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Update On Telephone Consumer Protection Act

The best advertising directs a company’s message directly to the customer.  Direct telephone marketing is an effective way to accomplish this kind of advertising.  However, the Telephone Consumer Protect Act (“TCPA”) now restricts how businesses can engage in direct telephone marketing.  But, there are many other ways companies can directly reach consumers—i.e., text messages, emails, and instant messages. These kinds of communications may not violate the law against direct telephone marketing.  Is your company looking for more effective marketing? Are you unsure how you can advertise directly to customers’ devices?  If so, then recent interpretations of the TCPA may allow your business to advertise directly to customer devices.

What Is the TCPA?

The TCPA was enacted in 1991 to restrict telemarketing and the use of automated telephone calls for the purpose of marketing. The law makes it unlawful “to make any call using any automatic telephone dialing system (“ATDS”) . . . to any service for which the party is charged for the call.” An ATDS means equipment, which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers.  A recent case has helped limit the definition of an ATDS.  In Marks v. Crunch San Diego, LLC, a district court in California held that text message marketing may not be an ATDS, and therefore is in compliance with the TCPA.

What Does the Marks Case Mean for Your Company?

The defendant, Crunch, a San Diego gym, utilized a third-party platform to send promotional text messages to gym members and potential clients.  Crunch used three methods to input client phone number information into the third-party platform, all of which involved a person inputting the data.  Crunch could then send mass text messages to everyone in the database when it wanted to publish an advertisement. The court held that this system did not violate the TCPA because the platform was not an ATDS.  The platform did not store or produce numbers to call, it did not use a random number generator, and it did not then dial those random numbers.  The holding in this case means that a company can utilize a database of customer and potential customer information for telephone marketing.  However, the company must ensure that a person, and not a random number generator, collects the data.  Also, the system must not have the ability or potential to randomly generate numbers and send text messages to those numbers.  The holding in this case could potentially be extended to other forms of telephone communication (e.g., instant messaging).  Yet, a system like this could be deemed an ATDS if the platform has the potential capacity to store or produce telephone numbers without human involvement via new software.  In Sherman v. Yahoo! Inc., the same court held Yahoo’s text message system was an ATDS because it had this potential.  These two cases allow businesses to utilize mass-marketing text messages as long as a person manually inputs the recipients’ information into the system.

At the Law Offices of Salar Atrizadeh we assist clients in legal matters involving changes in internet, technology, and telecommunication laws. You may contact us to speak with an attorney regarding your questions or concerns.