The Telephone Consumer Protection Act is (in)famous for being extremely harsh on telemarketers and companies contacting their customers via automated calling technologies. The statutory damages of $500 to $1,500 per call, text, or fax can quickly hit stratospheric proportions. So, when we hear of lawsuits settling—or courts imposing damages—for hundreds of millions of dollars we may wonder, among other things, how these amounts compare to other countries that enforce similar actions. As consumer protection and privacy rights gain momentum worldwide, and with the advance of technology making it easier to contact consumers in different ways, legislators and regulators around the world are implementing rules to thwart unwanted robocalls and spam text messages. But are the penalties and risks associated with similar violations nearly as egregious as the TCPA?
The U.S. has several avenues of adverse consequences—any number of them are simultaneously at stake—and none of them are particularly pleasant. We’ll go through 4 scenarios.
- Through a complaint filed with the FCC and potential forfeiture penalty of up to $19,246.00 per violation.
- Through an enforcement action initiated by the FTC, who has the power to impose civil penalties, seek injunctive relief to stop the conduct, or even shut down the offending company.
- Through a State’s Attorney General filing an action on behalf of its citizens.
- Through a consumer’s lawsuit seeking statutory damages of $500 per violation even if the consumer’s actual damages are much less than that. And if the violations were willful or knowing, the damages could spike to $1,500 per violation.
Due to its substantial statutory damages, the TCPA provides a major incentive for plaintiffs and their lawyers to pursue litigation. In fact, TCPA litigation is now the second most filed case in federal courts, and particularly attractive to plaintiffs’ attorneys when damages in class actions can quickly get into the tens or hundreds of millions of dollars. In addition to damages, the defendant might also be responsible for the attorneys’ fees and other expenses of the plaintiff or class (not to mention its own legal fees and lost time). Suffice it to say, the potential civil penalties and hefty litigation damages can be daunting for even the largest companies.
How does the U.S. system compare to enforcement actions performed by governments in other countries that also regulate unsolicited calls and messages?
To answer that question, we’ve gathered examples from 5 countries and analyzed what would happen if the same violation occurred in the U.S. In accordance with the TCPA, we assume that the litigation exposure for a TCPA violation is $500 per improper call or message, and $1,500 per improper call or message for willful and knowing violations. (Our analysis in this TCPA blog includes only 1 of the 4 scenarios noted above: a lawsuit filed by a consumer.)
In October 2013, the Australian Communications and Media Authority (ACMA) imposed a fine equivalent to approximately $12,000 USD (or $15,500 AUD) to Minardi Pty Ltd, owner of a Melbourne nightclub called Brown Alley, for sending approximately 50,000 unsolicited and promotional SMS messages without specific contact details or opt-out instructions, a violation under Australia’s Spam Act.
In March 2016, the Canadian Radio-Television and Telecommunications Commission (CRTC) imposed a fine of roughly $31,000 USD (or $39,000 CAD) in response to Toronto Breeze Air Duct Cleaning Services Inc.’s 39 violations of the Unsolicited Telecommunications Rules. The violations consisted of initiating telemarketing calls to numbers registered on Canada’s National Do-Not-Call List.
In February 2014, the New Zealand Department of Internal Affairs ordered an Auckland based marketing company, Image Marketing Group, to pay a fine equivalent to $89,000 USD (or $120,000 NZD) for sending unsolicited spam text messages in breach of the Unsolicited Electronic Messages Act. The Auckland company sent approximately 45,000 unsolicited text messages to mobile phones operated by Vodafone and Telecom New Zealand users for a one month period in 2009. The messages included inaccurate sender information and did not allow recipients to unsubscribe at no cost.
In September 2010, Gestevision Telecinco, S.A. sent 3,002,714 unsolicited marketing texts that failed to include any opt-out instructions. The unsolicited messages breached Statute 34/2002 (Ley 34/2002, Ley de Servicios de la Sociedad de la Información y Comercio Electrónico). For this violation, the Spanish Agency of Data Protection fined the company roughly $59,000 USD (or €50,000 EUR).
In September 2015, the United Kingdom’s Information Commissioner’s Office (ICO) fined Onecom Limited approximately $132,000 USD (or £100,000 GBP, or reduced down to £80,000 GBP if the fine was paid early) for sending 3.3 million unsolicited text messages promoting mobile phone upgrades.
In a more recent case from May 2017, the ICO fined Home Energy & Lifestyle Management Ltd. roughly $264,500 USD (or £200,000 GBP, or reduced down to £160,000 GBP if the fine was paid early) after making 6 million automated telemarketing calls, which was the largest ever nuisance-calls fine under the UK Data Protection Act.
A very important question remains unanswered: is the TCPA reasonably calculated to promote consumer privacy, or is it a tool for plaintiffs’ attorneys’ abuse and personal enrichment?
These side-by-side comparisons lead to an immediate and obvious conclusion: exposure from a TCPA violation is extremely disproportionate to fines imposed in other countries for the same or similar conduct.
The Canadian regulator, CRTC, was the only fine with a comparable outcome. However, there are two very important differences between the CRTC and the U.S.’s application of the TCPA:
- When imposing the fine, the CRTC analyzes the reasonableness of the fine. Some of the elements considered when determining reasonableness include: the nature of the violations, the number and frequency of complaints and violations, the relative deterrent effect of the fine, and the potential for future violations; and
- There is a maximum limit for administrative monetary penalties of $10 million CAD.
Even if a non-U.S. consumer could sue under his or her country’s TCPA equivalent, it’s hard to imagine that the (actual) damages would ever reach the magnitude of the TCPA’s statutory damages. The TCPA effectively promotes litigation with its enormous—and easily available— statutory damages, provides no analysis of a fine’s reasonableness, and establishes no maximum limits. Implementing a non-compliant marketing strategy or making a seemingly small mistake when contacting consumers may result in a lawsuit so big that it forces the offending company into bankruptcy.
As you can see, the TCPA carries high risk. If your company contacts consumers with automated technology, it is imperative to ensure every campaign complies with the TCPA. We’ve prepared a guide that is chock-full of tips on mitigating your TCPA risk: check out our TCPA Survival Guide: The Rules Edition.