Late August is that time of year when the relentless summer heat has us all feeling a bit exhausted and cranky. It’s like the regulatory compliance landscape—everything seems manageable until it isn’t, and then you’re left sweating bullets. Enter the Telephone Consumer Protection Act (TCPA), the regulatory equivalent of a late-August heatwave. It’s often overlooked until it becomes a pressing issue, and when it does, the exposure can be enormous. One of the most common misconceptions about the TCPA is that it only applies to consumer communications. In reality, it also governs business-to-business (B2B) interactions.
Enacted in 1991 to crack down on unwanted telemarketing calls and texts, the TCPA prohibits companies from using automated telephone dialing systems or artificial or prerecorded voices to contact people without prior express consent. Violating this law can be incredibly costly, with penalties starting at $500 per violation and soaring to $1,500 for willful violations. These violations are a prime target for class action lawsuits. Imagine sending 10,000 unsolicited texts—that could result in exposure ranging from $5 million to $15 million. Yes, you read that right—up to $15 million, even if the recipients of your communications suffered no actual damages whatsoever.
Marketing communications
When it comes to marketing, the TCPA is strict about the level of consent required. For marketing calls and texts, you must obtain prior express written consent directly from the person you’re contacting. This means you can’t rely on phone numbers captured indirectly, such as those sourced from third-party vendors or scraped from public websites, unless certain conditions are met. The consent must be clear, explicit, and in writing—anything less is a significant gamble. The Federal Communications Commission (FCC) has made it clear that indirect consent doesn’t cut it, so diligence in how you collect and use contact information is crucial.
Debt collection/account-related communications
The rules shift slightly for non-marketing communications, like texts and calls about debtor or client accounts. Here, prior express consent is generally sufficient, and written consent isn’t always required. If a customer provides their phone number when setting up an account, that typically implies consent for future communications related to that account. However, consent can be revoked, and the FCC’s latest rule on the topic requires businesses to honor revocations within 10 days. Revocation can be done by any reasonable means—whether it’s a phone call, an email, or even a text message—making it essential to have systems in place to promptly track and honor these requests.
Outsourcing texting to third party vendors
One aspect of TCPA compliance that often gets overlooked is the need to carefully review vendor contracts. When you’re working with third-party vendors—whether for marketing, lead generation, or debt collection—their actions can directly impact your liability under the TCPA. It’s essential to ensure that your contracts include clear provisions requiring TCPA compliance, including proper consent management. Additionally, these agreements should include strong indemnification clauses to protect your business if a vendor’s actions lead to a violation. Regularly auditing and updating these contracts can help safeguard your company from potential TCPA pitfalls, ultimately preventing costly legal issues down the line.
Takeaway: don’t underestimate the TCPA
The TCPA is more than just a set of rules to follow—it’s a potential minefield for businesses that don’t take it seriously. Whether you’re engaged in marketing or debt collection, understanding and adhering to the TCPA’s requirements is critical. One wrong move could cost you millions. So, ensure your compliance practices are airtight, and don’t underestimate the importance of obtaining and managing consent.
News and views
Don’t Forget to Register for Husch Blackwell’s Dodd-Frank Section 1071 Webinar! Small business finance companies will soon face new data collection and reporting rules under Dodd-Frank Section 1071, bringing significant compliance challenges and risks, especially for fintechs and alternative commercial finance companies. Also keep in mind that even though traditional factoring companies are carved out of 1071, many ancillary products are not exempt. Join us for a critical webinar where we’ll explore key strategies for navigating these new rules, reducing litigation, and managing reputational risk. Don’t miss this opportunity to get up to speed—register today!
According to a recent article by PYMNTS titled Intuit Says Small Businesses Adopt Digital Solutions to Improve Cash Flow, Intuit’s Small Business and Self-Employed Group experienced notable revenue growth, outpacing the company’s other segments as small and medium-sized businesses increasingly adopt digital solutions to enhance cash flow. Reflecting this expanded focus, Intuit renamed the division to the Global Business Solutions Group. The company is also ramping up its AI investments, with innovations like Intuit Assist providing personalized financial insights, positioning Intuit for continued growth and disruption in the SMB market.
Our colleagues Erik Eisenmann and Laura Malugade discuss a recent Federal Court decision out of Texas that enjoins the FTC’s noncompete ban on a nationwide basis. According to our colleagues, “[f]or now, it remains ‘business as usual’ when it comes to non-compete agreements.” Check out their legal alert or reach out if you’d like to discuss the details.
News you can bank on
Interested in more updates on the financial services industry? Subscribe and receive Husch Blackwell consumer financial services insights in your inbox.