Hunton Retail Law Resource

Businesses of all kinds increasingly rely on text messages and promotional calls to engage customers. While these channels can be highly effective marketing tools, their use can also expose businesses to potential liability under the Telephone Consumer Protection Act (TCPA). Enacted in 1991, the TCPA was designed to restrict telephone solicitations and the use of automated telephone equipment. Notably, the TCPA provides for the recovery of statutory damages, meaning that each violation (that is, each text message or call) gives rise to potential statutory damages of $500 to $1500. Recent years have seen a dramatic increase in TCPA litigation, costing businesses a pretty penny. For retailers seeking to mitigate litigation risk and costly settlements, we have compiled some practical guidance on TCPA compliance to help head off future claims.

Retailers, beware! The new wave in the fight against “robocalls” is coming, and it’s targeting telemarketing text messages. In the past six months, we have seen an uptick in activity at both the state and federal level to rein in telemarketing text messages, and companies using any kind of text messaging telemarketing will want to proceed with caution.

Last week the Eleventh Circuit delivered a surprising blow to class action settlement practice finding that 19th century Supreme Court precedent “prohibit[s] the type of incentive award that the district court approved here–one that compensates a class representative for his time and rewards him for bringing a lawsuit,” a type of incentive award that is “commonplace in modern class-action litigation.” Retailers and other defendants in class action cases should take note, because this ruling may impact how settlements in the Eleventh Circuit should be structured going forward.

On May 6, 2020, the United States Supreme Court held oral argument in William P. Barr, et al. v. American Association of Political Consultants, et al., No. 19-631 (Nov. 14, 2019). In Barr, the Court was asked to consider the constitutionality of the government debt collection exemption to the Telephone Consumer Protection Act (TCPA). Under that exemption, calls placed to collect a debt owed to or guaranteed by the United States government are not subject to the TCPA’s autodialing restrictions. The questions before the Court were (1) is the government debt collection exemption unconstitutional under the First Amendment and (2) if so, whether the constitutionality can be addressed by simply severing that exemption from the statute or whether the entire statute should be invalidated. Based on the tone of the oral argument, the tide may be changing for the TCPA.