FAQs: How Cannabis Businesses Can Avoid TCPA Liability
As the cannabis industry continues to grow in the country’s markets, cannabis companies are becoming a growing target for plaintiff’s attorneys in lawsuits under the Telephone Consumer Protection Act (TCPA). Text messages provide an effective channel for customer loyalty, but are also subject to strict regulations of the TCPA, with violations punishable by heavy legal penalties of 500 to 1,500 US dollars per message. While one-off cases usually don’t break the bank, this is by no means the case when many thousands of texts are bundled in a class action lawsuit. And that high payday potential means the plaintiff’s attorneys have a financial incentive to file class action cases whenever they can.
Some well-known names in cannabis have been the target of TCPA class actions. Cannabis delivery company Eaze has been battling some pretty well-publicized TCPA class actions in the past few years. There were also a number of pharmacies in several western states that have been the subject of similar lawsuits. In particular, these lawsuits have one common denominator: they are based on marketing or promotional text messages sent to consumers.
In this landscape, firing texts without the proper compliance safeguards is a game of roulette. At some point, one or more messages invariably end up in the wrong hands and trigger an expensive, high-stakes class action lawsuit. In this competitive environment, there are far more productive things a cannabis company can do than spend time and resources on this type of lawsuit.
How can your company avoid falling into a TCPA trap? The following questions and answers will walk you through some of the questions to ask while texting or planning to text your customer base for marketing purposes. A quick note before you start: The TCPA has different rules for different types of messages (e.g. informational or marketing messages). These Q&A cover the distinction between these types of messages, but focus on the rules for marketing messages, as these are the rules cannabis companies most often fall into when they are sued for TCPA violations.
Question: How do I know if the TCPA applies to me?
Answer: Are you texting your customers? If so, are you using a platform that allows you to send multiple texts at the same time? If you answered yes to both, then most likely the TCPA applies to you.
In short, the TCPA prohibits calling or sending text to cell phones using an automatic telephone dialing system (ATDS). Without going into the many nuances of how courts have interpreted the legal definition of this term (and could bore you to death), assume that if you don’t send every single text to your customers, you are using an ATDS and your texts are subject to the TCPA.
Q: So it looks like the TCPA applies to me. What now?
A: If you don’t have a compliance plan, now is the time to implement one. First, take stock of (a) how you send texts; (b) who you write; (c) where you got your phone number; and (d) whether you have their prior express written consent. This last part is key: if you are sending text messages to your customers for “telemarketing” purposes under the TCPA, you will need what the TCPA calls “prior express written consent”.
Q: But I’m a cannabis company, not a telemarketer. Why should I worry about TCPA again?
A: The rules of the TCPA, which require prior express written consent, apply when the text is sent for “telemarketing” purposes, defined as “initiating a phone call or message for the purpose of promoting the purchase or rental of or the Investing in Real Estate “. Goods or services that are passed on to a person. “Simply put, if you are putting text on the market or promoting something that you sell, the message is likely to be considered” telemarketing “by law. On the other hand, if you are sending a text for informational purposes only, e.g. For example, to send a receipt for a transaction or to inform about the status of a delivery, these messages are still governed by the TCPA but are subject to a loose consent standard (a topic for another article).
Q: What do I need to do to get my customers’ prior express written consent?
A: It is important to understand that prior express written consent is a technical term defined by law that requires that the caller be provided with a written disclosure with certain information and disclosures that they “subscribe” to. Prior express written consent has three main components:
First of all, the declaration of consent must be in writing. The law allows some flexibility here so that callers can obtain their consent digitally through a variety of media including web-based and electronic forms. If properly structured, consent can even be obtained through a text message flow.
Second, the consent form has to say certain things. It must authorize the caller to send advertising or marketing messages with an ATDS, it must indicate the telephone number at which messages are authorized, and it must indicate that the consumer does not give his consent as a condition for the receipt of goods or services.
Third, the information must be “clear and noticeable”. There’s no real rocket science here, but that’s a very important part of the rule. It is difficult to enforce an agreement that is difficult for a consumer to find or see. This means that the information on the consent cannot be hidden in imperceptible writing or burned into another legal document (e.g. terms and conditions).
Q: I have a great customer contact database, but I don’t think I’ll tick all boxes with prior express written consent. Can I still text them with specials and promotions?
On a. At least not with your usual automated or bulk text platform. However, with a little work, you can use your existing database and get approval. It’s not ideal, but it’s better than taking the risk of texting in this situation.
Let’s start with the fact that people love to get deals and specials on cannabis products, so your customer base is likely to be interested in signing up. And with the flexibility offered by the E-SIGN Act, companies can try several ways to obtain prior express written consent from existing customers. This can include a call to action where consumers can initiate a flow of consent for text messages by sending a keyword to a function code. The TCPA doesn’t regulate email, so companies can consider an email campaign that encourages their customers to follow a link that leads them to a web-based consent form. For businesses with storefronts, customers can be asked to sign up for text on-site by filling out a form on a tablet device and submitting it. The bottom line is there is room for creativity when designing campaigns to enrich your existing customer database with the necessary consent to send marketing texts.
Q: What happens when a consumer stops receiving texts?
A: You should pause all text on your phone number until you decide to receive text again. Under the TCPA, a consumer has the right to withdraw consent, and any text message sent after an opt-out is in violation of the TCPA. This means that it is important to have clear deactivation instructions (i.e. stop-to-stop text) in every message you send, and to ensure that you have the right systems in place to automatically add more texts to the consumer’s phone number after deactivation to suppress.
Q: If I don’t follow these rules, what is the likelihood of being sued for a violation?
A: Pretty high in my opinion. As mentioned earlier, the TCPA is a very lucrative law for the plaintiff’s attorneys. Several thousand TCPA cases are filed in federal courts each year, and recently, cannabis companies have become increasingly involved in the defendants named in these lawsuits. In addition, the TCPA has a four-year statute of limitations, which means exposure to non-compliant practices has a very long tail. It is far easier to develop and execute a compliance plan in advance than it is to take the risk that exists without a plan.
Q: Is there anything else I can do to protect my company?
Absolutely. Your TCPA compliance policy should be one level of a holistic approach to regulatory compliance. Companies have other tools, such as arbitration rules and class action exemptions, that they can incorporate into their consent-gathering process to further protect themselves in the event of a legal dispute.
Q: Are there any other tips to keep my company away from TCPA issues?
A: Yes. Lots. More than I could fit into just one article. But my goal here has been to get you to think the right way about TCPA, if you are not already. While I’ve tried to keep the basics as simple as possible, there are a lot of gray areas and nuances when it comes to compliance (especially when you’re bringing the real world into the situation). This is where it can be very useful to have a lawyer experienced in this area to review your information, review your compliance processes and implement other risk mitigation strategies.
TCPA claims have become a business cost when consumers are contacted through their cell phones. However, by acting proactively, companies have ample opportunity to mitigate their risk and protect themselves if the legality of their SMS campaigns is questioned.