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Legal risks on the rise for businesses that auto‑dial, text

published in McAfee & Taft tIPsheet | November 1, 2013

By Zachary A.P. Oubre

Recent changes to federal law could pose a serious litigation risk to your business if you conduct telephone or text-message marketing.

As of October 16, 2013, new Federal Communications Commission (FCC) regulations governing The Telephone Consumer Protection Act of 1991 (TCPA) went into effect that eliminate exemptions from the Act that served as valuable defenses in TCPA suits. The TCPA essentially prohibits unsolicited, autodialed sales calls, text messages, and fax transmissions, and provides for statutory fines of $500 to $1,500 per offense. As a result, such violations are particularly popular among plaintiffs as many TCPA lawsuits are pursued as nationwide class actions which present millions of dollars in exposure. The TCPA will now require “prior express written consent” of the marketing recipient in order for companies to market via automated phone call, fax or text, regardless of whether the recipient has an “established business relationship” with the company.

Significantly, there is no “grandfathering” of consents that were previously obtained under prior rules. Instead, companies must obtain new consent that:

  • Is in writing with the signature of the person providing consent (which includes electronic or digital signatures such as SMS messaging opt-in)
  • Specifies the telephone number to which the person is consenting to be contacted
  • Clearly and conspicuously authorizes the company to contact the person using an automated system or prerecorded message for telemarketing purposes
  • Is not a condition of purchasing goods or services

The other significant change that took effect on October 16th is the elimination of the “established business relationship” exemption that was allowed by the FCC for more than 20 years. With the elimination of this exemption, businesses will no longer be able to rely on pre-existing business relationships before making telemarketing attempts, and any such contacts will require prior express written consent as detailed above.

So, if you are marketing via automated call or text, you will need to obtain (or re-obtain) prior express written consent from your potential customers, whether you have acquired the number on your own or through a third party, and regardless of whether you have a pre-existing relationship with them.