As the cannabis industry continues to expand in markets across the country, cannabis companies are becoming increasingly popular with plaintiff attorneys in lawsuits under the Telephone Consumer Protection Act (TCPA). Text messaging is a powerful way to attract customers, but it’s also subject to strict TCPA rules, with violators facing heavy legal penalties ranging from $500 to $1,500 per message. While one-off cases do not usually blow up the bank, this is by no means the case when several thousand texts are brought together in a collective action. And this potential for large payments means that plaintiffs’ lawyers have a financial incentive to bring class action lawsuits, if possible.
Some well-known cannabis names have already been the subject of class action lawsuits under the TACA. In recent years, cannabis delivery service Eaze has had to deal with fairly well-known TCPA ads. In addition, a number of clinics have been established in a number of western states with similar trials. These processes have one thing in particular in common: They are based on marketing or promotional text messages sent to consumers.
In this landscape, shooting down a text without the necessary guarantees of conformity is a game of roulette. At some point, one or more contributions will inevitably fall into the wrong hands and give rise to a costly collective action involving a large sum of money. In this competitive space, there are things that are far more productive than spending time and resources on these types of disputes.
How can your company avoid falling into the TCPA trap? The following questions and answers will help you discover some of the questions you need to ask yourself if you currently send SMS messages or if you plan to send SMS messages to your customers for marketing purposes. Just a moment before we begin: The TCPA has different rules for different types of messages (e.g., informational and marketing messages). This question-and-answer section will discuss the difference between these types of messages, but the focus will be on the marketing message rules, because these are the rules under which cannabis businesses are most likely to go online when prosecuted for violations of the TACA.
Question: How do I know if the TACA applies to me?
Answer: Correspondence with your customers? If so, are you using a platform that allows you to send multiple text messages at once? If you answered yes to both questions, the PST probably applies to you.
In short, the TCPA prohibits calls or text messages to cell phones that use an Automatic Dialing System (ATDS). Without going into the many nuances of how the courts have interpreted the legal definition of the term (and may bore you to death), you can assume that if you are not sending all text messages sent to your customers, you are using ATDS and your text messages are covered by the TCPA.
Q: The TCPA seems to apply to me. What now?
A : If you don’t already have a compliance plan, it’s time to create one. First, consider (a) how you send messages, (b) who you correspond with, (c) how you obtained their phone number, and (d) whether you have their prior written consent. The last part is crucial: Under the TCPA, if you send your customers text messages for telemarketing purposes, you must first obtain express written consent.
Q: But I’m a cannabis company, not a telemarketer. Why do I have to worry about the TACA again?
A : TCPA rules requiring express prior written consent apply when a text is sent for telemarketing purposes, defined as initiating a telephone call or message to promote the purchase, lease or investment of goods, commodities or services to an individual. Simply put: If you send messages to market or promote something you sell, the message will likely be considered telemarketing by the law. If, on the other hand, you send text messages for purely informational purposes, for example. B. a transaction confirmation or delivery status message, these messages are still covered by the TCPA, but under a more lenient consent standard (a topic for another topic).
Q: How do I obtain prior written consent from my clients?
A : It should be noted that prior express written consent is a technical and legal term that requires the appellant to receive a written communication containing specific information and a statement that he signs. There are three main elements to obtaining prior written consent:
First: Consent must be given in writing. In this case, the Act provides flexibility by allowing appellants to seek consent digitally through a variety of means, including online and electronic forms. With the right structure, permission can even be obtained via a text message thread.
Second, the consent agreement must say certain things. It must authorize the caller to send advertising or marketing messages using the ATDS, it must specify the telephone number to which the messages may be sent, and it must indicate that the consumer need not give consent as a condition of receiving goods or services.
Third, the disclosure must be clear and visible. No real rocket science here, but it’s a very important part of the rule. It is difficult to enforce an agreement that is difficult for a consumer to find or see. This means that the disclosure of consent cannot be hidden, written inconspicuously or recorded in another legal document (e.g. the AVG).
Q: I have an excellent database of customer contacts, but I don’t think I have checked all the boxes for prior written consent. Can I still send them a text message with special offers and promotions?
A : No. At least not with your usual automated or mass texting platform. But with a little work, you can use your existing database and get approval. It’s not ideal, but it’s better than risking sending an SMS in this situation.
Let’s start with the fact that people love getting offers and discounts on cannabis products, so it’s likely that your customers will be interested in signing up. And thanks to the flexibility provided by the E-SIGN Act, companies can try different ways of obtaining prior written consent from their existing customers. This could be a call to action campaign where consumers can initiate a stream of membership text messages by sending a keyword to a shortened number. The TCPA does not regulate email. Companies may therefore consider an email campaign that asks customers to click on a link that leads to an online consent form. For businesses with a physical store, customers can be invited to register to receive texts on the spot by filling out and submitting a form on a shelf. So there is room for creativity in designing campaigns to enrich your existing customer base with the necessary permission to send marketing texts.
Q: What happens if a consumer refuses to receive text messages?
A : They must stop all messages to their phone number until they stop receiving messages. Under the TCPA, the consumer has the right to withdraw his or her consent, and any text message sent after the withdrawal violates the TCPA. This means that it is important to have clear opt-out instructions in each message sent (i.e. the stop text) and to ensure that appropriate systems are in place to automatically delete all further text messages to the consumer’s phone number after opting out.
Q: If I don’t follow these rules, how likely is it that I will be prosecuted for breaking them?
A : Pretty high, if you ask me. As noted above, the TCPA is a very favorable statute for plaintiffs’ counsel. Several thousand TCPA cases are filed in federal courts each year, and lately the cannabis industry represents a growing percentage of the defendants in these cases. Additionally, the TCPA has a four-year statute of limitations, meaning that exposure to non-compliant practices has a very long tail. It is much easier to develop and implement a compliance plan than to take the risk that arises without one.
Q: Is there anything else I can do to protect my business?
Absolutely. Your TCPA compliance policy should be one layer in a holistic approach to compliance. Companies have other tools at their disposal, such as. B. arbitration clauses and waiver of collective redress that they may include in the consent procedure to further defend themselves in the event of litigation.
Q: Are there any other tips to protect my business from TACA violations?
A : Yes. Very much so. More than I could possibly contain in this article. But my goal was to get you thinking in the right direction regarding TACA, if you haven’t already. While I tried to keep the basics as simple as possible, there are a lot of shadows and nuances when it comes to following the rules (especially when looking at the real world in a situation). Here, attorneys with experience in this area can be helpful in reviewing disclosures, verifying compliance, and implementing other risk mitigation strategies.
TACA lawsuits have become a cost of communicating with consumers via mobile phones. However, by being proactive, companies have ample opportunity to mitigate risks and protect themselves when the legitimacy of their SMS campaigns is questioned.