FCC Clips Lyft’s Wings

Businesses need to be aware that the Federal Communications Commission (“FCC”) will monitor and test the “Unsubscribe” feature used with their promotional and marketing communications even without evidence of consumer harm. Recently, the FCC issued a citation to Lyft, Inc. (“Lyft”) for promotional communications having an “Unsubscribe” feature that did not work like the website Terms of Service said it should.

Lyft provides a transportation matchmaking service to consumers in various metropolitan areas throughout the United States. Consumers who wish to purchase rides from Lyft drivers do so by accessing the Lyft website and creating an account via the Internet, or by downloading the Lyft mobile application onto a smartphone device and following the prompts to sign up for the service. Before entering their names, email addresses and phone numbers in the signup screen, consumers are required to check a box stating “I agree with the Terms of Service.” The signup page included a link to the Lyft Terms of Service, which provided in part:

IF YOU WISH TO OPT-OUT OF PROMOTIONAL EMAILS, TEXT MESSAGES, OR OTHER COMMUNICATIONS, YOU MAY OPT-OUT BY FOLLOWING THE UNSUBSCRIBE OPTIONS PROVIDED TO YOU.

FCC staff discovered, however, that—contrary to the explicit representation in the Lyft Terms of Service—Lyft did not, in fact, provide “unsubscribe options” for consumers to follow. FCC staff also discovered that exercising the opt-out option to decline marketing messages made it impossible to use Lyft’s services. Put another way, Lyft’s opt-out representations were found to be illusory, and Lyft effectively required all consumers to agree to receive marketing text messages and calls on their mobile phones in order to use services.

To protect consumers from being forced to give consent to receive telephone calls and text messages unwillingly, FCC regulations forbid requiring consumers to agree to receive marketing robocalls/auto-dialed calls and text messages as a condition of purchasing any goods, services or property.¹ While the Lyft Terms of Service stated that “[the consumer] acknowledge[s] that [they] are not required to consent to receive promotional messages as a condition of using the Lyft Platform or the Services,” this statement was contradicted by the FCC’s actual experience using the Lyft app and website. In reality, there was no way for the consumer to refuse consent to receive promotional messages without precluding use of Lyft’s services. The opt-out mechanisms at issue violated provisions of FCC rules and regulations regulating marketing and advertising calls and text messages that use auto-dialers or artificial prerecorded messages to residential and wireless phones. The FCC has directed Lyft to take immediate steps to comply with FCC regulations and the Telephone Consumer Protection Act’s (“TCPA”) prohibition against unlawful marketing and advertising calls.

It is clear from this case that the FCC will test a business’s opt-out mechanisms to see whether they conform with applicable provisions of the business’s posted terms of use and/or privacy policy. The Federal Trade Commission has also brought suit against businesses whose Terms of Use and Privacy Policy were deceptive and misleading to consumers.

Businesses should review their terms and conditions and privacy policy, not just for content but for accuracy. No matter what, the terms of use must be consistent with actual business practices. The FCC and FTC have numerous enforcement tools to address what they find to be deceptive, unfair or prohibited practices.

1. 47 C.F.R. § 64.1200.