TCPA – Collectors Not Vicariously Liable For Text Messages

In a recent case concerning violations of the Telephone Consumer Protection Act (“TCPA”) a federal appellate court affirmed a ruling in favor of payday lenders and lead-generating vendors, holding that these defendants could not be held vicariously liable for the actions of a non-party “publisher” that sent a text message to numerous individuals on behalf of the defendants. Vicarious liability typically occurs when an employer is held liable for the acts of an employee or agent, if the employee’s actions took place in the course of employment.  This case provides businesses and attorneys insight into the breadth of TCPA liability for those engaged in text messaging campaigns.

In this case, the defendant-lenders hired LeadPile, a vendor to deliver consumer leads. LeadPile, in turn, hired Click Media to obtain those leads.  Click Media then hired AC Referral, a lead-generation vendor; and also the entity that sent the text message at issue.  AC Referral was not named in the suit and the plaintiffs argued the defendant-lenders were vicariously liable for the actions of AC Referral.

For context, AC Referral sent the following text message to a list of numbers on behalf of the defendants:

Do You Need up to $5000 Today? Easy Quick and All Online at: 24 Month Repay, All Cred. Ok Reply STOP 2 End.

Plaintiffs alleged the lenders had knowledge of the use of the text messages, and therefore ratified AC Referral’s activities.

While ruling in favor of the lenders, the court held that a “seller” of goods or services is not directly liable for calls or texts sent by a “telemarketer” on its behalf.  The only time conduct by a third party is considered ratified is when the third-party acts or purports to act as an agent.  In this case, the third-party publisher had no contracts with the lender defendants.

However, the court noted that defendants do have a duty to investigate that its employees are complying with the TCPA.  Importantly, “knowledge that an agent is engaging in an otherwise commonplace marketing activity is not the sort of red flag that would lead a reasonable person to investigate whether the agent was engaged in unlawful activities.”  Therefore, the defendants did not ratify the third party’s actions.

The important guidance here is that knowledge of a commonplace marketing activity does not, under the law, impart a duty on a reasonable person to investigate its agent.  However, when engaging a third-party vendor, companies should ensure all parties comply with the TCPA.  This includes obtaining prior express consent.


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