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Marketers Must Be Careful When Using Pre-Recorded Messages

6 Nov, 2012 By: Marc Roth

In the event of a delayed or back-shipped order, communicating with your customers in a timely and effective manner is paramount for complying with applicable notification laws and maintaining customer satisfaction. To communicate this and other information quickly, but cost effectively, many companies call their customers using a pre-recorded message. However, pre-recorded messages are only permissible under certain circumstances – and violations can be costly. Thus, marketers should be aware of the laws governing these calls and associated risks.

The Telemarketing Sales Rule (TSR) and the Telephone Consumer Protection Act (TCPA) regulate placing telephone calls with a pre-recorded message, commonly referred to as a “robocall,” at the federal level. These laws prohibit calling a consumer’s landline with a pre-recorded commercial message without the consumer’s express written consent (the TSR and TCPA also require the same type of consent to place calls and send text messages to a consumer’s mobile phone, which has been addressed in previous issues of Response). From a regulatory standpoint, the TSR is enforced by the Federal Trade Commission (FTC) and the TCPA by the Federal Communications Commission (FCC). However, the TCPA also allows for a consumer private right of action, with penalties up to $1,500 per violation. Many states have similar laws of which marketers should also be aware.

Both the TSR and TCPA apply to pre-recorded messages that contain or suggest a commercial message. Exempt from this prohibition are messages that communicate information solely related to an existing transaction. However, it is important to note that there is no exemption for commercial calls to existing customers absent their consent.

In the past several years, many consumer class action suits have been filed against companies under these laws. Rather than face the uncertainty and costs involved in defending these suits, many companies have instead elected to settle such claims – many for several million dollars. In general, these suits have involved purely commercial messages. However, some cases have not been so clear. For example, a class action was filed against a major retail electronics chain alleging that its pre-recorded calls to customers encouraging their use of points earned through its loyalty membership program violated the TCPA.

Although the district court initially dismissed the case, holding that the calls were transactional and not commercial, the U.S. Court of Appeals for the Ninth Circuit overturned that decision on October 23, finding that these calls violated the TCPA as constituting a “dual purpose” call, since they solicited a commercial transaction in addition to the reminder. Further, the court noted the fact that the plaintiffs received multiple calls from the retailer despite requests for them to stop. Importantly, the court also rejected the retailer’s argument that consumers consented to receive such calls when they agreed to the company’s privacy policy, which included a notice that to that effect. The holding in this case follows an FCC rulemaking procedure earlier this year in which the agency required that consumers provide their prior written consent to receive these calls. This requirement goes into effect October 16, 2013.

The importance of this case cannot be overstated. Companies that intend to call their customers, or any consumer, with a pre-recorded message that contains either an express or implicit commercial message must first obtain those consumers’ express written consent to receive such calls. It is advisable that this consent be clear, unambiguous and separate from any other consent provided by the consumer. Further, merely including a notice in a privacy policy or other statement (online or offline) that consumers will receive these messages may not satisfy the requisite consent, as evidenced by the above case.

Marc Roth is a partner in the New York office of Manatt Phelps & Phillips LLP in New York. He can be reached at [email protected].

About the Author: Marc Roth

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