SSA Blog

Self storage operators considering using automated calls or texts to market their facility should be careful when choosing a service provider. Your company may be strictly liable for your service provider’s Telephone Consumer Protection Act (TCPA) violations. The regulation of communications by automated calls or text for marketing purposes is very different from regulation of the same technology for collections and staying in touch with current customers.

Operators can avoid any TCPA violations arising from automated communications with customers by simply disclosing that they may communicate with their tenants via automated calls and texts in the rental agreement. This and other legal protections do not apply when this technology is used for direct facility advertising.

The TCPA has two fundamental prohibitions. First, it bans making any calls or sending any texts for marketing purposes using either an artificial or prerecorded voice or an “automatic telephone dialing system” without the prior express written consent of the called party. Second, it bans making calls and sending texts for marketing purposes to any telephone number registered on the National Do Not Call Registry unless the caller has (a) given prior express written consent; or (b) has an established business relationship with the calling party. The TCPA has a private right of action that allows consumers to sue for minimum statutory damages of $500 per violation, which may
increase to $1,500 per violation at the court’s discretion. A recent Ninth Circuit opinion demonstrates just how devastating potential damages can be when marketing campaigns go wrong.

A $925 Million Verdict

A company that outsourced its automated marketing campaigns to a service provider became a defendant in a class action lawsuit for violating the TCPA. The suit alleged that almost 2,000,000 illegal automated calls had been made on the defendant’s behalf. A jury returned a verdict of $925,000,000. The Ninth Circuit Court of Appeals, in Wakefield v. ViSalus, Inc., 51 F.4th 1109, upheld the verdict but gave the company a life raft when it concluded the damages might be excessive. ViSalus will likely be liable for millions of dollars in damages even if the trial court grants it some relief on the damages award as directed by the Ninth Circuit. Any company considering an automated
communications marketing campaign should be confident that its service provider is fully versed and compliant with the regulation of automated call technology and should have legal counsel ensure that the parties’ contracts contain the appropriate legal protections.