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The Hidden Danger of Text Message Marketing


Text Message Marketing Compliance Dangers for Car Dealers


Keeping the lawyers at bay used to be a whole lot easier for dealerships. Unfortunately, new technology brings new challenges. A recent high-profile lawsuit involves a large dealer group named in a class-action lawsuit for allegedly failing to honor a text message opt-out request. The suit, launched by a former employee, is seeking damages of at least $500 for each violation. While this may seem like yet another frivolous lawsuit by a disgruntled former employee, the potential for liability to this dealer group is substantial. Several recent text message cases have resulted in multi-million dollar settlements. For instance:

Twentieth Century Fox - $16 million class-action settlement ($200/ phone number)
Simon & Schuster - $10 million class-action settlement ($175/ phone number)
Timberland Company - $7 million class-action settlement ($150/ phone number)

Text (SMS) marketing is subject to a number of federal and state restrictions and the rules are extremely confusing. These regulations can be much more difficult to deal with than telemarketing or email regulations - primarily because many consumers are charged for text messages and the government feels that they should be afforded additional protection against unwanted solicitations. In many cases, the consumer must opt-in (give express permission) before you can legally send them a text message, even if you have an existing relationship with them.

Here are some things you should know before launching a text marketing campaign:

1. You can’t send a commercial text message (solicitation) to a phone number that’s on the national “Do Not Call” (DNC) list (subject to the “established business relationship” and other provisions of the national DNC rules).

2. You can’t send a commercial text message to a phone number that is on your company-specific DNC list.

3. You can’t send any text message whatsoever to a cell phone number – including sales pitches, service reminders, and communications with current customers - using an “automated dialer system” unless you have the consumer’s prior express consent. This may include computers used to send automated text messages (yours or your vendors).

4. In some instances, a text message may also be considered an email and must comply with all of the standard CAN-SPAM requirements (contains your physical mailing address, cost-free opt-out mechanism, etc.). A text message will be considered an email if is sent to an email address – that is, if it has an internet domain name after the "@" symbol (for example: sending a message from your computer to a mobile carrier, such as

5. The CAN-SPAM Act also prohibits sending commercial e-mail messages to wireless devices without prior permission. So, no commercial text message that is deemed to be an email may be sent to a wireless device without express prior authorization. Merely having an "established business relationship" with the recipient is not enough.

Confused yet? Here are some suggestions to help protect yourself against legal challenges:

• Consult your company-specific DNC list before sending a text message.

• Consult the national DNC list and consider whether your messages are based on an "established business relationship," which may provide an exception from the national DNC compliance.

• Determine whether your delivery meets the CAN-SPAM Act’s "email" definition, and if so, whether you have complied with the CAN-SPAM disclosure and opt-out requirements.

• Put a process in place to ensure that all opt-out requests are honored quickly and permanently.

• Develop an employee policy regarding text messaging and educate your staff on proper procedures.

• Appoint an in-house compliance coordinator to monitor text messaging by both employees and vendors.

• Consider instituting a policy of ALWAYS obtaining recipients’ express prior authorization before sending text messages, regardless of the circumstances or method of delivery.

• Always consult knowledgeable legal counsel before launching a text marketing campaign.

• If you use an outside vendor to administer your text marketing campaigns, NEVER assume that they know all the rules and regulations - run it by your legal team first. If you’re writing the check, you’re responsible.

I know - it’s mind-boggling how difficult it can be to deal with these regulations. But just remember - it only takes one consumer (or one employee) to get the legal ball rolling, and it’s certainly not difficult to find a lawyer who’s ready, willing, and able to sue a car dealer.

Views: 1291

Tags: CRM, Compliance, Federal, Fines, Penalties, Regulation, SMS, Text, Text Messages, Texting


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Comment by Jim Radogna on October 23, 2011 at 1:56pm

You're so right Manny. Vendors that are out to make a quick buck and don't have dealers' best interests at heart are a disgrace to the industry. Thanks for the feedback!

Thanks Ashok and Jae.

Great info Stan, thank you.

Comment by Stan Bradbury on October 23, 2011 at 11:02am

Great post.  As a supplier of text messaging services to many dealerships I can tell you the first thing every GM asks is 'why can't I just text messaging every mobile number in my database.'  Certainly more education with posts like this is needed.  

Not only do SMTP 'email' based text (i.e. frequently violate the CANspam and carrier rules so does Application-to-Person text messaging over long numbers (i.e. 1023902203) - usually resulting in termination once discovered.  Neither practice is in line with the best practices of the Mobile Marketing Association.    Long numbers are intended for person-to-person messaging and group messaging but not for business communications.  Make sure your vendor is following all the rules that you can find here: 

Comment by Jae Chang on October 23, 2011 at 7:05am
Must be OPTED IN and offer easy opt-out. Great post Jim.
Comment by ASHOK DILAWRI on October 23, 2011 at 6:11am
Great info.Thanks.
Comment by Jim Radogna on October 22, 2011 at 8:58pm
Good point Josh. Thanks for your feedback.
Comment by Jim Radogna on October 22, 2011 at 8:56pm
Please do Scott. Thanks for spreading the word.
Comment by Scott Falcone on October 22, 2011 at 8:18pm



Absolutely quality information! I'm sure this took you a great deal of time to put together as well. If it is OK I'd like to re post on some additional sites.



Comment by Joshua Michael Friedman on October 22, 2011 at 6:46pm
Not a fan for another reason.  I think the nuisance threshold is a low one in this medium.  The texts must add value, and as more marketers jump in, saturation will quickly be reached.
Comment by Jim Radogna on October 22, 2011 at 4:51pm
Thank you Ralph. I appreciate your help in getting the message out to dealers. An ounce of prevention...
Comment by Ralph Paglia on October 22, 2011 at 2:37pm
Thank you, Jim... This is an important message for dealers.  I have been aware of issue around texting customers without written permission for quite some time, but am always amazed at how few dealers know about these federal regulations and what the liabilities are.  Once again, thank you for providing very valuable information for ADM Professional Community members!

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