By Craig Dammeier
In April of 2014, the Buffalo Bills settled a two-year federal court case in Florida for a cool $3 million dollars. Their mistake? Sending three more text messages over a 14-day period than a fan had agreed to. Mr. Jerry Wojcik visited the Bills’ website in 2012 and opted-in to receiving promotional text messages limited to “…three to five messages per week for a total of 10 to 12 weeks.” Instead, Mr. Wojcik received six text messages the first week and seven the second week. He subsequently filed a class action suit against the sports franchise alleging violations of the Telephone Consumer Protection Act (TCPA). The settlement agreement was as follows: each eligible class member was entitled to a share of $2.5 million worth of debit cards (only redeemable on the Bills’ website, a “win” for the franchise) and $500,000 in attorney’s fees. And it’s not just the Bills (nor the NFL) that faces this menace. The Tampa Bay Buccaneers and the LA-based Chargers, Clippers, and Lakers have all fallen victim to the heartless TCPA. These teams are being mercilessly-abused over a few extra promotional emails or texts—who will help them survive the night?
The TCPA, passed by the Federal Communications Commission in 1991, was originally intended to protect individuals against unsolicited calls and texts sent to wireless devices (and home phones) by “auto-dialers.” Auto-dialers are automatic telephone dialing systems that use prerecorded or artificial voice messages. The 1991 statute arose over complaints regarding the increased use of auto-dialers, specifically because the called parties could incur significant phone bills as a result of the unsolicited calls. In response, the TCPA provides statutory damages of $500 (for an “innocent” violation) and $1,500 for a willful violation of the statute.
In 2012, a subsequent amendment to the TCPA included text messages and other modern technologies into the statute and further precluded companies from making any call without the prior express consent of the consumer. It also required the companies provide an automated, interactive “opt-out” mechanism which would allow the consumer to stop all future messages. It is under this 2012 amendment that TCPA litigation has seen a historic rise in the court system.
While the statute was originally passed to protect consumer privacy and restrict companies from engaging in unwanted telemarketing communication practices, it has quickly become a favorite weapon of plaintiff’s firms as it creates liability for every company from startups to international banks (not just sports franchises). Furthermore, the Act enables mistreated consumers and their lawyers to collect massive class action settlements. Bank of America settled its TCPA class action for $32 million (the culmination of six pending TCPA litigation matters), HSBC was granted judicial approval of a $40 million settlement in 2015, and Western Union agreed to pay $8.5 million the same year. The potential payout has created a frenzy amongst plaintiff’s firms, with several creating sub-groups that specifically handle TCPA class actions. The rise in TCPA litigation has not gone un-noticed by the Judiciary either: “This is the second multi-million-dollar class action settlement this court has reviewed and addressed in the last three weeks in which the plaintiff class has sued credit card companies for violations of the Telephone Consumer Protection Act.”
In short, the sharks are circling and each bite provides larger and larger settlements for Americans whose consumer rights have been violated (along with attorney’s fees, of course).