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.

For nearly all calls and text messages, the TCPA generally requires businesses to obtain consumer consent before initiating contact. Even calls that are manually dialed or placed business to business may still be subject to some or all of the TCPA requirements and restrictions. 

The level of consent required for automated calls, text messages, and prerecorded or artificial calls depends on the nature of the communication—specifically, whether it is advertising and telemarketing or informational (i.e., contains no advertising or marketing content). This classification turns on a fact-specific review of whether the communication promotes the availability of or encourages the purchase, rental, or investment in goods or services as opposed to providing non-promotional information such as account updates or service notifications. When a message serves a dual purpose by combining marketing and informational content, it is treated as a telemarketing communication for TCPA compliance purposes and therefore requires prior express written consent.

Informational communications provide non-promotional information such as account updates or service notifications and require prior express consent. Telemarketing communications, by contrast, are subject to heightened restrictions under the TCPA and require prior express written consent from the consumer (which must meet specific statutory criteria).

Though the distinction between these two forms of consent may sound subtle, prior express written consent is a significantly higher standard than prior express consent. The former requires a signed (or ESIGN compliant electronic signature process) written agreement authorizing the receipt of telemarketing messages, while the latter may be satisfied when a consumer voluntarily provides a phone number related to the context of the subsequent calls/texts and without limiting the purpose for which their phone number may be used. Importantly, if the electronic signature is combined with another process, such as creating an online account, consent to receive telemarketing calls or texts must be clear and conspicuous.  And consent to receive telemarketing calls or texts must not be a required condition for completing any purchase.  

Obtaining consent, however, is only half the battle. Businesses must also ensure that their advertising or telemarketing campaigns allow consumers to revoke consent and opt out of communications by any reasonable means. Accordingly, businesses cannot designate an exclusive method for revoking consent that precludes other reasonable means. Instead, they should offer multiple opt-out methods. Keep in mind that some calls may be required to provide an automated interactive voice response system.

Opt-out mechanisms through reply text message must be designed to recognize any act or communication that reasonably indicates a consumer’s intent to revoke consent. The FCC has identified seven words that constitute per se revocations when used through reply text message: “stop,” “quit,” “end,” “revoke,” “opt out,” “cancel,” and “unsubscribe.” If a consumer uses one of these words through an automated voice or keypress mechanism, text message, website, or phone number designated for opt-outs, the revocation is treated as definitive. Opt-out systems should be designed to recognize a broad range of consumer language that may indicate revocation of consent, but at a minimum, they should immediately recognize and process these seven per se revocation terms.  Notably, we have seen a recent uptick in litigation by plaintiffs testing the bounds of “reasonable” opt out language. To mitigate risk, callers should ensure that their systems are able to recognize and process broad opt out requests.

Businesses also should routinely scrub their call lists against the National Do Not Call Registry (“DNC”). Consumers who have registered their numbers with the DNC generally cannot receive marketing communications—including manually dialed live voice calls—unless there is an established business relationship between the business and the consumer or the consumer has provided prior express written consent.

Businesses should also routinely scrub call lists against the Reassigned Numbers Database (“RND”) to help ensure that calls are not placed to phone numbers that have been reassigned to new owners whose consent has not been obtained. In addition, businesses should maintain an internal do-not-call list containing consumers who have opted out of marketing communications despite previously providing consent.

Finally, certain telephone solicitations may be prohibited between 9:00 p.m. and 8:00 a.m. in the recipient’s time zone. Businesses should therefore ensure that telephone solicitations are not sent or placed during these restricted hours.  Lawsuits based on these alleged ‘quiet time’ violations have been increasingly popular with plaintiffs particularly for retail rewards programs.  Retailers should carefully examine their approach to permissible call times.

The TCPA remains an active area of regulatory interpretation and litigation. Court decisions and agency guidance can significantly affect compliance obligations. A strong compliance posture includes periodically reviewing marketing programs and updating policies as legal requirements evolve. Retailers that focus on obtaining valid consent, maintaining thorough records, honoring consumer preferences, and monitoring their marketing practices can significantly reduce legal risk while preserving the effectiveness of their customer engagement efforts.