Hand about to bang gavel on sounding block in the court room
Hand about to bang gavel on sounding block in the court room

The Terrifying Tale of a TCPA Compliance Lawsuit

Are you worried about the possibility of facing a TCPA compliance lawsuit—a class action suit where hundreds or even thousands of people band together to get a lawyer and sue your company for millions of dollars? 

If you aren’t, it should be in the back of your mind. 

One of the things we hear from a lot of business owners who reach out to us for the first time is “I’m getting sued for TCPA. What can I do?”

Right now, you might be wondering something like “What is a TCPA lawsuit” or “what is TCPA compliance?” 

You may have heard about some of the big class action lawsuits regarding this Federal Communication Commission (FCC) regulation, but might not be familiar with what it is, how to comply with it, or why it’s such a big threat to your business.

To help illustrate the danger of TCPA suits, let’s start with a quick explanation, followed by a story about how a company suffered a major TCPA compliance violation:

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What Is TCPA Compliance?

TCPA is an acronym for the Telephone Consumer Protection Act of 1991. It was a landmark regulation administered by the FCC that was designed to reduce the number of nuisance calls going to the landline phones of American consumers. 

TCPA compliance is the practice of matching your business’ processes to the rules of the regulation in order to avoid violations.

Over the years, the law has been amended (or accrued real-world legal case precedents) to modify it to be more responsive to modern telecommunications technologies that either didn’t exist or weren’t widespread when the original document was drafted. This has complicated the picture for TCPA compliance.

What Is a TCPA Lawsuit?

A TCPA suit usually takes the form of a class action lawsuit against a company that has been found to violate the rules of TCPA. The cost of a TCPA lawsuit can vary depending on how many people join the class action, how aggressive the attorneys representing the class are, and if/how your organization deals with the class action.

These lawsuits can be triggered by a variety of circumstances. For example, what if your contact list has outdated or incorrect contact information? 

In such cases, your sales team could be reaching out to people who have no clue who you are and never actually “opted in” to receive marketing messages from you.

These errors can be caused by neglecting to update contact info regularly, erroneous entries in your contact database, and by lead generation fraud. 

Lead gen fraud is the biggest contributor because the fraudster often enters thousands of fake leads into your system to claim credit for submitting them. They often use the data of real people to generate these fake leads, so you end up reaching out to the wrong people.

Some marketers who purchase lead lists from third-party companies can also run afoul of TCPA compliance violations—especially if the list seller is giving you outdated contact info. At any rate, a purchased lead list does not contain individuals who have consented to receive automated phone marketing messages from you. 

Worse yet, they may not have even given the list seller permission to share their contact data, either.

How a Company Gets Hit with TCPA Class Action Lawsuits

This story is based on true events. The names and other details have been changed to protect the innocent.

Sam was the marketing manager at ABC Company—a B2C business that specialized in high-tech consumer goods that were competitively priced to meet the budgets of the average American citizen. 

When COVID-19 hit, his company saw a sharp drop in sales as consumers had more pressing concerns than buying wireless earbuds, video game console accessories, and other tech gadgets.

To make up for the shortfall, Sam went to the VP of Finance and the company CEO with an idea: launch a major ad campaign on social media and other companies’ websites to promote their latest and greatest tech toys to a public that now found itself largely trapped in their homes with too much time on their hands.

The CEO thought the campaign was brilliant (and wanted to start building a profit before the end of the year to preserve his bonus). The VP of Finance took some convincing, but was ultimately swayed by Sam and the CEO’s collective excitement. 

However, he put a restriction on the budget that would make it hard to meet the campaign’s goals based on past marketing performance data.

So, Sam decided to bring on a new marketing partner and leverage some affiliate marketing opportunities. He would negotiate a cost-per-lead (CPL) agreement with these affiliates so that the more leads they generated, the more they’d earn.

Fast forward two months and the early results were great. The affiliate marketing campaign brought in an unprecedented number of leads—out of all proportion to their previous marketing efforts!

At first, the CEO was astounded (and happy), congratulating Sam on his success and promising that if this level of success kept up, Sam would be getting a bonus on his end-of-year paycheck. Even the VP of Finance was pleasantly surprised at the apparent ROI of the affiliate campaign.

