Direct response advertisers face a number of hurdles in getting the word out about their products, mostly from FTC regulations put in place to protect consumers. But class action lawsuits are a particular source of consternation—not only are they difficult to predict and avert, but some also seem to be filed in search only of profit.
“You’ve seen a substantial uptick in consumer class actions and false advertising class actions,” says Daniel S. Blynn, an attorney in Venable LLP’s Advertising and Marketing Practice. “Where you’re really seeing class actions explode is in the Telephone Consumer Protection Act (TCPA). We have seen a huge increase in those since last summer.”
Cases like these are easy to file. If a marketer calls, texts, or faxes a consumer who has registered on the national Do Not Call list using an autodialer, that consumer can file a class action suit. And the damages for a company found guilty of such a violation in federal court can be staggering—$1,500 per call, text, or fax.
That adds up fast when the system makes thousands of calls every day. “TCPA cases are fairly straightforward, but in certain instances, these are complete cash cows,” Blynn says.
Worse, new guidance from the Federal Communications Commission (FCC) could open more defendants to TCPA class actions, he says. The FCC’s new definition says that any technology that can be modified to autodial is an autodialer—a definition that includes most smartphones. “Anyone using an iPhone could be using an autodialer and could be exposed to TCPA litigation,” Blynn says.
“Be sure to know which calling platform you use, and scrub lists of numbers to make sure the autodialer doesn’t accidentally call people on the Do Not Call registry,” he warns. “If you are going to place a call to a number on the Do Not Call list, make sure you have the appropriate consent. Consent differs by the kind of call, and that includes texts, too.”
Venable is currently tracking a case that could alleviate the pressure marketers face from class action lawsuits. The U.S. Supreme Court heard arguments in Tyson Foods, Inc. v. Bouaphakeo in November 2015, and will issue a decision on the case later this year.
The decision could narrow the circumstances under which a class action is certified by changing how damages are calculated. “The normal thing is to come up with a damages model that applies to the entire class of complainants to avoid different damages for each person,” Blynn says. “The presumption is that all class members are identical.
“A favorable decision would mean that a class could not be certified, and without class certification, most of these cases would go away, because the damages are so low on an individual level,” Blynn says. “It would be very good for future class action defendants.”
Photo by suphakit73/FreeDigitalPhotos.net
The above blog post was adapted from the article, “Ads & Advocates,” published in the March-April issue of ER magazine.