No Arbitration Without Clear and Enforceable TCPA Terms

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Forming a contract is not as straightforward as it was even 20 years ago. With the application of the Telephone Consumer Protection Act (“TCPA”) to digital marketing, TCPA terms became a crucial component of the formation of a contract between consumers and telemarketers. The Second Circuit Court of Appeals addressed a tricky aspect of this digital contract dance, specifically the issue of conspicuous Terms and Conditions and their impact on enforcing a constituent arbitration provision. The case is captioned Soliman v. Subway Franchisee Advertising Fund Trust.

How do TCPA terms affect arbitration enforcement?

Generally, marketing campaigns have certain Terms and Conditions attached to them that consumers agree to abide by in order to take advantage of applicable offers. In Soliman, a consumer signed up for Subway’s rewards program by texting to a Subway-owned short-code. Wishing to receive fewer messages, Soliman subsequently requested to be removed from the contact list. When more text messages arrived, she sued Subway for various TCPA violations. Subway moved to compel arbitration claiming that the print ad that enticed Soliman to sign up for the rewards program referenced that participation was subject to certain Terms and Conditions. Those TCPA terms were located on Subway’s website and included a provision requiring that all disputes were subject to resolution through arbitration. Both parties agreed that Soliman never read the Terms and Conditions.

After the district court denied the motion to compel arbitration, Subway appealed. On appeal, the Court addressed the question of whether a reasonably prudent consumer in Soliman’s position would have known to ask about or otherwise search for the Rewards Program Terms and Conditions on Subway’s website. The Court found that neither the print ad nor the text messages at issue were so clear and conspicuous as to place Soliman on notice of the Terms and Conditions. Thus, no contract was formed, and Subway could not enforce the mandatory arbitration provision contained in the Terms.

Why does the Soliman case matter to your business?

On the surface, the Soliman decision appears to be about a technical legal issue. However, the decision provides a call for telemarketers to at least make the application of their website or rewards program Terms and Conditions clear and conspicuous and, preferably, to actually send the consumer a specific link to the TCPA terms to ensure that they are fully enforceable. Whether the Terms and Conditions apply to website use or to a marketing campaign, their purpose is to protect telemarketers and provide clear rules of the road for any and all future disputes.

Without clear and enforceable TCPA terms, telemarketers open themselves up to uncertain and likely costly TCPA demands or even litigation. For example, imagine that a Telemarketing, Inc. is based in New York and markets nationwide. It does not have clear and enforceable Terms and Conditions that consumers must abide by. Without those clear and enforceable TCPA terms, any consumer who alleged a TCPA violation could sue Telemarketing, Inc. anywhere in the U.S. Hiring local attorneys, keeping track of local rules, and funding expensive litigation across the country is neither predictable nor cost effective.

Conversely, imagine that Telemarketing, Inc. had clear and enforceable TCPA terms that included a requirement that all disputes be resolved through binding arbitration in New York and that each consumer agrees to waive any class action participation. Now it has centralized all dispute resolution, protected itself against class action litigation as best it can, and otherwise created a predictable process and cost structure for resolving TCPA disputes.

Companies may choose arbitration to resolve disputes for any number of reasons. They may also choose the jurisdiction in which the parties must resolve any disputes and which state’s law will apply. TCPA terms provide predictability and should be an important part of every future marketing campaign.

Hire experienced TCPA attorneys.

Making sure that your TCPA terms are both up-to-date and adequately protect your business is vital. The requirements for enforcing program or website Terms and Conditions often change. Hiring an experienced team of TCPA attorneys can help your business stay TCPA compliant and ensure that your Terms and Conditions are fully enforceable. The attorneys at Klein Moynihan Turco focus on all things TCPA and can help update your program or website Terms and Conditions so that you can stay current with the ever-evolving TCPA landscape. If you need assistance creating or updating your Terms and Conditions, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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Photo by Sara Kurfeß on Unsplash

Related Blog Posts:

The Importance of Well-Drafted Terms and Conditions

CFPB Plans to Regulate Certain Consumer Arbitration Agreements

TCPA Consent – A Cautionary Tale

David O. Klein

David O. Klein

David Klein is one of the most recognized attorneys in the telemarketing, technology, Internet marketing, sweepstakes and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

(212) 246-0900

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