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What We Learned from 5 Major TCPA Lawsuits in 2016

Mon, 03/27/2017 - 08:32

Last year saw nearly a 32% increase in number of the Telephone Consumer Protection Act (TCPA) case filings over the previous year. Amongst the thousands of TCPA class action lawsuits filed, we’ve identified five major suits in particular that have provided some valuable lessons.

While we review these cases, ask yourself if you notice any similarities in the marketing operations of your business. Could you be making the same operational mistakes as these well-known corporations who paid millions to settle costly TCPA class action lawsuits?

The good news is that there are simple risk mitigating steps you can take to drastically reduce the possibility of exposure to costly TCPA violations and lengthy legal entanglements. 

American Express - $8.25 Million Settlement

(Jennifer Ossola, et al. v. American Express)

TCPA issues: 1. Use of an Autodialer without obtaining prior express consent 2. Vicarious liability (dealing with a third-party marketing company)

The lawsuit alleges that American Express, while using a third-party marketing company, Alorica Inc., placed calls to cellphones using an automatic dialer without obtaining prior express consent from the consumers which violates the Telephone Consumer Protection Act (TCPA). Between July 3, 2009 and March 15, 2016 Alorica made calls to consumers for the purpose of marketing American Express small business credit cards to potential customers.

American Express’s position was that they shouldn’t be held responsible for the actions of third-party vendors, but eventually American Express agreed to settle the class action lawsuit. As part of the settlement, those who received telemarketing calls from Alorica between 2009 and 2016 will split $8.25 million after attorneys' fees. Over 55,000 members of this class filed claims and will receive $88 apiece. The attorneys received around 35% of the settlement funds, or over $3 million.

Learnings: It's important to use caution when contracting third-party marketing companies. Businesses cannot shield themselves from the TCPA by hiring a third-party to initiate contact with consumers. Businesses should maintain a standardized review process for approving potential marketing partners to ensure their communication methods with consumers are TCPA compliant. The TCPA is a federal law that prohibits companies from placing phone calls and text messages using an automatic telephone dialing system (ATDS), artificial or prerecorded voice to consumers who have not consented to receive the calls or texts. Companies must receive prior express written consent which is a written agreement between the caller and receiver of a message or call that explicitly authorizes the caller to market advertising or telemarketing messages using an automatic telephone dialing system or artificial prerecorded voice that includes the number to be called and contains the signature of the person receiving the call or message.  

Sirius XM - $35 Million Settlement

(Hooker v. Sirius XM Radio Inc.)

TCPA issues: DNC list management, Autodialers, third-party marketing firms (vicarious liability)

The plaintiff purchased a 2012 Hyundai Elantra that came with a free three-month trial subscription to Sirius XM. The complaint alleges that Sirius XM violated the TCPA when it used third-parties to call his cellphone after 9PM using an automatic phone dialing system in an attempt to convert him to a full-time subscriber. Even after the plaintiff requested to be added to Sirius' DNC list, the calls continued.

Sirius XM Radio Inc. agreed to establish a $35 million settlement fund to settle several class actions that allege the company illegally used predictive dialers for telemarketing calls in violation of the TCPA between February 2008 and July 2016. They also agreed to require vendors dialing cellphones on their behalf to use human intervention to initiate calls.

Learnings: Businesses need a clear process for consumers to opt out of receiving future communications. This process should capture, document, and process opt-out requests in a manner that ensures that all future communications are verifiably terminate.

iHeartMedia - $8.5 Million Settlement

(Willis v. iHeartMedia Inc.)

TCPA issues: Prior express consent

iHeartMedia’s radio stations encouraged listener to send texts to request a song or enter a contest. Instead of simply confirming receipt of the listeners’ texts, they responded with messages that included advertising for the company’s partners. According to the complaint, iHeartMedia violated the TCPA when they responded to those texts with advertising messages without prior expressed consent.

iHeartMedia denied all allegations of wrongdoing and liability, but agreed to establish an $8.5 million settlement fund. In addition, the defendant agreed that for future text message advertising, they would obtain prior expressed consent from consumers to receive such messages on their cellphones. In this case, the class action attorneys were awarded an amount not to exceed $3.4 million.

Learnings: Under the TCPA, texts are treated like calls to cellphones. Sending a confirmation text may be appropriate, but responding with advertising without prior consent could leave your business liable for up to $1,500 per text. When used properly, texting is a low cost marketing alternative, but fines for TCPA violations after sending hundreds or thousands of text messages can make it financial disaster.

Wells Fargo - $16.3 Million Settlement

(Markos vs. Wells Fargo)

TCPA issues: Prior express consent

The calls at issue were all non-emergency, debt-collection calls and texts made by Wells Fargo Bank in connection with residential mortgage and home equity loan accounts. The TCPA class action lawsuit alleges that Wells Fargo illegally used an automatic telephone dialing system to call customers' cellphones without their consent in violation of the TCPA between November 2011 and February 2016.

Though Wells Fargo denied the allegations, they chose to avoid the expense and uncertainty of going to trial. They agreed to pay more than $16.3 million to settle the lawsuit. Based on the number of members in the class action, the expected cash award going to each of the over 3 million customers may range from $25 to $75 apiece. Attorneys are expecting to be awarded attorneys’ fees at a cost equal to 30% of the settlement fund, or nearly $5 million.

Learnings: In this particular case, had Wells Fargo simply employed a trusted compliance provider to identify and remove cellphone numbers from their campaign files with a product like Litigator Scrub®, they’d have saved millions and avoided the negative publicity.

State Farm - $7 Million Settlement

(Smith et al. v. State Farm)

TCPA issues: Third-party marketing services (vicarious liability)

State Farm hired Variable Marketing, a third-party auto-dialing service, to make marketing calls on their behalf offering insurance products. Consumers that were interested in the offer were routed to live agents to complete the sale.  State Farm is accused of being directly involved with dictating the timing and volume of the unsolicited telemarketing calls made by Variable Marketing.

State Farm opted to settle the case. The TCPA class action settlement will be dispersed to approximately 78,200 class members who are expected to receive $60 apiece. Class action representatives will receive $15,000 in service awards. No more than 33.3% will go to attorneys’ fees, or over $2 million.

Learnings: It is worth repeating that businesses cannot shield themselves from the TCPA by hiring a third-party to initiate contact with consumers. Third-party marketing partners should be considered an extension of the business that employs them, and therefore follow the same compliance policies and procedures.


An hour of data processing could spare your business years of legal expenses and the negative publicity that comes with a TCPA class action. The best way to avoid becoming the next defendant in a costly TCPA class action is to use products like Litigator Scrub® and Wireless ID Scrub services. Our compliance services will identify:

  • Serial class action litigators hidden in your calling data
  • Wireless Data in Real-time
  • Wireless vs. Landline numbers prior to dialing
  • Carrier and ported wireless numbers

To learn more about these and other compliance services, sign up for a complimentary compliance audit with one of our team members here or contact us at or call us at 866-DNC-LIST (362-5478).

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