What Business Owners Need to Know About the Telephone Consumer Protection Act (TCPA)

What businesses need to know about the TCPA.

While most people haven’t heard of the TCPA (Telephone Consumer Protection Act), it is actually a huge deal for businesses.  In fact, TCPA related lawsuits are the second most common federal lawsuit after employment law claims.  But what exactly is the TCPA, and how can you avoid violating it?  Here’s what businesses need to know about the TCPA.

  • What is the TCPA?

The TCPA was initially passed in 1991 with the goal of preventing telemarketers from calling and disturbing families during dinner hours.  In 2015, the FCC updated TCPA regulations and, today, this Act is primarily designed to protect consumers against businesses using SMS text message marketing.

  • What actions violate the TCPA?

Essentially, a consumer can file a TCPA lawsuit against a business if they feel that the company is sending them marketing messages without their explicit consent.  Statutory damages for violating the TCPA is $500 per text or actual damages, depending on which is greater.  For willful or knowing violations, the damages can cost up to $1,500 per text.  Oftentimes, TCPA lawsuits are class actions and, because there is no cap of aggregate statutory damages, multi-million dollar settlements are not unusual.

To illustrate what constitutes a TCPA violation, consider the example set in the Kolinek v. Walgreen suit.  The basis of this suit was that the client provided his mobile number to Walgreens when he picked up his prescription.  The pharmacist stated that his number would only be used to verify his identity for future refills.  However, he then started to receive messages reminding him to pick up his refills.  Because Walgreens did not use the customer’s mobile number to verify his identity as they claimed they would, he filed a lawsuit which ended in an $11 million settlement from the company.

  • How to prevent TCPA violations?

To avoid liability under the TCPA, businesses must receive prior written consent from each customer before sending them advertising or marketing messages.  The customer also cannot be charged for such text messages.  The business is responsible for obtaining customer consent, and there is a long list of requirements that a company must fulfill for consent to be considered valid.  Please note, most errors and omissions or general business liability insurance policies do not offer coverage for TCPA claims.  You should speak to your commercial insurance provider to learn how you can secure coverage for this specific risk.

This is what businesses need to know about the TCPA.  Worried about your company’s risk?  Then make sure you have the right business insurance protection in place.  For assistance with all your commercial coverage needs, contact the experts at CIA Insurance and Risk Management today.

Post written by Sophia Najjar, Vice President | Commercial Risk Management (CRM)

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