Mobile Marketing under the Telephone Consumer Protection Act: Do You Have the Consent You Need?
Litigation over Telephone Consumer Protection Act (TCPA) violations continues to rise, fueled in part by an increase in companies using software-driven text message and mobile app communications to reach consumers. Companies in nearly every consumer-facing industry, from health care to retail to entertainment, are defending against nationwide class action claims seeking millions of dollars in alleged damages arising out of mobile marketing and customer service practices. Businesses are ensnared by a confusing regulatory landscape, rapidly evolving communication technology and social media, and often-conflicting case law, depending on the jurisdiction, court and even judge presiding over the matter.
The TCPA was enacted in 1991 to protect consumer privacy by prohibiting unwanted telemarketing calls, autodialed or prerecorded calls, and unsolicited faxes. But technology has changed significantly since Congress first considered the statute and the ills it was designed to cure. For example, the near-universal adoption of cellphones—which often replace landlines as the preferred, if not the sole, method of communication for consumers—has resulted in an outdated regulatory scheme that presents serious risks for businesses using the most popular and effective way to reach their consumer base: texts and mobile app communications.
The Federal Communications Commission (FCC), which oversees the TCPA and promulgates the regulations enforcing the statute, has struggled to keep up with the rapidly changing demands of modern communication technology. The agency has released a series of rules and enforcement advisories in an attempt to clarify the TCPA’s application to mobile communications with consumers. Unfortunately, this has only resulted in an increase in TCPA litigation.
Although TCPA litigation has been a particular favorite of the class action plaintiffs’ bar for a while, the spike in TCPA claims can largely be traced to the Omnibus TCPA Declaratory Ruling that the FCC issued in 2015. Indeed, in the 17 months following the ruling, 3,121 TCPA lawsuits were filed, a 46 percent increase over the 17-month period before the ruling.
Numerous decisions issued in the past two years show that federal courts are still struggling to make sense of the TCPA and the Omnibus Ruling, especially involving the distinction between informational and marketing messages, consumer consent and revocation, and sender liability. And the recent ruling from the Court of Appeals for the D.C. Circuit in ACA International v. Federal Communications Commission, which appealed the Omnibus Order, did little to change that. So while businesses await further interpretation and application of the D.C. Circuit’s ruling by the courts, they must continue to contend with an obstacle course of compliance that looks more than ever like American Ninja Warrior—one misstep and you’re sunk (into a class action suit).
In this Part 1 of our two-part series on the TCPA, we discuss the legal trends in distinguishing between informational and transactional text communications, and those that may cross the line into marketing and advertising.
Informational vs. Commercial Messages
In the Omnibus Order, the FCC reiterated that text messages sent to mobile phones constitute calls under the TCPA, and that texts made for non-emergency purposes require the recipient’s prior express consent. Whether this prior express consent must be indirect, oral or written, however, depends on whether the mobile communication is informational or commercial.
While the recipient’s giving of a phone number is sufficient for informational messages, businesses need to secure written consent for any messages that include an advertisement or constitute telemarketing. As stated in the FCC’s regulations, calls or texts that advertise the sender’s products or services, or that are sent with the purpose of inducing the recipient to make a purchase, are telemarketing calls or text messages. “Dual purpose” calls or messages—those that include both an informational and a marketing component—also constitute telemarketing under the statute.
But where, exactly, is the line between an informational/transactional and a marketing call or text?
While often this is a fact- and context-specific determination, sometimes evident (after the fact) from the face of the pleadings in a class action suit, the lack of any bright-line rule or consistency in court rulings makes it challenging, from a practical perspective, for businesses to comply with the TCPA.
Take, for example, two cases involving mobile communications reminding consumers about insurance renewals—both from federal courts in the Central District of California. In Flores v. Access Insurance Co., the defendant insurer sent a text message to the plaintiff policyholder, advising the plaintiff that his policy was expiring the next day and directing him to make a payment via a link to the insurer’s website.
The court found the text had a dual purpose: “[T]he communications had both informational and telemarketing purposes because plaintiff was informed about the status of his policy and was encouraged to purchase services from defendant.” The district court therefore refused to dismiss the TCPA claim against the insurer, finding that the text message constituted telemarketing.
