Fool’s Gold? TCPA Loophole Survives 9th Circuit, For Now

Published: Feb. 11, 2016

Updated: Oct. 05, 2020

An exception to a consent requirement for some non-marketing text messages and calls has survived another misplaced legal challenge, but you probably shouldn’t rely on the exception. Here’s why.

First, some background: The federal Telephone Consumer Protection Act (“TCPA”) requires “prior express consent” for sending non-marketing text messages or placing non-marketing calls to cell phones using certain automated equipment. What type of equipment? That’s a matter of ongoing litigation, but Federal Communications Commission (“FCC”) rulings arguably apply this requirement to virtually all texting or dialing equipment that could be controlled by software, which is much of what businesses use today to send bulk text messages. Companies that violate the requirement are liable for statutory damages ranging from $500-$1500 per text message sent without prior express consent. So, a single unlawful text message sent once to 100,000 recipients creates potential liability of at least $50,000,000 and up to $150,000,000. This is the reason for so many settlements in this area.

In 1992, the FCC created an “invitation” exception by ruling that “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.” Some TCPA defendants have been able to use this language to escape liability for automated communications.

One such defendant is Sabre, which helps consumers manage travel reservations. Plaintiff Shaya Baird supplied her telephone number to Hawaiian Airlines when making a reservation. Later, acting on behalf of the airline, Sabre sent her an automated text message at that number, inviting Baird to reply “yes” to receive flight notifications for her trip. She didn’t respond, and Sabre sent her no more messages. She then tried to bring a class action lawsuit, but her claim was dismissed on the basis of the invitation exception, despite her argument that the FCC based the exception on an unreasonable interpretation of the TCPA. The 9th Circuit affirmed this dismissal on February 3, 2016, but on the narrowest of grounds: Baird didn’t follow the proper procedures for challenging the FCC’s interpretation. Under the Hobbs Act, this interpretation can be challenged only in a case filed against the United States in a federal Court of Appeals. Her suit, which was filed against a private company in a U.S. District Court, was ineligible.

The FCC’s language has lived to see another day, and it sometimes can be useful for rebuffing plaintiffs’ attorneys. But for the following reasons, wise companies will explicitly request consumers’ express consent (and use the FCC exception only as a fallback defense) instead of relying on the exception as a complete compliance strategy:

  1. The exception is vulnerable to being overturned:
    1. The TCPA statute requires “prior express consent” for automated calls and text messages.
    2. The FCC’s exception says that by providing a telephone number, individuals “have in effect given their invitation or permission.” Even if one accepts that “invitation or permission” are both equivalent to “consent,” the statute requires “express” consent, which arguably is something more, especially where, as specified in the FCC’s language, the invitation or permission is only “in effect” given. District courts have reached this conclusion before, but they lacked authority to overrule the FCC.
    3. The TCPA does authorize the FCC to create exceptions to the “prior express consent” requirement as applicable to text messages and autodialed calls, but only where the text messages or calls do not result in any charge to the recipient. The invitation exception lacks this limiting language, and not everybody has an unlimited texting or calling plan.
    4. The plaintiffs’ bar has a big financial incentive to try to overturn the exception.
  2. Because of that, and because of FCC orders that limit or qualify the exception, some courts have found ways to determine that the exception is inapplicable to particular cases. Your judge might do the same.
  3. Regardless of TCPA compliance, cell phone carriers can suspend certain text message programs that don’t comply with standards that are imposed in the industry by contract. These rules contain specific opt-in requirements, and merely asking a user to input a phone number doesn’t qualify as a valid opt-in.
  4. Obtaining explicit prior express consent can be easy, and it creates certainty. You have some flexibility about how to capture the consent, and you don’t need to choose something awkward.

As a reminder, if the automated call or text message is for marketing purposes, additional consent requirements likely apply, and the FCC exception discussed above won’t work (see here and also the discussion of a single-message exception here).

Photo by Ashley Van Haeften from Flickr