However, a couple of months later, Sam started getting angry emails and messages from both executives. Somehow, despite generating thousands of leads for the company, actual new sales remained stagnant—none of the new leads were converting into customers at all. 

Then, the CEO reached out with a message: the company was being slapped with a class action lawsuit for violating TCPA compliance guidelines.

Sam was left scrambling to find a reason for the lawsuit and to find a way to fix the problem. That’s when he discovered that his “brilliant” affiliate campaign was really filled to the brim with lead generation fraud.

His effective marketing partners were using bots to fill out forms and claim credit for generating a lead when they were actually producing nothing. 

Even worse, the data that they used to fill out the forms was stolen from real people and used without their permission—meaning that the sales and marketing teams had been reaching out to people who never opted to receive communications in the first place.

TCPA Lawsuits from the Perspective of a “Class” Member

Let’s change perspectives to Erica, one of a million people who, out of the blue, got a sudden influx of text messages, automated voicemails, and persistent marketing calls from some tech company she’d never heard of. She wasn’t a gamer and being stuck at home because her office job was closed due to COVID did nothing to change that.

In fact, the pandemic had really put a strain on her finances since she got downsized during the lockdown. 

She tried starting a side business as a driver in a ride sharing company, but the income wasn’t really enough to cover her new business expenses for maintaining the car and all of the bills she was already dealing with. After all, there were thousands of other people in her area trying to do the same.

After the fifth time a drunk made a mess of her backseat, the “being your own boss and setting your own hours” thing quickly lost its luster. After a few close calls with accidents in heavy city traffic, she decided to quit.

This was when Erica got a piece of mail from some big law firm in her city that read “You could be entitled to compensation…” She’d seen the law firm on billboards as she was ferrying passengers from point-to-point in the city, so she vaguely recognized the name. 

Figuring she had nothing to lose but time, she read the mail slip, visited the lawyer’s website, and eventually called their TCPA violation hotline.

As it turns out, there were thousands of people just like her who had gotten a spate of annoying voicemail messages and texts from that same tech company. Erica added her name to the class action suit the lawyer was filing in the hope that she could get a piece of the compensation and use it to cover her bills in the coming months. 

While it wouldn’t be much for her even if the company paid the full settlement amount (especially after the law firm got their cut), it was better than nothing.

Eventually, Erica will get a letter saying something like: “The case has been settled and ABC Company has agreed to pay the class to resolve the suit.” Erica’s cut — about $260, if she’s lucky.

TCPA Lawsuits from the Perspective of a Class Action Attorney

Jacob Smith of Smith & Smith Law is a busy person. He wants to grow his law firm and attract a lot of customers who have tough, and thus extremely billable, legal needs. To do that, he needs to win a big, high-profile case.

One day, his office gets dozens of calls from consumers in the area asking if they can sue some business called ABC Company for calling them unsolicited. Jacob recalls that there have been some big decisions regarding TCPA violations in recent years and sees an opportunity to start a big class action suit against ABC Company.

So, Jacob sets his team of paralegals to work—collecting depositions from affected consumers, investigating ABC Company’s records to verify that they’ve violated TCPA restrictions, and reaching out to additional consumers (like Erica) to get them to join the class action to maximize its size and impact.

Following the initial investigation, Jacob determines that it’s a slam-dunk case of TCPA violation through negligence, and sets to work filing the necessary motions to bring the case to court. 

This begins what will be a long and lucrative (for Smith & Smith Law, at least) legal battle.

What Can ABC Company Do to Prevent Future TCPA Class Actions?

It was after discovering that the company was getting slapped with a TCPA class action that Sam decided he really needed to find out what is required for TCPA compliance and find a way to stop fraud and keep crooks from filling his contact database with fake leads that could trigger future violations.

Although it was too late to save ABC Company from its predicament, Sam could help prepare the company to deal with future ad fraud schemes. Some of the measures he could present to his company’s executives include:

1. Tasking a Department or Team with Vetting New Marketing Affiliates

Since his company fell for a lead generation fraud scheme run by dodgy affiliate marketing partners, Sam may try to recommend that they start vetting future marketing affiliates more carefully.

This may entail creating an internal team to investigate new marketing affiliates or hiring a third-party service to vet affiliates to see if they’re legitimate. 

