Car Dealers, Beware of TCPA Litigation Risk

The Telephone Consumer Protection Act requires marketers to get customers’ OK to call or text them.

Brian Epro

November 18, 2019

4 Min Read
computer fear
A poorly trained employee could not know whether a lead had consented to be called or texted. That can create problems.Getty Images

Every time a car dealership responds to a lead puts the business at legal and financial risk.

If you’re like most people, you probably saw this article’s headline and thought: “I’m not 100% positive what TCPA is.” Or: “TCPA isn’t a problem for me; I’m covered.”

I’ll cover what TCPA is, and then explain why you might not be safe.

TCPA litigation in the auto industry is increasing every year. The losses it is causing are getting larger.

In recent years, TCPA class action lawsuits against dealerships have resulted in settlements ranging from about $3 million to $6 million.  A few minutes reading this could prevent that from happening to you.

What is the TCPA?

The Telephone Consumer Protection Act of 1991 requires marketers to obtain prior express written consent before calling or texting a consumer.

Penalties can be up to $1,500 per incident. Let’s say a dealership texts someone without permission once. That’s $1,500. Twice? That’s $3,000. Now, imagine some well-meaning dealership person texting dozens of people to let them know about a big sale. Now, you’re talking serious money.

Not only has TCPA litigation grown more than 1,200% since 2010, but it has spawned an entire industry of ambulance chasers and “serial plaintiffs” who actively seek out companies who are not TCPA compliant and attempt to sue. Google “TCPA lawyer.” The top half of your screen will be attorney advertisements. The bottom half will be articles that link to TCPA litigation services. You’ll also find content about OEMs and dealers with multi-million- dollar settlements against them.

The risk of TCPA non-compliance is high in the auto industry. There are multiple places where a consumer may provide contact information, such as OEM web sites, dealer websites, third-party websites and others – all without real-time monitoring for compliance.

Dealers are in a tough situation due to ongoing industry-wide issues with low employee retention.

A poorly trained employee could not know whether a lead had consented to be called or texted. That can create problems.

In all cases, a dealer responding to a contact request or lead from any of these sites without the proper TCPA consent in place can face legal damages.

Ensuring the proper disclaimers have been appropriately shown and consent given can be difficult unless you are using a third-party service to monitor and flag inbound leads for TCPA compliance.

Ensuring Compliance

This leads to the first excuse we commonly hear regarding active TCPA compliance monitoring. “We periodically review all of our websites for compliance.”

Really? So, you’re telling me you look at lead forms on your manufacturer sites, regional sites, your dealership website and third-party vendor sites, too? What about any websites those third parties may aggregate from?

If any of those sites have more than one form, you need to ensure the review of every form, every time. How often are you able to do that review? If your TCPA disclaimer disappears from your website today, how long before you know it’s gone? The answer is you will almost always be too late.

Another popular excuse we hear is “My vendors will indemnify me for TCPA compliance.”

That sounds great. Except it’s not legally viable. If you respond to a lead that has not given you consent to call or text, regardless of where the lead was generated, you are liable.

Ask The Dish Network. In 2015 it lost a bid to overturn a $61-million TCPA judgement by arguing the company it was using to generate leads had indemnified Dish. The courts rejected that argument. So much for lead vendors indemnifying dealers.

All levels of the auto industry need to mitigate TCPA compliance risk. They also need to demonstrate persuasive proof of consent when challenged by a litigant. Having a vendor provide screenshots and IP addresses is not enough. If you are able to provide witnessed consent from a neutral third party, you can frequently defeat an attorney demand letter before litigation even begins.

Brian Epro Headshot (002).jpg

Brian Epro Headshot (002)

In light of the increase in texting and use of mobile phones in the auto industry, we are seeing an explosion of concern about TCPA compliance. A recent TCPA settlement involving an auto dealership topped $4 million. One person made a bad decision and cost the company a lot of money.

Multiply the potential for that to happen across a multi-store group, and proactive TCPA compliance should quickly become a top priority. (Brian Epro, left)

Brian Epro is vice president-automotive at marketing firm Jornaya.

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