When Telemarketing is the Target: How to Avoid Legal Trouble


By Ross Shanken, CEO, LeadiD

When it comes to Telephone Consumer Protection Act (TCPA) lawsuits, it’s not a question of if a business will get sued, but when. The onslaught of TCPA litigation affects any vertical that dials consumers, and that means pretty much every industry. With the ongoing proliferation of mobile devices, how can you protect yourself and remain safe when the tidal wave reaches you?

The court docket of TCPA litigation is growing ever lengthier. Since October 2013 when the TCPA was updated, a new threat has emerged – and it’s not the government, as many assume. A growing industry of plaintiff’s attorneys views the lucrative and litigation-friendly TCPA statute as a golden opportunity, and they are filing lawsuits at a fast pace: through the end of Q3 2014, cases were up 30 percent from 2013.

As consumers increasingly rely on mobile phones, these cases have become all the more attractive to attorneys. Now more than ever, mitigating TCPA risk is crucial to marketers.


No Industry is Safe: Recent Settlements Affect Many
Many companies are eager to settle TCPA lawsuits early on, rather than fighting claims alleging literally billions of dollars in damages. Even when a company has a legitimate defense, the lengthy legal battle and potential for a devastating decision make settling the safe choice. Such settlements only further incentivize consumer attorneys to file actions against dialing businesses. Capital One, for example, recently reached a $75.5 million settlement – the largest in TCPA settlement history. Prior to that, the record was held by Bank of America with its $32 million settlement.

Here is a snapshot of several recent TCPA class-action settlements:


Lengthy Statute of Limitations Puts Businesses in Greater Danger

The vulnerability of businesses is even greater when you consider the lengthy four-year statute of limitations most courts have applied to TCPA cases. This trend has provided consumer attorneys an enormous window of time in which to build the basis for a lawsuit. With all the cards in their favor, the “cottage industry” of TCPA plaintiffs’ law firms is vigorously recruiting class representatives for lawsuits.

Unanswered Calls Still Result in Lawsuits

The bar for entry is remarkably low. A ringing phone alone is grounds for a lawsuit. The consumer does not need to pick up a call or even receive a voicemail to take legal action against a company. Even if a representative never reached a consumer, unless full and conspicuous consent was provided and can be proven, a business is vulnerable.

Businesses Lack Insurance Coverage for TCPA

To make matters worse, many businesses cannot completely rely on their insurance in the event of a devastating legal decision. Aware of the potential for uncapped statutory damages, a large number of insurers have expressly precluded coverage for TCPA litigation in commercial general liability policies. While not all businesses lack this coverage, the trend has only fueled the TCPA legal fire and increased vulnerability for any business contacting consumers.

Businesses Found Vicariously Liable for TCPA Violations

Even if the business did not place the call itself, and had established reasonable procedures and practices in place to forestall a violation, it is still at risk. Just the mention of a company’s name in a text or call can render it vicariously liable in TCPA litigation. That means plaintiffs’ attorneys may ignore steps a defendant took to prevent infractions by business partners.

Firms Join Forces in Booming TCPA Cottage Industry

The cottage industry of TCPA plaintiffs’ law firms actively recruits clients and friends willing to act as class representatives for actions. In fact, firms are joining together to split legal expenses in the hopes that a shared investment can generate major rewards. With such significant financial backing, these litigation ventures have the potential to devastate the businesses they target.

What’s the TCPA Solution?

Businesses can and must confirm that all disclaimers are clearly displayed, and that consumers have checked a box to let marketers know they’ve given express consent to be contacted.

A company that proves compliance and disproves violation claims stays out of harm’s way, and that leads to a happy legal team. When legal is satisfied, marketing, sales and IT teams gain peace of mind knowing that their consumer intelligence is unimpeachable, keeping costs in check without sacrificing efficiency. Remember, legal costs are just one aspect of the overall burden that accompanies the TCPA headache. Consider the employee time and cost that must be dedicated to answering claims, as well.

The smart solution to the threat of TCPA litigation is prevention.

Ross Shanken is a digital technology business builder, thought leader, and patent holder who founded LeadiD to revolutionize the lead industry. Ross bootstrapped LeadiD in 2011 with the singular purpose of creating a trusted environment for lead sellers and lead buyers to operate. With a continually expanding customer base, 50 employees, and backing from Comcast Ventures, Genacast Ventures and Tribeca Venture Partners, Ross collaborates regularly with customers, advisors, and thought leaders to evolve LeadiD’s platform to best meet the needs of the lead industry and broader digital marketing ecosystem. LeadiD has made a name for itself as an independent, neutral third party of digital media transactions. LeadiD clients know exactly where consumer data comes from, where it traveled, and how it performed, offering deep insights into customer intent.

  • Julie Myers

    It is so true that just about every business will end up getting sued at some point, so it is best to just be prepared beforehand. I think that it is definitely a problem for those in marketing. This is what I do for work, so I would like to start learning more about how to prepare for a lawsuit. If I could start looking into my insurance coverage and then also start looking at possible liabilities, then I think we could probably figure out a way to prevent lawsuits for a while. Thank you for the great post! http://www.souderslaw.com/businesscontracts.html