New Regs For SMS Ads Take Effect Tomorrow

Companies that want to send SMS ads to consumers need to jump through some new hoops starting tomorrow, when new regulations go into effect.

The new rules, enacted by the Federal Communications Commission last year, provide that companies must obtain consumers' written consent before sending them SMS ads. What's more, companies must explicitly tell consumers, before they consent, that they will receive calls made by autodialers.

The prior regs didn't clearly spell out that the consent had to be in writing, or that consumers had to be informed about autodialers. Instead, marketers in some situations were able to assume that people consented to receive SMS ads by providing their phone numbers.

For instance, Wal-Mart recently prevailed in a lawsuit where it was accused of spamming a consumer with SMS messages. In that case, the customer said she gave the pharmacy her cell phone number in case  they needed to contact her about her prescription. Instead, Wal-Mart allegedly enrolled her in an automatic refill reminder program, and began sending her unwanted SMS messages. A federal judge in Alabama cleared the company last November on the ground that the consumer voluntarily gave the pharmacy her phone number.

If that same situation were to happen tomorrow, the result in court likely would be different, according to attorney Marc Roth, a partner in the advertising, marketing & media practice at Manatt, Phelps and Phillips. “After Wednesday, just providing a phone number for texts will not be enough,” Roth says.

Even with the prior, relatively looser regulations, numerous companies -- including Yahoo, Facebook, Google and a host of big retailers -- have been sued for violating the Telephone Consumer Protection Act by sending unwanted SMS ads.

The stakes of these cases are high, given that the law provides for damages of up to $1,500 per violation. Google recently paid $6 million to settle a lawsuit alleging that its apps company, Slide, spammed people with SMS messages. That deal calls for Google to pay up to $500 to people who received unwanted messages, and $1.5 million to the class-action lawyers who brought the case. Any leftover money will be donated to the International Association of Privacy Professionals.

Now that the regulations have been tightened, more lawsuits are almost certainly on the way. “There will be an increase in the number of class actions filed,” Roth says. “No doubt.”

Tags: privacy
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1 comment about "New Regs For SMS Ads Take Effect Tomorrow".
  1. Brian Moore from Varolii Communications , October 16, 2013 at 5:04 p.m.
    Good update; I've not seen many cite the Pinkard v Walmart decision in TCPA discussions. Sad to see it will be losing whatever value it had as a precedent with the new rules. It should also be mentioned that the prior written consent requirements apply only to marketing communications. Informational and non-commercial communications are not impacted by the 10/16 rule change.