How do TCPA lawsuits impact businesses?

The Telephone Consumer Protection Act (TCPA) is a federal statute enacted in 1991 by the U.S. Congress. Its main goal is to safeguard consumer privacy and reduce the nuisance and invasion of privacy caused by unsolicited telemarketing calls and faxes.

The TCPA restricts the use of automated dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines. It also specifies several technical requirements for fax machines, autodialers, and voice messaging systems—primarily with consent and identification requirements.

When organizations violate TCPA regulations, the results can be severe. To start, businesses are responsible for a fine that starts at $500—for each violation. More violations cost more money. And that’s not including any legal fees or fines for other violations you might have committed on top of breaking TCPA rules.

To help you understand just how important it is to stay in compliance with TCPA, we’ve put together a list of common ways organizations have violated the law, as well as the impact these violations have on businesses. Keep reading to learn what not to do.

Common reasons for TCPA lawsuits

Navigating the complex landscape of TCPA compliance can be daunting for businesses. Common reasons for lawsuits under this act often stem from seemingly innocuous practices, but they can lead to significant legal challenges and financial repercussions. Understanding these triggers is crucial for maintaining compliance and safeguarding your business against potential legal pitfalls.

Lack of consent

The most frequent cause of TCPA lawsuits is the lack of prior express consent from consumers before initiating contact. This includes unsolicited calls, pre-recorded messages, and automated texts.

Inaccurate Do Not Call list management

Failure to accurately manage and honor the national Do Not Call Registry and internal Do Not Call lists often results in legal action.

Revoked consent

Another common issue leading to lawsuits is when businesses continue to contact consumers who have previously given consent but later revoked it.

These violations often happen when organizations don’t fully understand TCPA or don’t have safeguards or processes in place to catch potential violations before they happen. And while they might seem like small mistakes, they can have big consequences in the eyes of the law.

Impact of TCPA lawsuits on businesses

The fallout from TCPA lawsuits can extend far beyond hefty fines. They can profoundly affect your business's operational dynamics, brand reputation, and customer relationships. This section explores the multifaceted impacts these legal challenges can impose on companies navigating the intricate web of consumer communication regulations.

Financial implications

The financial impact of TCPA lawsuits can be severe, with penalties ranging from $500 to $1,500 per violation. For large-scale violations, companies can be fined millions of dollars.

Operational changes

Beyond financial penalties, companies often have to undertake significant operational reforms to comply with TCPA regulations, which can be costly and time-consuming.

Reputational damage

The negative publicity associated with TCPA lawsuits can harm a company's reputation, leading to a loss of consumer trust and potential business.

Notable TCPA violation cases

Since 1991, there have been multiple instances where companies have flouted TCPA. They’ve ended up mired down in lawsuits or saddled with millions of dollars in fines, legal fees, and settlement obligations. Let’s take a look at a summary of some of the most severe results of TCPA violations so you can better understand the stakes.

Class action lawsuits

Class action lawsuits are particularly common in TCPA violations. These lawsuits can involve thousands of consumers and lead to substantial financial liabilities for businesses. The collective nature of these lawsuits amplifies the financial and reputational damage to companies.

The largest TCPA penalty ever issued by the FCC amounted to $299,997,000, against ten companies involved in making over five billion illegal robocalls.

Multi-million dollar settlements

Several high-profile cases have resulted in multi-million dollar settlements. These cases often involved large corporations that made automated calls or sent texts without proper consumer consent. The settlements involved substantial financial penalties and required comprehensive changes in telemarketing practices.

For example, HelloFresh was involved in the largest TCPA class action settlement in Massachusetts state history. The lawsuit alleged that HelloFresh violated the TCPA by:

• Placing telemarketing calls to consumers listed on the federal Do Not Call registry
• Using an automatic telephone dialing system without prior express written consent
• Contacting consumers who had requested to be placed on Hello Fresh’s internal Do Not Call list.

They faced a class action settlement of $14 million, approved by the U.S. District Court for the District of Massachusetts.

How businesses can protect themselves

To ward off TCPA litigation risks, businesses should fortify their practices. This section outlines proactive measures and best practices to ensure robust protection against potential lawsuits.

Implement robust compliance systems

To prevent violations, businesses should implement comprehensive systems that ensure compliance with TCPA regulations, including consent management and Do Not Call list adherence.

Make regular training and audits a priority

Conducting regular training for staff and performing audits of telemarketing practices can help in identifying and addressing potential compliance issues.

Seek out professional legal advice

Consulting with legal experts specializing in TCPA regulations can provide businesses with guidance and help them navigate the complexities of compliance.

For more proactive strategies to maintain TCPA compliance, you can also check out our TCPA compliance checklist.

Avoid TCPA lawsuits by finding the right partner

TCPA violation lawsuits pose a significant legal and financial risk to businesses. Understanding the common causes of these lawsuits and implementing effective compliance strategies is crucial for any company engaged in telemarketing or mass communication. By staying informed and proactive, businesses can avoid the pitfalls of non-compliance and operate successfully within the legal boundaries set by the TCPA.

But navigating TCPA compliance isn’t something you have to do alone. Finding partners who take TCPA compliance seriously can also help you avoid lawsuits and fines.

With over a decade in the telecommunications industry and Tier 1 carrier status, Telnyx is well-equipped to assist customers with TCPA compliance issues if they come up. Our award-winning support team is staffed by experts who deeply understand the intersection of technology and communications. And they’re available to assist all customers at no extra cost 24/7.

By choosing a partner with deep knowledge and expertise in the communications space, you can rest assured that you’re working with a team that understands your compliance goals.