TextMarks SMS Spam Lawsuit – What it Means for SMS Marketing
Last year we broke the story about how Jiffy Lube was sending unsolicited text messages to consumers. It turns out, the text messages were being sent by SMS provider TextMarks on behalf of Heartland Automotive Services, who operates 435 Jiffy Lube stations.
After we broke the story, consumers filed a Master Consolidated Class Action Complaint on September 23, 2011, claiming that Defendants Heartland Automotive Services, Inc. and TextMarks, Inc. sent them text messages in violation of the Telephone Consumer Protection Act (“TCPA”).
Shortly thereafter (October 26th), Heartland filed a motion to dismiss the complaint. Heartland presented three different arguments in their motion, all of which were denied by the court. I’ve broken down these three arguments below and explain what impact they will have on the SMS marketing industry.
FYI – I didn’t graduate from law school, or even college, so below is my best effort at dissecting and understanding the opinion of the court. Instead of just taking my word, you’re encouraged to read the opinion below and make your own conclusions regarding the courts decision.
Argument #1: Heartland wasn’t responsible for TextMarks’ actions.
Heartland argued that it cannot be held liable because they only “engaged” TextMarks to send the text messages, they didn’t send them themselves. The plaintiffs responded by asserting that the law recognizes liability for any party responsible for the text messages, regardless of which entity physically sends the text messages.
The court found that Heartland can be held liable, even if it did not physically send the text messages at issue.
Impact: I once had a senior SMS marketing executive tell me to stop blaming SMS marketing platforms for text message spam. He explained that SMS platforms are just that, a platform, the user is the one that is liable for their actions on that platform, not the platform itself. This court decision however says differently, assessing the liability of text message spam to any party involved.
I found the following post within TextMarks’ knowledge base responding to angry consumers that received the Jiffy Lube text message. It looks like TextMarks was trying to play the other side of the blame game, claiming they weren’t responsible as “Textmarks does not send text messages”. This court dismissal serves as notice to everyone in the SMS marketing industry, no longer can we play the blame game, we’re all responsible for text message spam. Period.
Argument #2: Heartland had prior express consent from consumers.
Heartland argued that at least four of the six named plaintiffs provided Heartland with prior express consent to the text messages by providing their telephone numbers to Heartland on invoices when they received oil changes. While the TCPA generally prohibits using an auto-dialer for telemarketing, it accepts those calls “made with the prior express consent of the called party.” Heartland provided copies of these invoices along with a request for judicial notice (allowing a fact to be introduced into evidence – Thanks Wikipedia).
The court denied Heartland’s request for judicial notice.
Impact: This court decision parallels the recent (February 15, 2012) amendments to the Telephone Consumer Protection Act. In the amended version of the TCPA, it states that “The person [consumer] is not required to sign an agreement [authorizing a business to deliver advertisements or telemarketing messages using an automatic telephone dialing system] (directly or indirectly), or agree to enter into such an agreement as a condition of purchasing any property, goods, or services. The amended TCPA also states that now there must be prior express written consent, bearing the signature of the person called that clearly authorizes the business to deliver advertisements.
This court ruling, in addition to the revised TCPA has a huge impact on text message marketing. In the past SMS providers would allow businesses to use mobile phones numbers that were collected in the normal course of doing business with a consumer, whereby establishing a “business relationship” with that consumer. An example of this practice would be using mobile phone numbers found on business cards left in a punchbowl at a restaurant, or in the case of Jiffy Lube, a mobile phone number left on an application, invoice, form, etc. that didn’t include clear and conspicuous disclosure. This disclosure would have to clearly inform the consumer that by executing the agreement, they’re authorizing the business to deliver telemarketing calls using an automatic telephone dialing system. FYI – In June of 2007, the Ninth Circuit in the case of Satterfield v. Simon & Schuster, found that text messages were considered an automatic telephone dialing system.
With this court decision and the amended TCPA, the whole landscape of how to obtain mobile phone numbers for text message marketing campaigns has changed.
Argument #3: The Telephone Consumer Protection Act is unconstitutional.
Heartland challenged that the TCPA was unconstitutional based on first amendment grounds. Heartland asserted that it is unconstitutional to prohibit calls from machines that have the capacity for random or sequential number generation but do not utilize that capacity. WTF? HAHAHA
The court denied Heartland’s challenge that the TCPA was unconstitutional.
Impact: I really don’t know what impact this will have on the SMS industry, as this argument seemed more like a last ditch hail mary, rather than a realistic argument. I guess the only impact this decision will have is that future text message spam cases won’t be able to make this argument.
*** What do you think about the precedent this case sets for the future of SMS marketing? Let me know what you’re thinking in the comments section below.