactional information (a receipt, a confirmation, notifications about an existing subscription or service, etc.), then the email is regulated if the recipient would regard the primary purpose of the email to be commercial in nature.

What About Social Media and Text Messaging?

Messages transmitted via social networking sites is a bit of a grey area. Some federal courts have ruled that CAN-SPAM’s definition of “electronic mail message” includes messages transmitted to a social network user’s inbox, news feed or wall. It is also important to check the terms and conditions of each social media platform you intend to use – many have limits on how marketers can use them.

And because social media, email and SMS marketing are all intertwined, it is important to note that the TCPA restricts telephone solicitations and the use of automated phone equipment. It lays out very strict solicitation rules that require explicit customer consent for commercial SMS messages.

Basic Guidelines for Sending Commercial Emails

If you are ready to draft commercial email campaign, these 7 basic guidelines outlined by the FTC are a good place to start:

1. Don’t use false or misleading header information in the “From” and “To” lines.

2. Don’t use deceptive subject lines.

3. Identify the message as an ad.

4. Tell recipients where you are located.  

5. Provide a clear way to unsubscribe.  

6. Honor opt-out requests promptly.

7. Monitor contractors or vendors working on your behalf.  

It is important to note that in Canada, marketers must have consent for both commercial email and text messages. If not, you need to send an email requesting express consent or find another way for the recipient to opt in to receive future emails or text messages. Acheck box at checkout or on your website is not sufficient.

Additional Resources For Marketing

Many businesses, regardless of size, leverage some form of marketing on a regular basis to market and communicate with their client population. Whether its regular email marketing newsletters or text messages designed to communicate and market to your customers, there are some best practices that we at Beckage recommend following.  Our attorneys are also technologists and certified privacy professionals.

Additionally, our experienced team at Beckage helps client navigate those rules and any other similar regulations as your organization’s data security and privacy program is evaluated from a compliance standpoint. There are many low-cost, high-impact protective measures that can be implemented with the assistance of counsel to make sure your business has a legally defensible compliance posture.

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