By contrast, in Smith v. Blue Shield of Cal. Life & Health Ins. Co., the court granted summary judgment to the defendant insurer in a TCPA case also involving insurance renewal. There, the court found that the insurer’s prerecorded renewal reminder call—which also referenced a link to the insurer’s website—did not constitute telemarketing. The court rejected the plaintiff’s argument that the call constituted telemarketing that required her written consent, concluding that the message was purely informational, even though it encouraged recipients to visit the website for more information about their plan.
Conflicting case holdings implicating other consumer-facing industries similarly leave businesses without clear guidance as to what is, and what isn’t, a marketing call or text.
Courts are increasingly finding that a text message sent for the purpose of completing an ongoing commercial transaction initiated by the customer is not telemarketing. For example, in Wick v. Twilio Inc., the plaintiff claimed that he received an unsolicited text message after he attempted to obtain a free sample of a dietary supplement online. The message stated: “Your order … is incomplete and about to expire. Complete your order by visiting [website].” The court pointed out that the plaintiff had entered his name, address, email and mobile number on the website and then clicked on “Rush My Order,” closing the webpage before completing the order. Because the text message was aimed at completing a commercial transaction that the plaintiff had initiated and for which he had provided his phone number, the Western District of Washington held that the message did not constitute telemarketing.
But even that line is hard to navigate.
A Northern District of California court concluded that a text message sent to a consumer who had orally agreed to be a part of the sender’s rewards program and that contained a link to download the company’s mobile app was not aimed at facilitating the completion of a transaction, but instead might qualify as an advertisement requiring the plaintiff’s express written consent. In San Pedro-Salcedo v. Haagen-Dazs Shoppe Co., the plaintiff alleged that she had not provided the requisite consent to receive a text message that read: “Thank you for joining Haagen-Dazs Rewards! Download our app here.” The plaintiff had visited a Haagen-Dazs retail store, agreed to join the company’s loyalty program and provided the cashier with the cellphone number at which she subsequently received the text message. The plaintiff asserted that the Häagen-Dazs app, which enabled users to find retail locations, place online orders, and download offers and coupons, was itself a product. Consequently, including a link to download that app in the text was advertising the app’s commercial availability and was therefore telemarketing within the meaning of the TCPA.
In denying the defendants’ motion to dismiss, the court contrasted cases in which texts sent to consumers after they had joined a loyalty program were for the specific purpose of inviting or assisting the consumer to complete registration in the program. “If the registration for Haagen-Dazs Rewards was completed before the receipt of the text and without the need to download Defendants’ app, then Defendants’ message to ‘Download our app here,’ arguably constitutes an advertisement for the commercial availability of Defendants’ app,” the court concluded.
Yet, in another case decided only a month later, a different California federal court dismissed a proposed class action lawsuit alleging that a restaurant violated the TCPA by texting the plaintiff a confirmation of his dinner reservation that included a link to review the restaurant’s dinner specials. In MacKinnon v. Hof’s Hut Restaurant Inc., the plaintiff maintained he did not consent in writing to receive any advertising. The court held that the texted confirmation did not constitute advertising because it was purely informative in nature. The invitation to view the restaurant’s specials was not an advertisement because it facilitated the plaintiff’s dining transaction by allowing him to easily look at the specials before going to the restaurant, it added.
Consent: Is It Broad Enough?
Inexorably linked to the classification of mobile communications as informational or advertising/telemarketing are issues related to the adequacy of the recipients’ consumer consent for the calls and texts they receive to their cellphones. Although the TCPA allows calls and texts with prior express consent, plaintiffs often allege that the communications they received exceed the scope of the consent that was granted. We will address this issue in Part 2 of this series.
“Mobile Marketing under the Telephone Consumer Protection Act: Do You Have the Consent You Need?” by Ana Tagvoryan, Jeffrey N. Rosenthal, and Harrison M. Brown was published in Legaltech News on June 7, 2018. To read the article online, please click here.
Reprinted with permission from the June 7, 2018, edition of Legaltech News © 2018 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.