Direct Marketing: Cheap and Easy Advertising or Potential Litigation from Hell?

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November 25, 2013
Eric Samore and Molly Arranz
SmithAmundsen Class Action Alert

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The unthinkable possibility of being on the hook for millions of dollars for what is, seemingly, a simple marketing call, text or fax has become a reality for many defendants in Telephone Consumer Protection Act (TCPA) cases. Just ask WebMD, Papa John’s, Steve Madden, and many others. Now, even companies that knew that this large, potential liability loomed for using low-cost marketing tools need to reinstitute their wariness. What you knew last year, this year or last month is likely outdated information. Significant recent changes to the federal regulations relating to this statute may land you right back in the liability mire.

The TCPA was enacted with reasonable intentions: protect consumers from unwanted telemarketing. Few liked having a telemarketer interrupt dinner. However, since its enactment, what is considered unwanted “telemarketing” has expanded—it means everything from fax advertising to promotional texts now. Given broader ways in which people communicate, a simple marketing message could translate into a $500 penalty, which can be multiplied by thousands of violations and millions of dollars in statutory damages. Further, insurance companies likely have written exclusions in their policies to eliminate coverage for these telemarketing violations.

What are some of the precautions you can take? Consider the following:

You want to advertise by automated calls

  • Make sure this ‘okay’ shows the person knew what he or she was agreeing to and agreed to receive the calls at that number
  • Stay clear of incorporating any numbers from the "Do-Not-Call" list

You want to advertise by faxes

You want to advertise by text messages

What if you hire an outside company to advertise for you?

SmithAmundsen advises clients with respect to corporate compliance issues relating to direct marketing, drafting of appropriate third party agreements, and content of opt out fax notice requirements. SmithAmundsen provides this advice from its unique perspective of having defended more than 60 class action lawsuits alleging that defendants violated direct marketing statutes.