Real estate businesses should be aware that they may be the target of new class action lawsuits under the Telephone Consumer Protection Act (“TCPA”), which has the potential for significant liability exposure. Businesses in other industries hit with TCPA lawsuits often end up settling such claims for amounts in excess of $50 million.
In just the last month, class actions asserting claims under the TCPA were filed against Presidential Real Estate Group, Inc. (d/b/a RE/MAX Presidential) and Keller Williams Realty, Inc. The real estate sector is just the latest part of our economy to be hit with a rash of these TCPA class action lawsuits.
The TCPA has several components, but the primary provisions getting attention these days relate to allegedly unwanted texts and calls to consumers. The claim against RE/MAX involved alleged unwanted marketing texts and the Keller Williams case involves alleged calls to an individual on the federal Do-Not-Call list.
The reason the TCPA strikes fear in the hearts of so many executives is that the TCPA provides statutory damages of $500 – $1,500 for every individual call or text made in violation of the act. In other words, even if your customer base or potential target list is under 1,000 people, with the push of a button your company may be facing over a million dollars in damages.
The case against RE/MAX Presidential alleges that the company used an autodialer to send text messages offering to help the plaintiff sell his home, and promoting deals on the commission rate. (What is an autodialer is being hotly litigated around the country, but generally it is the use of a machine or system that has the capacity to store and randomly dial numbers.) The plaintiff alleges that he did not provide “prior express written consent” to receive such messages.
The focus on “written consent” is very telling, and is an important reminder for those in the real estate industry. Often businesses think that if an individual provides their telephone number, then outreach to that number is permitted. And it may be permitted for certain transactional communications (i.e., a text indicating that the sales documents requested are now available to sign). However, the Federal Communications Commission has adopted specific regulations implementing the TCPA that require a particular type of “prior express written consent” before certain calls or texts can be made that involve marketing material.
Prior express written consent requires:
- a written agreement;
- signed by the person receiving the call or text;
- a “clear and conspicuous disclosure” that specifically authorizes the seller to send telemarketing communications using an automatic telephone dialing system or an artificial or prerecorded voice;
- notification that person is not required to sign as a condition of purchasing any property, goods, or services; and
- the person consenting must also provide authorization for the specific telephone number that may be contacted.
In general, businesses should seek to avoid TCPA liability by doing the following:
- Manually dialed texts or calls without pre-recorded messages; or
- Get consent for the type of message at issue:
- Prior express written consent (for any telemarketing)
- Prior express consent (generally, if not telemarketing); and
- Comply with do-not-call requests.
Given the potential significant liability exposure for a TCPA violation, before using any equipment that could be considered an autodialer, or using any prerecorded messaging, it is best to seek guidance from counsel or someone experience in this area of marketing/outreach who can provide guidance on how you can successfully communicate with customers or potential customers while still complying with state and federal law. Planning on the front end can avoid significant liability down the road.