“LOANMOD TXT MSGS VIOL8 LAW, SEZ FTC.” So reads the headline on the Federal Trade Commission’s Bureau of Consumer Protection’s Business Center Blog. The posting announced the FTC’s complaint against a marketer who sent more than 5.5 million spam text messages at a “mind boggling” rate of about 85 per minute, every minute of every day. Allegedly, most or all of the messages were unsolicited, and, like most text messages, they caused many recipients to incur standard text messaging charges.
The complaint, which was filed in U.S. District Court for the Central District of California, is significant because it appears to allege that this “unfair transmission of text message spam” alone constitutes a violation of Section 5 of the Federal Trade Commission Act. The FTC reasons that this activity “has caused or is likely to cause substantial injury to consumers that consumers cannot reasonably avoid themselves and that is not outweighed by countervailing benefits to consumers or competition.” If the FTC prevails on this theory, it would represent a significant expansion of its enforcement authority in the text messaging space.
The FTC and the Federal Communications Commission (the “FCC”) have somewhat overlapping enforcement authority in the telemarketing space, and each has promulgated relevant regulations. Traditionally, only the FCC has argued that its regulations govern unsolicited text messages (by interpreting the word “call” in its regulations to include text messages). Private litigants have adhered to this interpretation, bringing lawsuits for unsolicited text messages under the Telephone Consumer Protection Act of 1991, the federal law under which the FCC promulgated its regulations. In this enforcement action, the FTC does not argue that the defendant violated its Telemarketing Sales Rule. Instead, the FTC seeks to demonstrate how the FTC Act’s long-established restrictions on unfair or deceptive trade practices can be adapted to protect consumers from harm caused by the abuse of modern technology.