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Industry faces hurdles in communicating with guests by text

No company is immune from liability under a federal law that prohibits sending consumers unwanted text advertisements, and the sports industry has been particularly hard hit by lawsuits filed by consumers and law firms looking to score a quick buck. While many of these lawsuits may have little or no merit, the fact that the law provides for uncapped damages and places onerous and confusing requirements on companies to get consumer consent to send these messages means tough business for teams both inside and outside of the stadium. Recent lawsuits and settlements in this area drive home the need for strict compliance with this law or risk paying hefty fines.

The Telephone Consumer Protection Act governs how companies may communicate with consumers via text message, calls to mobile devices and prerecorded messages to landlines. This law is enforced by the Federal Communications Commission, but of greater concern is the ability for consumers to bring class actions seeking uncapped fines of between $500 and $1,500 per violation (read: each text message).

Virtually all professional, semiprofessional and farm teams conduct in-stadium promotions that invite guests to text in answers to trivia questions, guess the next play or display a message on the scoreboard. But other than using these guests’ submissions at that moment for the intended purpose, can a team use the telephone numbers voluntarily provided by these motivated guests to promote the team or its brand partners? Unfortunately, no — unless specific legal procedures are followed.

Teams encourage fan interaction via social media and text, but must be mindful of federal law governing how they communicate via text message.
Photo by: GETTY IMAGES
While companies are free to invite consumers to transmit texts for various purposes such as the examples provided above, responding to these messages with any content that may be deemed promotional is problematic, as the TCPA sets out very specific and onerous requirements for these messages. Simply responding with a “Thanks, look for your message on the big screen” or “You’ve won, claim your prize at a customer service desk” is permissible. However, including any content that invites the guest to visit concession kiosks, purchase tickets to future games, or that promotes a brand partner means the message will be deemed an advertisement and will require the consumer to agree to specific contractual language, such as “I agree to receive promotional automated text messages from [name of organization] to this number on my mobile device and understand that my consent is not required to make a purchase.”

Aside from the fact that this language may be confusing, as a purchase is not likely involved in the promotion and may deter consumers from responding at all, implementing this contractual arrangement presents significant logistical challenges. All in-stadium experiences are intended to be fun, spontaneous and frictionless, and requiring consumers to read and agree to legal language would clearly undermine such efforts.

Teams that have attempted to reach out to guests in the past under less draconian circumstances have paid dearly for not following the rules. One team that conducted an in-stadium promotion encouraging guests to send in messages to be displayed on the scoreboard found itself on the wrong side of a lawsuit when it sent promotional text messages to those guests.

Despite possessing some valid defenses, the team eventually agreed to settle the matter rather than risk the uncertainty and costs of lengthy litigation. The settlement required the team to pay the equivalent of $5 million in the form of free tickets to future games and team merchandise. While this form of settlement may have been palatable from a branding and goodwill perspective, what hurt most was the fact that the team also had to pay the plaintiff’s lawyers $600,000 in fees and costs.

Even if a team obtains the appropriate consent to send promotional text messages to guests, it must be clear as to what it intends to do with the guests’ information and live by that statement. The Buffalo Bills learned this lesson recently when they were sued for sending more text messages than they said they would. In this case, the plaintiff alleged that he signed up to receive no more than five weekly promotional text messages from the Bills but instead received more than that in the weeks following. In support of his case, the consumer claimed that the team’s website, terms and conditions, and confirmatory text messages all stated that by subscribing, consumers would receive no more than five text messages each week. With this evidence against it, and facing significant costs and uncertain outcomes in defending the case, the team chose to settle by issuing up to $2.5 million worth of debit cards redeemable for team merchandise. And, as above, plaintiff’s counsel got their “fair” share — just over half a million dollars.

The lesson here is clear: Before engaging in campaigns designed to communicate with guests by text message, companies need to develop and strictly follow a compliance playbook or run the risk of facing consumer class actions seeking unlimited damages.

Marc Roth (mroth@manatt.com) is a partner in the advertising, marketing and media division of Manatt, Phelps & Phillips and is co-chair of the firm’s TCPA Compliance and Class Action Defense group, resident in the firm’s New York office.

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