In a move that seems likely to shut down a hot new category of class actions, the Federal Communications Commission has ruled that companies can send a one-time text message confirming a consumer's request to opt out of receiving more text messages.
It sounds innocuous enough, but Barclays Banks paid about $8 million to settle a class action earlier this year stemming from the following text: "You will no longer receive text alerts from Barclaycard to this number. If you have questions, call 866-408- 4070" (the bank did not admit wrongdoing). Other entities including Citibank, American Express; NASCAR Holdings; the National Football League; Redbox Automated Retail and GameStop face similar class actions.
The FCC in a declaratory ruling issued yesterday found that a text confirming a consumer's request that no additional text messages be sent does not violate the Telephone Consumer Protection Act of 1991. However, the FCC stressed that the ruling applies only when the company received prior expressed consent to send the consumer text messages.
The ruling was prompted by a petition from SoundBite Communications Inc., which sends text messages on behalf of about 400 companies, including banks, utilities and retailers.
Represented by Patton Boggs partner Monica Desai, SoundBite in its February 2012 petition complained that current and threatened lawsuits mean "companies that lawfully utilize mobile marketing strategies to sustain and grow their businesses are exposed to hundreds of millions of dollars of potential liability, and that exposure is growing by the day."
SoundBite argued that the Telephone Consumer Protection Act, which forbids companies from using autodialers to barrage consumers' cell phones with telemarketing calls without prior consent, does not apply to a text acknowledging an opt-out request. "The type of immediate, one-time reply messages sent by SoundBite to confirm a subscriber's opt-out request is consistent with the [the act] and consistent with the public interest," Desai wrote on behalf of SoundBite.
Further, she said, the mobile industry has widely endorsed opt-out confirmation text messages as a best practice.
Comments in support of SoundBite's petition were filed by groups including the American Bankers Association and the Consumer Bankers Association, which were represented by Wilkinson Barker Knauer; Twilio Inc., represented by Arent Fox; and the Future of Privacy Forum, represented by Hogan Lovells.
Mobile Marketing Association General Counsel Cara Frey wrote that a final confirmation text "ensures that the consumer has a 'receipt' for his or her opt-out request and ensures that the consumer knows he or she will not receive any future text messages from that particular marketer.Closing this circle of communication protects the consumer and is therefore good public policy."
However, Delicia Reynolds Hand, legislative director for the National Association of Consumer Advocates, countered in FCC comments that "The consumer will know they will not receive additional unwanted texts by simply not receiving any additional texts." She continued, "Most mobile phone carriers charge for all messages sent by and to a consumer even if a message is not actually received. Thus, consumers should only receive messages on their cell phones that they have actually consented to receive."
The FCC backed SoundBite. "Consumers have not complained about receiving confirmation texts. In fact, our review shows that at least some consumers complain about not receiving a confirmation text after sending an opt-out request from receiving further text messages," the agency stated.
The FCC concluded, "The record demonstrates that, whether or not texts impose some incremental cost on consumers, such confirmation messages ultimately benefit and protect consumers by helping to ensure, via such confirmation, that the consumer who ostensibly opted out in fact no longer wished to receive text messages from entities from whom the consumer previously expressed an affirmative desire to receive such messages."
Desai in an interview said the "FCC was fantastic in acting so quickly on this. They recognized it was a common sense issue."