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How Avoid SMS/Texting Lawsuits: 4 Quick Tips to Keep Your Dealership Safe

Late last year, a 2.5 million dollar lawsuit was won against Lithia Motors Inc. for sending unwanted text messages to customers without giving them the option to opt out of the text messages. According to, Lithia was hit with a class-action lawsuit for broadcasting to 57,800 consumer cell phones text messages that failed to adequately allow the recipients to opt out of future texts. A second Lithia broadcast text went to 48,000 of the previous recipients, 6,190 of whom said that they tried to opt out but were unable to.

The Lithia texting case sent an impulsive wave through dealerships' digital marketing departments late last year and was still a hot topic at the Digital Dealer 12 Conference in Orlando. To avoid lawsuits like these, automotive dealers need to understand the FCC Laws regarding this form of communication and do a little research when choosing mobile to mobile marketing strategies. Be sure to test out any services before signing a contract and ask to speak with current customer references.

Here is what I found on the FCC Website regarding mobile email and text messages:

Under the CAN-SPAM Act, the FCC prohibits sending unwanted text messages to a consumer’s wireless phone number if they are sent using an autodialer, or if the number has been placed on the national Do-Not-Call list.

Even if a consumer has placed their number on the national Do-Not-Call list, the TCPA (Telephone Consumer Protection Act) does not protect consumers from receiving commercial messages sent to that number if they have:

  • given prior consent to the sender, or;
  • established a business relationship with the sender

Under the FCC’s rules, commercial email messages may only be sent to a wireless device via the Internet if the consumer has “expressed prior authorization.” Email senders may request consumers to provide this authorization orally or in writing (email or letter).

The Federal Trade Commission also has four requirements that must be followed:

  • Identification – Unsolicited commercial email sent to non-wireless accounts must be clearly identified as a solicitation or advertisement for products or services.
  • Offering a Way to Reject Future Messages – Commercial email senders must provide easily-accessible, legitimate ways for recipients to reject future messages from a specific sender.
  • Return Address – All commercial email, and email considered transactional and relationship messages (about existing transactions), must contain legitimate return email addresses, as well as the sender’s postal address.
  • Subject Lines – Commercial email senders must use subject lines that are accurate. Using misleading or bogus subject lines to trick readers into opening messages is prohibited.

Dealer Takeaway
Before implementing any texting programs, be sure to have done your research. There are many new guidelines regarding SPAM, email marketing and text messaging so do some reading before moving forward. For those of you in the process of implementing a text strategy, make sure your guidelines include the following:

1. Have consent to send text messages to specific customers

2. Have an “opt out” option included in the text messages sent

3. Identify your dealership in the message by providing a valid return address and noting the postal address of your dealership.

4. Ensure all subject lines must accurately describe the content within the message.

Views: 1742

Tags: FCC, Lithia Motors, Marketing, Text Messages, avoid, lawsuit, sms, texting


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Comment by Shuki Lehavi on May 11, 2012 at 8:09am
Kevin, going through the CRM is good, but not enough. The key is to ensure that you are a) properly disclosing your use of the sms messages and b) properly protecting the consumer cell number. That's why we implemented an sms chat tool that hides the consumer cell number. Give me a call if you have questions, I am always happy to help
Comment by Kevin Frye on May 11, 2012 at 7:54am

Great piece that every dealer needs to be familiar with. There are LOTS of sales reps across the county using their personal cell phones to text customers, many of them without prior consent. We have directed that all text communications to customers must be made through our CRM tool to ensure we are compliant with all of the FCC guidelines. Thanks Ketty!

Comment by Ketty Colom on May 8, 2012 at 11:48am

Great find Ralph! That's exactly what not to do! 

Comment by Ralph Paglia on May 7, 2012 at 3:46pm

Here's a mobile phone screen capture of what NOT to do:

Comment by Sean Brown on May 7, 2012 at 1:49pm

Great feedback from everyone on this topic! As the President/Founder of a mobile marketing company here in Colorado, I run into this issue on a daily basis. The guidelines are very clear an available to everyone @ the mobile marketing association. Mobile marketing tools are very powerful and can really help increase business not only in the sales department, but in all profit centers & businesses. There are ton's of fly by night sms services out if you do the research and find a reputable company, you will likely have a great experience! Thanks

Comment by Ralph Paglia on May 7, 2012 at 1:17pm

If Jim's update does not strike fear in the hearts of interruptional marketers, I do not know what will!

Comment by Jim Radogna on May 7, 2012 at 12:22pm

Great post Ketty!

Here's an update - Like everything in the digital world, the rules are changing at light speed. In February 2012, the FCC amended the TCPA to eliminate the “established business relationship” exception and require PRIOR EXPRESS WRITTEN CONSENT before sending text messages. So, once this goes into effect (probably next year), oral authorization will no longer be allowed.

Thanks for the share!

Comment by Ralph Paglia on May 7, 2012 at 10:01am

Jim Bryant - I agree with you about the "stupid tax" designation... The company that supplied Lithia definitely should have known better, and having worked directly with Lithia, I can assure you that they are very conservative about following ALL regulations and guidelines.  Lithia most certainly did not encourage or condone violating FTC regulations, that is not their style in any way, on any day... Lithia may be one of the most cautious and conservative automotive retail organizations in America, which is why the whole lawsuit issue is so noteworthy.  If this sort of thing can happen to Lithia, then it can certainly happen to ANY dealership or dealer group!

Comment by Shuki Lehavi on May 7, 2012 at 9:37am

Ralph, I am not surprised the vendor payed: a) Lithia has a pretty good negotiation power, and b) the vendor should be the one managing opt-outs.

Comment by Jim Bryant on May 7, 2012 at 9:34am

This is what Marketing guru Perry Marshall calls the "stupid tax".  A reputable SMS firm / Consultant will be VERY familiar with and adhere to the Mobile Marketing Assoc. guidelines.

Our SMS platform has a mandatory opt-in and an optional double opt-in for "nervous" care dealers.  :)

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