The Supreme Court sided with businesses in two cases this month that lessen the powers of the Federal Trade Commission and narrow the scope of the Telephone Consumer Protection Act. The decisions were victories for companies, including auto dealerships and lenders. Still, legal experts say compliance in both instances remains vital.
Though the FTC’s ability to retrieve ill-gotten gains from businesses and return them to consumers is impacted, it likely won’t change how the agency approaches its cases against auto dealerships, said Michael Goodman, a partner at Hudson Cook.
Several cases the FTC brought against dealerships were resolved without including monetary redress or penalties, he said.
“That kind of relief is more common when the FTC believes there has been consumer harm,” he said. For the agency to seek monetary redress, “it would have to be a pretty extreme advertising case against the dealer.”
The FTC can still investigate dealerships and bring cases against them, which can be cost-intensive, Goodman said. For example, if a dealer was improperly charging or failing to disclose exorbitant fees, he said, and “if consumers were out real money, that’s when the FTC would typically look to get something back to consumers.”
In the second case, the court decided that technology with the capacity for automated dialing doesn’t necessarily mean the company is liable. That said, the Telephone Consumer Protection Act still applies to business operations that contact consumers, said Scott Helfand, a partner at Husch Blackwell. Based in Chicago, Helfand defends consumer financial services providers, insurers and other businesses.
“When you get into a battle with technology experts, it is extremely expensive to litigate,” Helfand said. “This is not the time to throw out your TCPA compliance manual.”
It’s still important to get consent from customers before contacting them over email or through their telephone, he said, which includes text messages.
For example, if a consumer’s number is listed on a Do Not Call list, using that number without their consent still violates the act, whether or not a company uses an auto dialer, Helfand said.
Another distinction is knowing which communications require express consent — which can be verbal or written — and express written consent.
“You just need express consent, which can be a product of a customer merely providing his or her phone number,” he said. “If you want to make marketing calls, you need express written consent.”
Both decisions remove costly compliance risks for dealerships and auto lenders, but ultimately it’s important for the industry to remain vigilant.