Use of Text Messages by Insurance Agents

All the marketing articles I have seen recently advise insurance agencies and other businesses to be accessible to their customers and potential customers using every means of communication available.  One of those means is sending text messages to a mobile telephone number.  The IIABA recently published a memorandum on the legal requirements that must be met by insurance agencies and agents who choose to communicate with customers and potential customers using text messages.  The memorandum includes sample forms for use in complying with those requirements.

The legal requirements are based on the Telephone Consumer Protection Act (“TCPA”).  The passage of the TCPA in 1991 was in response to the growing number of unwanted calls from telemarketers and the avalanche of advertisements being sent to telefax machines.  It imposed limitations on those marketing methods, one of which was the need to obtain the consent of the recipient of any telefax intended as an advertisement.  The TCPA was passed before there were text messages, but the Federal Communications Commission (“FCC”) has interpreted its provisions to cover the sending of such messages.

In fact, the FCC has taken a very restrictive view of what the TCPA requires for text messages sent for a commercial purpose.  The FCC has ruled that statute covers all text messages sent for a commercial purpose, even if they are to sent to only one person.  The FCC has also held that, unlike many other commercial communications, the fact that the recipient of a text message has an existing business relationship with the sender of the message does not exempt the sender from the requirement of obtaining the prior written consent of the recipient to the sending of such a message.  It appears that this requirement even applies before an insurance agency or agent can reply to a text message initially sent to them by a customer or potential customer.

The IIABA memorandum notes that many agencies and agents may choose not to follow the legal requirements, especially when the text messages are sent by or to a customer about their existing policy.  Why this is the case can be seen by examining the sample forms attached to the memorandum.  While the consent, or opt-in form, is a manageable one page document, the sample terms and conditions that will apply to the use of text messages is five pages long and filled with legal jargon that will likely make any customer or potential customer think long and hard about whether to sign the consent form.  The jargon includes disclaimers of liability and warranties, a waiver of the right to participate in class actions, and a requirement to arbitrate any dispute.

As noted in the memorandum, if an agency or agent intends to use text messages for mass marketing purposes, they should follow the above legal requirements with respect to every person to whom such messages are sent.  If for no other reason than each recipient of a text message sent in violation of those requirements is eligible to receive their actual damages or $500, whichever is greater.  If the court finds the sender of the message did so knowing it was in violation of the law, the amount awarded as damages can be increased by up to three times.

Given the requirements imposed by the FCC on the use of text messages for commercial purposes and the amount of damages that can be claimed for a violation of those requirements, agencies and agents will need to carefully weigh the risks and benefits of using that means of communication with their customers and potential customers.