TCPA: Beware! Informational Calls Can Be Viewed as Solicitations
On October 17, 2012, the Ninth Circuit Court of Appeals revived a Telephone Consumer Protection Act (TCPA) class action, alleging that a series of automated phone calls placed by Best Buy Stores LP, regarding its customer rewards program, were not purely informational and constituted illegal solicitations.
The appeals court reversed a Washington federal judge’s ruling that a series of telephone calls about Best Buy’s Reward Zone customer rewards program were informational only, finding that encouragement to redeem the Reward Zone points at the electronics retailer’s stores did in fact rise to the level of solicitation in violation of the TCPA. The court noted that it “approach[es] the problem with a measure of common sense. The … calls urged the listener to ‘redeem’ his Reward Zone points …. Redeeming Reward Zone points required going to a Best Buy store and making further purchases of Best Buy’s goods. There was no other use for the Reward Zone points. Thus, the calls encouraged the listener to make future purchases at Best Buy.”
Nuts and Bolts
The TCPA, 47 U.S.C. §227(b)(1)(B), makes it unlawful to initiate any telephone call using a prerecorded message without the prior express consent of the called party. The statute provides that the Federal Communications Commission may exempt certain commercial calls from the TCPA, provided the calls do not adversely affect the privacy rights the statute was intended to protect and do not include unsolicited advertisements. The statute defines unsolicited ads as including “material advertising the commercial availability or quality of any property, goods, or services,” 47 U.S.C. §227(a)(5).
The FCC has exempted automated commercial calls that do not introduce or include unsolicited advertisements. However, the FCC has determined that “dual purpose” calls – calls that contain both information and an advertisement – do not fall within the exemption.
With that in mind, the court here concluded that Best Buy’s automated calls fell within the scope of the TCPA. The calls, among other things, urged the listener to redeem his or her reward points, directed the listener to a website to further engage with the rewards program, and thanked listeners for shopping at Best Buy.
While not every court may adopt the Ninth Circuit’s view of advertisement versus solicitation, there is an important lesson to remember. In order to prevent lawsuits, a company must obtain prior express consent from customers before contacting them via telephone calls or text messages or ensure that calls made are strictly for informational purposes, which, according to the Ninth Circuit, can be a slippery slope.
To learn more about the Consumer Financial Protection Bureau, please do not hesitate to contact David Anthony, Alan Wingfield, or Virginia Flynn.
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