Some warning signs include:

  • An affiliate having a large following despite being too new to have generated much organic traffic or not having a lot of content published.
  • Low quality engagement with their channel—such as having a lot of likes but few comments or comments being generic “great stuff” posts that could fit virtually anything.
  • Generating large numbers of leads that never convert.
  • Abnormally high or low engagement rates for content.
  • Followers who have blank or low-quality accounts.

These signs may indicate that the influencer or affiliate is using bot traffic to make their social media accounts look bigger than they actually are.

The major issue with this approach is that it isn’t really realistic to scale when running a large affiliate marketing program. Having enough team members to vet literally thousands of affiliates and get them all approved would be cost prohibitive, to say the least. 

Meanwhile, skimping on these checks could result in more affiliate fraud (and thus, TCPA violations).

2. Start Checking the Company’s Contact List Against the National Do-Not-Call Registry

One way to clean out bad leads from the company’s contact list is to start verifying the content of the contact database against the National Do-Not-Call (DNC) registry’s latest list. If Sam or the marketers and sales reps in charge of checking the list find a bunch of names and phone numbers in their contact database that are on the DNC registry, that could be a warning sign that they’re being fed fake leads.

While this is a reactive rather than proactive approach, it can help to prevent TCPA violations. Having such processes in place (and properly documenting them) can even help demonstrate to regulators that you have taken the appropriate steps to comply with the TCPA’s rules.

Furthermore, Sam can start creating a database listing the names and contact information of everyone who has ever opted out of receiving the company’s communications. If a phone number reappears attached to a different name, that could be a warning sign of a fake lead.

3. Sending Confirmation Emails to Contacts

One way that Sam could proactively prevent a lot of bot traffic from showing up as leads is by using a confirmation email to verify a lead’s contact info before sending them other marketing messages.

If the email address is connected to a real person’s information, but they weren’t the ones to fill out the form on ABC Company’s website, they’ll either mark the message as spam, ignore it, or (in extremely rare cases) actually find something of interest and click on the verification link (thus providing consent).

The main downside is that this creates an extra step for all legitimate leads to go through—which can negatively impact any ad campaign’s conversion rates. However, it can be effective for stopping lead gen fraud and preventing TCPA lawsuits.

4. Using Honeypot Form Fields

Another proactive measure that Sam can leverage to put a stop to lead gen fraud (and thus, TCPA compliance violations) is to start using “honeypot” form fields. These are form fields that only exist in a web page’s code—making them invisible to human users.

However, bots don’t “see” website pages the same way people do. They crawl a website’s code directly to try to interpret what’s on the page. This is how they know that a form exists on the page and that they should fill it out.

The fake form field code tricks the bot into filling it out—creating a simple filter for deciding if a lead is real or fake. If they filled out the form field that no normal person would see, then it’s a bot.

Still, this doesn’t do much to address fraudsters who use human fraud farms to conduct lead generation fraud. These operations use real people to fill out forms quickly, so they won’t fall for the honeypot. 

Despite this, it’s still an incredibly valuable tool for stopping bot-based fraud techniques.

5. Continuously Reviewing Marketing Performance

In future ad campaigns, Sam and his team will likely spend a lot of time and effort on manually reviewing their marketing performance—going over each campaign to see how many new leads they’re generating vs how many customers they’ve acquired.

While this will take time and effort, it can be crucial for spotting when leads aren’t converting (which is an early warning sign of ad fraud). More importantly, Sam and his team will need to perform deep dives on their leads to see where they’re coming from. 

This can be crucial for identifying fraudulent affiliates and removing them from the program.

However, this is still a reactive measure rather than a proactive one. This means that there’s still a chance for fraudsters to get away with ABC Company’s ad money and for their sales team to reach out to bad leads.

6. Using an Ad Fraud Solution

Finally, one of the best measures to stop lead generation fraud (and thus, avoid TCPA compliance violations) is to use an ad fraud solution that can vet the traffic behind form fills in real time.

By checking traffic as it comes in and weeding out the fakes, ABC Company can proactively prevent the impacts of ad fraud. This, in turn, helps to severely reduce the risk of getting TCPA lawsuits, wasting ad budget, and losing opportunities to convert genuine leads into customers because of time wasted on fake leads.

Why wait until your own company gets into a protracted legal battle over TCPA violations? Start protecting your business now by adding an ad fraud solution before fraudsters can get you into trouble with Anura!

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