Think your last phone bill was high? Imagine paying $4 million.
That’s how much an automotive finance company settled for in a recent class action lawsuit over violations of the Telephone Consumer Protection Act.
If you can’t ensure TCPA compliance, your dealership may be next. Here’s a quick rundown of you need to know about this rapidly increasing area of legal and financial risk:
What Is the TCPA?
Enacted in 1991, the TCPA protects consumers from unsolicited communications and “robocalls” (i.e. calls with prerecorded voice messages, made through automated dialing systems). Under the TCPA, organizations must obtain prior written consent from everyone on their telemarketing list, let consumers clearly know that consent is not a condition of purchase, and provide people on the list with a way to opt out.
Any company that contacts customers or leads over the phone—or has a third party do it for them—is at risk of TCPA-related liability.
That’s pretty much every dealership in business today. For every TCPA violation, a business faces a penalty of as much as $500—or $1500 per repeat violation. That may not sound like very much, but the costs add up. If you call or text 100 people, you could be on the hook for $50,000–$150,000.
Now imagine you’re running a telemarketing campaign and reach out to 1,000 leads over the course of a month. How much could a telemarketing call lawsuit cost you in that case? I’ll let you do the math.
Why Is TCPA Litigation on the Rise?
Dealers face greater TCPA-related risk than ever. More and more businesses are using automated call and text technology, or outsourcing to vendors that do.
At the same time, consumers are paying closer attention to unsolicited calls and text messages. We’ve all experienced the scourge of phone spam over the past few years. As a result, robocall lawsuits are increasing.
Some enterprising attorneys are seeing it as an opportunity to make bank. As Brian Epro recently wrote in Ward’s Auto:
“Not only has TCPA litigation grown more than 1,200% since 2010, but it has spawned an entire industry of ambulance chasers and ‘serial plaintiffs’ who actively seek out companies who are not TCPA compliant and attempt to sue. Google ‘TCPA lawyer.’ The top half of your screen will be attorney advertisements. The bottom half will be articles that link to TCPA litigation services. You’ll also find content about OEMs and dealers with multi-million- dollar settlements against them.”
What Can You Do to Stay in Compliance with the TCPA?
- Ensure all consumers you call or text have consented to be contacted. Document their consent, and keep your TCPA forms up-to-date. Epro writes that “screenshots and IP addresses” are insufficient. By contrast: “If you are able to provide witnessed consent from a neutral third party, you can frequently defeat an attorney demand letter before litigation even begins.”
- Use an automated TCPA compliance monitoring tool. Don’t rely on good faith or periodic manual checks to stay in compliance.
- Prioritize TCPA training throughout your rooftops. The actions of a single marketer or salesperson can expose your dealership to major legal and financial risk.
- Hold your vendors accountable. According to Epro, assuming vendors will indemnify you for TCPA compliance. is “not legally viable”: “If you respond to a lead that has not given you consent to call or text, regardless of where the lead was generated, you are liable.”
Read “Car Dealers, Beware of TCPA Litigation Risk.”KPA can help you ensure compliance with the many laws and regulations impacting your dealership. For more information and guidance about auto compliance, be sure to check out our article: “Regulations Across Your Dealership: Consumer-Facing Employees.”