Imagine you send a brand new discount offer to your existing customer base via text message as part of a new campaign. You expect some high conversion rates through this exciting new marketing channel, and at worst, a few unsubscribes.
Now, fast forward to a few months later. Suddenly, you’re hit with a $10 million fine for sending that very text message.
In this blog, we’ll explain why every D2C marketer using SMS messaging for marketing communications should be aware of the Telephone Consumer Protection Act (TCPA), and how to take every precaution to avoid costly litigation with protected SMS outreach efforts.
Over the past decade, Direct-To-Consumer (D2C) marketers have used email outreach to offer their customers and prospects promotions, discounts and alerts for new products. While email has become a successful marketing channel, its growing popularity has also created some issues. With nearly every D2C brand using email to communicate to their customers, inboxes are getting flooded daily – making it harder to get opens and stand out from the crowd. Additionally, marketing emails often don’t provide an opportunity for a two-way dialogue with consumers, which makes it more difficult to get feedback on their wants and needs from your brand.
Luckily, there’s another marketing channel that solves all of these problems and creates opportunities previously untapped: SMS messaging.
Why SMS is the retail marketer’s next goldmine
As consumers grow more attached to their phone and bored of crammed inboxes, SMS has created a unique new opportunity for marketers. After all, the average person spends a whopping four hours per day on their mobile device and checks their phone over 150 times per day. Not only are consumers spending more time on their phones, but it’s also increasingly their preferred method of communication: More than 75% of consumers say they prefer to receive promotions via text messages than while browsing the internet or social channels. Consumers also respond much more quickly to texts than email – 90 seconds compares to 90 minutes, respectively.
The variety of use cases for SMS are abundant. Texts can be used for a wide range of marketing purposes, from new user acquisition and remarketing and reengagement promotions, to creating a two-way dialogue between the brand and customers that builds stronger relationships. Ecommerce brands can even use texts to remind customers of abandoned shopping carts and increase conversions.
The Catch to SMS: Potential TCPA Violations
Unfortunately, there is a danger to SMS outreach that D2C brands must be vigilant in preventing: Telephone Consumer Protection Act (TCPA) violations. TCPA legislation requires prior, express written consent for marketers to contact consumers via auto dialer or text message – an increasingly difficult challenge for D2C marketers looking to take advantage of the SMS channel.
Whether you’ve already entered into SMS outreach or are simply considering it, it’s important to be aware of the hefty fines you can incur if not appropriately documenting proof of consent. If a consumer files a complaint, the TCPA states that the burden of proof is on the advertiser. Even consumers who have previously opted in to your brand’s communications may forget and attempt a lawsuit. TCPA violations can cost anywhere from $500 to $1,500 per text. For example, if a business sent 10 text messages to one consumer, there is a potential statutory fine of $5,000 to a single consumer if they can prove a willful TCPA violation. These fines can increase even further if there are class action claims – which are increasingly being sought out by “professional TCPA plaintiffs” who offer consumers settlement shares if they bring violations to their attention through websites like these.
Big names from across the D2C industry have been hit for not taking the proper precautions in their SMS outreach. After sending unsolicited text messages with a discount offer to thousands of customers, Jiffy Lube was hit with a $47 million fine. American Eagle sent over 600,000 text messages to cell phones without consent, or after the recipient had opted out of future messages, resulting in a TCPA class action suit. In the end, American Eagle had to pay $14.5 million for its violation. Pizza Hut paid out $6 million in a settlement for sending out similar unsolicited texts, and Steve Madden paid out a class action settlement for $10 million after it sent text messages promoting a holiday sale on footwear and other products.
To help D2C marketers avoid these lawsuits and hefty settlements, ActiveProspect developed TrustedForm as the original lead certification product. It works by generating a unique certificate for each customer or prospect that is stored with each record, and includes a video replay of the prospect engaging with the web form. TrustedForm is considered the highest standard for documenting proof of TCPA consent for both outbound calls and text messages. With its video replay, marketers can easily pull the URL with video playback to dismiss a potential lawsuit before it ever becomes a problem.
SMS outreach – done with the proper TCPA precautions in place – shows incredible promise as a marketing channel in the D2C space. At ActiveProspect, our platform works to help D2C marketers take advantage of all outreach channels in a safe, cost-efficient, and scalable way.
To learn more, reach out to our D2C experts today!