Lawsuits related to violations of the Telephone Consumer Protection Act (TCPA) have increased by 50 percent over the last four years, and many have affected businesses within the fitness industry.
This increase means health clubs need to be more vigilant about obtaining proper consent to communicate with members using automated text and telemarketing devices.
Since our article on the topic last year, TCPA compliance has become more confusing due to recent circuit court rulings that relied on varying interpretations of the definition of an automatic telephone dialing system (ATDS).
The reason for the confusion stems from the TCPA’s definition of an ATDS, as it was defined in 1991 and then updated by the Federal Communications Commission in 2001. The definition in and of itself is still too ambiguous for the courts to rely on. It is no surprise that the courts have struggled to agree on how to enforce the statute in this age of ever-evolving technology.
The increase in TCPA litigation has made one thing clear—every business owner should be well educated on federal and state regulations before embarking on an automated messaging campaign or face the potential of class action lawsuits, legal fees and fines.
Tracing the Origins of the TCPA
The TCPA is a federal statute that was enacted in 1991 to protect consumers from unwanted communication by regulating the use of automated telephone dialing systems and prerecorded voice messages sent to telephones, voicemails or fax machines. In 2012, the TCPA was updated to include text messages and wireless calls, and it was expanded to require prior written express consent for marketing messages.
Unfortunately, dated and ambiguous language in the original statute combined with fast-paced advancements in communication technology have resulted in contradictory and confusing judicial outcomes in TCPA cases. Affected businesses are being drained of defense fees as courts struggle to interpret dated TCPA language in a new technological age.
In order to avoid a TCPA lawsuit, it is important that business owners not only understand the regulations but also stay current on developing TCPA news. With the right tools and information, it is possible to implement a TCPA-compliant automated communications program without exposure to legal trouble.
Understanding the Concept of “Prior Express Written Consent”
The first and best way to avoid a TCPA violation is to maintain a meticulous process for gaining and recording prior express written consent for every single person you communicate with via an automated system, Associate Attorney Danielle Newman of Los Angeles-based Manatt, Phelps & Phillips told Club Industry. Newman works as a defense attorney on TCPA cases.
Under the TCPA, marketing-related messages require “prior express written consent,” but informational messages only require “prior express consent.” It is best to obtain written consent before sending any message, marketing or otherwise, because even if you view the message as informational, the courts may see it differently.
The language used in a written consent agreement must clearly disclose the use of an ATDS or prerecorded voice, Newman said. The consumer must also be made aware that they are not required to consent to communication in order to purchase a service or product.
“Written consent should be clearly visible,” Nick Miniello, vice president of sales and co-founder of mobile marketing company Textmunication, told Club Industry. “I shouldn’t have to see it with a microscope. Separate your demographics based on how they want to be communicated with. Make it visible and be upfront that texting is available. All these I’s need to be dotted and T’s need to be crossed. Often, consumers don’t read the fine print, and they don’t know what they are signing. Although your paperwork may hold up in a legal dispute, there would still be legal representation fees involved if there is a dispute.”
The TCPA stipulates that the consumer has a right to revoke consent at any time. Consumers must be given a mechanism to opt out of receiving automated communications and informed of how to do it, even after prior express written consent is obtained. If a text message is sent, there should always be an opt-out option attached.
Records of consent need to be maintained for at least four years, the statute of limitations for a TCPA violation suit.
For 10 years, Textmunication has provided a platform that allows businesses to automate text communication to consumers. The company engages with TCPA defense attorneys to stay on top of regulations and provides application programming interface (API) integrations to identify reassigned numbers, numbers on the National Do Not Call Registry and opt-outs. They train their clients on how to update consent forms and vet consent with secondary opt-ins.
Even with safeguards in place, club owners need to understand that the responsibility of gaining and documenting proper consent falls on the business that is sending the message, not the technology provider. Two recent clients of Textmunication were found to have violated the TCPA because they failed to get proper consent before sending automated text messages while using Texmunication’s platform.
When done in compliance with the TCPA, automated messaging remains an effective tool for health and fitness professionals, Miniello said, and most of his clients leverage the platform with success and without violating the TCPA.
“There are so many ways to utilize that communications channel—billing, emergencies, marketing or an announcement that your favorite Zumba class was cancelled today,” he said. “I’ve seen anywhere from a 10 percent to as high as a 30 percent increase in collectable revenue, not to mention all the time the company is saving by not placing one-to-one phone calls.”
