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May 1, 2015

A common problem for business owners experiencing a loss of customers based on the current economy is how to market your services and products to potential new customers. Advertising on billboards, television and radio is expensive and may not reach your intended market. Therefore, you may consider hiring a company that sends out phone calls with prerecorded messages, mass faxes and/or mass text messages. These companies have the ability to send out thousands of advertisements to thousands of customers in a matter of minutes using automatic dialing system equipment. Even more enticing is the fact that these companies perform this service for a relatively low fee in comparison to the other available forms of advertising. While this method may appear to be attractive because it is extremely economical on the front end, the fact that it is now prohibited by federal law makes it incredibly expensive on the back end.

The Telephone Consumer Protection Act

In response to consumer complaints regarding the receipt of unsolicited phone calls, which requires the use of the consumer’s cell phone minutes, and unsolicited faxes, which uses the consumer’s paper, toner and ink, the federal government enacted the Telephone Consumer Protection Act, 47 U.S.C. §227 (“TCPA”). The TCPA prohibits: 1.) using automatic dialing machines to make calls to emergency telephone lines, health service providers’ lines and cellular phones; 2.) calling residential telephone lines using a prerecorded voice to deliver a message without the prior consent of the recipient; and 3.) using fax machines or computers to send unsolicited advertisements to fax machines. Furthermore, courts interpreting the TCPA have found that sending unsolicited text messages is also prohibited by this statute.

Civil Liability for Violations of the TCPA

Not only does the TCPA prohibit the use of prerecorded messages, unsolicited faxes and unsolicited text messages for commercial advertisement purposes, but it also creates a civil cause of action for individuals harmed by the receipt of these advertisements. One would think the damages for receiving an unsolicited fax would be relatively low. A few minutes on the phone or the cost of a piece of paper, a small amount of ink and toner cannot amount to much, right? Wrong. The TCPA creates a statutory fine in the amount of $500 per violation. Further, the court can triple the amount to $1500 per violation in the event there is a finding that the party violated the TCPA willfully or knowingly. Therefore, if a company sends out 1,000 faxes, then it could be liable for $500,000 (1,000 faxes x $500 per violation) in liability, or up to $1,500,000 in liability if the court finds that the violation was committed willfully or knowingly.

Perhaps the most damaging aspect of this statute is that courts have been imposing personal liability on the agent of the corporation who directed the advertisements to be sent out, rather than simply imposing liability on the corporation. Imagine this scenario- a business owner goes to a store that performs these mass faxing services. His business is decreasing, it does not have fixed assets and he needs to do something to generate more customers. He sends out 1,000 faxes and hopes the business will come pouring in. A few months later he receives a summons and complaint, which states that he is being sued for violating the TCPA. To his surprise, the plaintiff is not only seeking to recover from his company, but also from him personally. Therefore, business owners need to be careful to comply with this statute because not only are your business assets at stake, but so are your personal assets.

These types of cases have become a hot commodity for plaintiff’s class action attorneys. Once they find a potential plaintiff who has received a single fax, they will file suit and use discovery procedures to attempt to find out how many faxes have been sent and to whom they were sent. They will use this information to create a class of plaintiffs who all have the same TCPA violation claim against the party who sent the prerecorded messages, unsolicited faxes or text messages. In the scenario discussed above, the business owner who sent out 1,000 faxes could now be facing between $500,000 and $1,500,000 of personal liability. The potential for liability and litigation are simply not worth the use of advertising via prerecorded messages, mass faxes or mass text messages.

We have successfully defended multiple companies and individuals who have been sued for alleged TCPA violations. If you are faced with litigation regarding violation of the TCPA or are considering advertising for your company using prerecorded messages, faxes or text messages, please contact us to discuss your legal rights before proceeding.