The Federal Communications Commission recently ruled that companies may send a one-time text message confirming a consumer’s opt-out of texts without violating the Telephone Consumer Protection Act (“TCPA”), and potentially facing large class action lawsuits.
This pro-business ruling represents a victory for SoundBite, the company that sought a declaratory ruling from the FCC, as well as for other businesses that use mobile texting to communicate with customers. Many businesses (including SoundBite) are facing class actions under the TCPA for sending this type of confirmatory message.
The TCPA prohibits, among other things, autodialed calls to mobile phones, unless the sender has received prior express consent from the recipient for such calls. The FCC has ruled that text “calls” are covered by this prohibition. Thus, under the TCPA, an autodialed call that sends a text to a mobile phone without prior express consent (irrespective of the type of message) is prohibited. The TCPA provides for FCC and state attorney general enforcement as well as private litigation. Plaintiffs’ lawyers have latched onto the TCPA for several years and have recovered substantial amounts in judgments and settlements.
SoundBite sends text messages on behalf of a number of companies that have obtained express consent to send texts to particular wireless subscribers, including banks, utilities, and retailers. SoundBite follows the Mobile Marketing Association’s best practices which include the transmission of a text message to a subscriber confirming that subscriber’s request to opt-out of receiving future messages. When a consumer opts-out of receiving future text messages, a one-time reply is sent back (usually within minutes) via text confirming receipt.
While many of the FCC’s rulings on the TCPA have not been viewed as business-friendly, this latest ruling represents a victory for businesses. Several large associations and businesses filed in support of SoundBite’s petition, including the American Bankers Association and the Consumer Bankers Association. SoundBite also had the support of the National Association of Consumer Advocates. The parties argued that confirmation messages are, in fact, consumer-friendly as they provide important information to the consumer to let him or her know that the opt-out was received and the messages will stop.
The FCC concluded that, as long as prior express consent of the receiving party exists before sending any messages, a one-time text confirming an opt-out request does not violate the TCPA: “We conclude that a consumer’s prior express consent to receive text messages from an entity can be reasonably construed to include consent to receive a final, one-time text message confirming that such consent is being revoked at the request of the consumer.”
Importantly, the FCC stated that these opt-out texts may only confirm the opt-out request and may not include any marketing or promotional information (or an attempt to convince the consumer to reconsider his or her opt-out) and can be the only additional message sent to the consumer after the receipt of the opt-out request. In addition, if the confirmation message is sent more than five minutes after the opt-out, the burden will fall on the sender to demonstrate that the delay was reasonable. The FCC also asserted that it will monitor consumer complaints and take action if senders are using confirmation texts as an additional opportunity.
Businesses that receive threats of TCPA lawsuits for confirmatory texts will now be able to use this FCC ruling in their defense. Plaintiffs may challenge the FCC’s interpretation of the strict statutory language, however, as they have done in other instances. Organizations wishing to use confirmatory opt-out texts should review the FCC’s ruling and ensure that their confirmations comport with the FCC’s guidance, especially regarding timing and ban on advertising and promotional messages
Companies marketing prepaid phone cards should be on the lookout: the Federal Communications Commission is threatening more-severe penalties for deceptive advertising.
The prepaid phone card business is pretty profitable, with the industry raking in billions every year. Plastering phone cards with names like “Africa Magic” and “Hola Amigo,” prepaid calling card companies target immigrant populations, advertising thousands of minutes of talk time to immigrants’ native countries for just a few dollars.
The problem is that there are tons of hidden costs that erode the value of these cards before the card user can say “adios.” So while a card purchased for $2 or $5 may say in a big font that it will provide 1000 minutes of talk time, in a tiny font on the detachable “hanger” for the card are additional fees that may reduce the talk time by 45 percent or more.
The major discrepancies between the big-font value and the small-font reality of these prepaid calling cards have made the industry a popular target for state and federal regulators as well as plaintiffs’ attorneys. State attorneys general, the Federal Trade Commission, the FCC, and class action attorneys have pursued prepaid calling card companies for deceptive advertising.
Year after year there are announcements of companies paying out hefty multi-million dollar sums. But the marketing techniques continue. And many of these companies are repeat players. For instance, the company Epana Networks has been pursued in – and settled or been fined in – federal, state, and private actions.
Perhaps prepaid calling card companies have considered responding to legal actions for deceptive advertising as part of the cost of doing business. Getting people to buy their cards under misleading pretenses and paying a fine or settlement is a lot more lucrative than just being more up front about calling fees.
These companies may not be able to make the “cost-of-doing-business” decision for long, though. The FCC announced forfeitures by four different telecommunications companies earlier this month. Each of the companies was fined $5 million. The notice for each forfeiture, in the form of a No Action Letter (NAL), was almost a mirror of the next. One thing that bears repeating is how the FCC could have calculated the fines against these companies: $150,000 for each violation AND each card purchased as a separate violation. The FCC opted not to calculate out these prospective sums and instead determined that a $5 million fine would be sufficient to protect consumers and deter future bad behavior.
But, in each NAL, the FCC also noted that should the company continue to engage in “unjust and unreasonable practices” (deceptive advertising), the FCC would issue more NALs imposing substantially greater forfeitures and revoking each company’s operating authority. The takeaway here: current practices of hidden fees may be a thing of the past if prepaid calling card companies want to have a future.