Here at the TCPA Defense Force, one of the core risk mitigation strategies we recommend for companies sending text messages to consumers is incorporating an arbitration provision into the terms of service.  Due to several favorable Supreme Court decisions over the last few years, a well-crafted arbitration provision, including a class action waiver, has a good chance of being enforced, and such a provision can be a powerful tool for businesses trying to avoid the crippling damage caused by TCPA class actions.  Of course, this strategy is only effective if the client ensures that its consumers actually consent to the terms and conditions applicable to an automated marketing campaign.

Despite the potential value of a mandatory arbitration provision, we all too often see cases in which a company has failed to properly implement it.  We just received another such example courtesy of the Eleventh Circuit Court of Appeals’ decision in Gamble v. New England Auto Finance, which centered on the ability of a lender to require its consumers’ TCPA claims to be resolved pursuant to arbitration, rather than in court.  The Eleventh Circuit’s opinion provides helpful, practical guidance for companies that seek to require their customers to arbitrate claims, and thereby prevent the companies from incurring the costs, publicity, and risks associated with trial.

The Facts:

The facts in Gamble are rather straightforward.  The defendant, New England Auto Finance (NEAF), loaned the plaintiff, Ms. Hope Gamble, the funds needed to purchase a car. In signing the loan paperwork, Ms. Gamble agreed to arbitrate any “claim, dispute or controversy … whether preexisting, present or future, that in any way arises from or relates to this Agreement or the Motor Vehicle securing this Agreement.” 

The same document Ms. Gamble signed to obtain the loan also sought her permission for NEAF to send her text messages.  However, Ms. Gamble’s consent to mandatory arbitration and to receiving text messages were not within the same document or signature block.  Importantly, the consent to receive text messages appeared after the signature block for the loan agreement (which contained the mandatory arbitration provision) and had its own, separate signature block.  Ms. Gamble signed the loan agreement, but did not sign the second signature block indicating consent to receive text messages.

After Ms. Gamble paid off her loan, she started receiving texts from NEAF offering her a new loan to purchase a new car.  Ms. Gamble eventually called NEAF asking that the company stop texting her.  But the messages continued, eventually leading Ms. Gamble to file a TCPA class action lawsuit in federal court.  On appeal to the Eleventh Circuit, the issue was solely whether the loan agreement’s arbitration provision extended to Ms. Gamble’s TCPA claim. 

In agreeing with the trial court, the Eleventh Circuit held that the loan agreement’s arbitration provision did not reach Ms. Gamble’s TCPA claim, and that her case should proceed in court rather than through arbitration.  According to the court, “Ms. Gamble’s TCPA claim … arises not from the Loan Agreement or any breach of it, but from post-agreement conduct that allegedly violates a separate, distinct federal law.  And NEAF’s sending of the text messages do not relate to or arise from its lending money to Ms. Gamble, Ms. Gamble’s repayment of that loan, or the vehicle which secured the loan.”  Furthermore, the court expressed its opinion that, because Ms. Gamble had not signed the signature block permitting NEAF to send her text messages, NEAF and Gamble had not reached an agreement authorizing the company to send her its marketing messages.

Several key lessons can be drawn from this decision:

  1. In order to minimize risk, an arbitration provision contained in a consumer contract should be clear that arbitration is the sole means of resolving disputes related to the receipt of autodialed calls or text messages. The provision should ideally reference the TCPA expressly.
  2. If a consumer contract includes a separate signature line for consent relating to the receipt of autodialed calls or text messages, it may be treated as an entirely separate contract. Therefore, it may be preferable to include an arbitration provision specific to the TCPA in that part of the agreement.
  3. Finally, and most obviously, if a consumer does not sign the signature block giving you consent to contact the consumer by call or text message, do not send that consumer any marketing messages.

The law regarding arbitration provisions and class action waivers has recently been clarified in ways that are helpful to businesses and you should take advantage of that. Therefore, if you have not reviewed your consumer opt-in processes and arbitration provisions in the last year, you should consider doing so.  The TCPA Defense Force can help your company with a TCPA Risk Assessment Audit and can identify and implement the risk mitigation strategies that will help protect your company in the event it becomes the target of TCPA litigation.



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About The Author

Meet David, our cultivator, dreamer, and norm disrupter. He advocates effortlessly in and out of the courtroom, leveraging his wealth of experience along the way. Constantly carving new paths, you can find David guiding his clients’ deals and big-picture strategies. The sky’s the limit.