Defining an Automatic Telephone Dialing System (ATDS)
The TCPA is a federal statute, but how a TCPA case is decided could depend on where it was filed.
Newman regularly defends businesses against TCAP claims and said that once it is determined that a message was sent without proper consent, a court immediately will move into discovery to determine if the message was delivered by an ATDS.
“The term auto-dialer is really the hot-button issue because that is what is currently in the gray area, and different district courts are interpreting that issue differently,” Newman said. “In general, it would mean the kind of technology that is able to dial numbers with little to no intervention. Where the split comes in is that the capacity could be latent, where it could be changed to be an auto-dialer. Other courts take a more restrictive view and say it refers to only the current capacity.”
In 2015, the Federal Communications Commission (FCC) sought to clarify the definition of an ATDS with an omnibus declaratory ruling and order with which it defined an auto-dialer as “dialing equipment that generally has the capacity to store or produce and dial random or sequential numbers even if it is not presently used for that purpose, including when the caller is calling a set list.”
The Association of Credit Collection Professionals (now known as ACA International) filed a petition almost immediately after the FCC issued its definition of an ATDS that claimed that the FCC had expanded the TCPA beyond what Congress had originally intended. The petition, and others like it, were combined into one suit to be decided by the U.S. Court of Appeals for the District of Columbia Circuit’s Judicial Panel on Multidistrict Litigation. In its judgment, the circuit court threw out the FCC definition of an ATDS and concluded that such a broad definition would apply to any smartphone device and make it even more difficult for businesses to comply with the TCPA.
In 2019, U.S. Court of Appeals for the Ninth Circuit took a different view. A Marks v. Crunch San Diego case centered around promotional text messages that were allegedly sent without proper consent. After an initial summary judgment was made in Crunch’s favor, the court reversed its position and ruled that an ATDS had been used to make the calls because, even though the device was not calling from a random or sequential number generator, it had the capacity to automatically dial stored numbers. The court declared that the language of the TCPA is so ambiguous that they had to return to Congress’ original intent of the statute, which was to protect the consumer from robocalls. The Crunch case has since been settled out of court.
“Most of the circuit courts have not ruled on what an auto dialer is, so the lower courts, the district courts, are a bit all over the map,” Newman said. “Some have broader views; some have narrower views.
(Manatt, Phelps & Phillips’ newsletter offers an in-depth review of court rulings on the definition of ATDS and how those rulings may impact future cases here.)
Adhering to the National Do Not Call Registry
In addition to the TCPA, telemarketers must comply with the Federal Trade Commission’s (FTC’s) National Do Not Call Registry regulations. According to the FTC’s website, telemarketers must scrub their list against the Do Not Call Registry every 31 days. Certain exemptions apply such as the existence of express prior written consent or proof of an established business relationship within the past 18 months. Companies are also required to maintain internal Do Not Call Registries and maintain procedures for keeping them current. The FTC has recovered $52 million in civil penalties and $72 million in redress or disgorgement for Do Not Call Registry violations since 2003.
Respecting the Potential Costs of TCPA Violations
Damages-wise, the TCPA stipulates that consumers are entitled to $500 per call (or text) and an additional $1,500 per call if the court rules that the caller willfully violated the TCPA. This means that a single class action lawsuit involving hundreds or thousands of plaintiffs could result in millions of dollars in fines, accompanied by equally large defense expenses.
Since 2013, TCPA lawsuits have been filed against Planet Fitness, Gold’s Gym, Workout World, Life Time, 24-Hour Fitness, Town Sports International, Las Vegas Athletic Clubs and Crunch Fitness, among many others. In 2015, Life Time reached a settlement for $15 million in a class action lawsuit that alleged the company sent text messages to 593,000 members without consent. Planet Fitness is currently facing a suit claiming damages of $5 million or more for a text message promotion that allegedly offered a free water bottle to consumers without their consent.
The definition of an ATDS will remain ambiguous until a case makes its way to the U.S. Supreme Court or until Congress takes further action to clarify the statute. Even if the FCC offers further clarification, its definition must hold up in court. With ambiguity comes trepidation about using automatic dialing systems, but it is important to remember that using an ATDS is not illegal as long as there is a record of proper consent.
states and foreign countries have their own statutes that apply to consumer telephone communications, and it is important to fully understand and comply with those laws if you plan to contact their residents, Newman said.