Legal Watch: Are You Making Unlawful Communications?

March 16, 2018
Many security dealers are vulnerable to TCPA violations, which can result in crippling class-action lawsuits

A tough, decades-old federal statute designed to protect consumers from unwanted telemarketing calls is creating problems for the electronic security industry.

The Telephone Consumer Protection Act (TCPA) prohibits companies from using auto-dialers, pre-recorded messages or artificial voices or text messages to communicate with a consumer’s residential landline or any cell phone (even if commercial), unless the company has the consumer’s consent to do so.

The type of consent varies depending on the type of communication method; however, what constitutes valid consent – and for how long – remains the subject of legal debate.

TCPA litigation is on the rise, including an increasing number of consumer class actions seeking damages from companies for allegedly violating the act. Unfortunately for the security industry, most, if not all industry insurance policies exclude coverage for class actions – and the cost to defend such a case is likely to be in the millions of dollars.

The TCPA is a “strict liability” statute, meaning that a company violates the law even if it did not mean to do so (think speeding ticket – you either went over 55 or you didn’t). The act allows consumers to sue alleged violators for damages for each call, at $500 per violation and $1,500 per “knowing” violation. That means a company’s liability can get very high, quite quickly, especially in the context of a class action potentially involving hundreds if not thousands of consumers and calls.

Your Company’s Vulnerability

Here’s the problem – every week, our industry generates tens of thousands of “robocalls” (auto-dialers and recorded or artificial voices) and text messages to cell phones and residential landlines informing the recipient of anything from an activated fire alarm to low batteries. It is not just the caller who is at risk (i.e., a wholesale monitoring provider), it also includes the alarm dealer for whom the call is being made.

As drafted, the TCPA does not apply just to telemarketing calls and text messages – with limited exceptions, the law applies to all communications generated by auto-dialers or that employ pre-recorded messages or artificial voices and all text messages, regardless of the content in the calls or text messages.

There are several types of calls and texts (communications) under the act – commercial communications (designed to sell), informational communications (designed to inform) and emergency communications (affecting health and welfare of consumers). The line between commercial and informational calls can be tricky. For example, is an insurer’s text reminding of a policy lapse date just information or an attempt to sell a policy renewal, and therefore, commercial? Courts have gone both ways on this issue.

Likewise, the definition of emergency calls exempted from the statute is not crystal clear. The Federal Communications Commission, which administers the TCPA, defines emergency as calls made in “any situation affecting the health and safety of consumers.” Given that definition, it is clear that an otherwise unlawful call or text message informing the recipient of a possible fire certainly seems to qualify as an emergency call. A similar communication advising of a low battery on a burglary alarm may not.

Protect Yourself

Some have called for industry action – for example, petitioning the FCC seeking a broad exemption for these sorts of calls. Others are concerned the FCC may not understand our industry’s custom and practice and issue a detrimental ruling.

With or without legislative action, there are plenty of ways to protect your company from liability under the statute.

You can secure valid consent to communicate in various ways – via subscriber agreement, alarm monitoring agreement with a central station, or a representation and warranty from an alarm dealer. You can also get consent via text or a phone call to your call list. Be sure to include a well-drafted indemnity provision to provide important tactical advantages if sued.

Eric Pritchard is a Philadelphia lawyer who works to make the world safer for security and life safety providers. Contact him at [email protected]. This column does not constitute legal advice; contact an attorney with questions.

About the Author

Eric Pritchard | Eric Pritchard

Eric Pritchard is a partner in FisherBroyles, a law firm with office throughout the United States and in London. He spends his days trying to make the world safer for the security industry. You can reach Eric at [email protected].