As of October 16, 2013, the new rules under the Telephone Consumer Protection Act (TCPA) of 1991 went into effect. The newly adopted rules derive from a report and order issued by the Federal Communications Commission (FCC) on February 15, 2012 intended to “maximize consistency” with the Federal Trade Commission’s (“FTC”) Telemarketing Sales Rule which established the “do-not-call registry.”
The rule changes are significant for retailers, marketers and any company with a mobile marketing program as the TCPA encompasses marketing messages via SMS, in addition to autodialed or prerecorded telemarketing calls. The explosive growth of consumers using smartphones to search for and purchase goods and services cannot be ignored.
Prior Express Written Consent. Under the new rules “prior express written consent” must be obtained via a written agreement signed by the person receiving the marketing message who clearly authorizes the delivery to that person via autodialed or prerecorded telemarketing calls and text messages. The sender of the marketing message must include a “clear and conspicuous” disclosure that:
(1) By giving consent, the consumer authorizes the seller to deliver autodialed or prerecorded telemarketing calls and text messages to the specific phone number designated by the consumer;
(2) The consumer is not required to give his or her consent as a condition to purchasing any goods or services, and;
(3) The consent encompasses all future autodialed or prerecorded telemarketing calls and text messages from that particular sender.
Electronic Signatures. The signature affirming the written consent can be electronic and may be obtained in compliance with the E-SIGN Act. Acceptable forms of electronic signature include e-mail, website forms, text messages, telephone keypad functions or voice recordings. An electronic signature should involve an affirmative act, such as typing in a phone number and clicking “submit” for an online form. In contrast, the use of a pre-checked box would not be acceptable since it would essentially require the consumer to opt-out.
Removal of Established Business Relationship Exception. The rule changes also eliminate the “established business relationship” exception for prerecorded telemarketing calls to land lines whereby telemarketers could circumvent TCPA liability if they had an established business relationship with the consumer arising from the sale of goods or services within the last eighteen months or had fielded an inquiry or application from the customer within the prior three. The established business relationship exemption did not apply to wireless phones so this change does not impact mobile marketing.
Best Practices for Compliance.
Review Your Current Mobile Marketing Database. Companies need to carefully review their mobile databases to determine whether they are in compliance with the new rules. Most likely they are not. Express consents that are not written can no longer be used. Moreover, even if the database contains express written consents, they probably do not include the disclosure that consent to get texts is not a required condition of purchase. While it is unclear whether such a disclosure is required with respect to written consents obtained prior to the rule change, the potential for statutory penalties and class action lawsuits weigh against taking such a risk. Most companies will need to get their customers to re-opt-in to receiving marketing texts.
Obtaining Consents Going Forward. Written consent can be achieved via various means including online agreements, lead generation forms and emails prompting consumers to reply. Clarity is key. If using an unchecked box or other online agreement, the above-described disclosure should be next to or immediately preceding the opt-in mechanism and should explicitly state the terms to which the consumer is consenting. To that end, avoid broad language that refers to affiliates, partners, or brands as the consent must name the specific seller and does not encompass one’s affiliates unless they are explicitly identified.
Include Standard Text Notices. Businesses must continue to provide standard disclosures and notices, such as that message and data rates may apply to the texts being sent. All texts must have a clear unsubscribe option.
Maintain Consent Records. The burden of proof for consent lies with the seller. Companies should have a record-keeping system and implement procedures to store and access the new written consents.
Written Consent Still Not Required for Transactional Messages. Companies sending purely transactional or informational texts (e.g., airline flight updates, confirmations of purchases or sweepstakes entries, etc.) still only need prior express consent, which does not need to be in writing. So, pre-October 16 mobile databases can continue to be used to send transactional texts.
Retailers that do not already have a mobile marketing program, will soon. eMarketer expects the overall mobile ad market to grow 89% in 2013 to $16.65 billion. If that doesn’t grab your attention, here are some other noteworthy statistics:
- 9 out of 10 mobile searches lead to action, over half leading to a purchase. (Search Engine Land, 2012)
- Mobile coupons are redeemed at 10 times the rate of traditional coupons. (Mobile Marketer, 2012)
- 52% of all mobile ads result in a phone call. (xAd, 2012)
- 70% of all mobile searches result in action within 1 hour, compared to70% of online searches resulting in action in one month. (Mobile Marketer, 2012)
- 50% of smartphone owners have scanned a QR code, and of those, 18% made a subsequent purchase. (Mashable)
Fines can run as high as $1,500 per unsolicited message and TCPA class actions are on the rise since it is a strict liability statute with no cap on the number of violations that can be included in a single lawsuit. With these changes, companies need to rethink their mobile marketing programs with respect to how they obtain and maintain consent to avoid becoming a class action target.