Text Marketing Backfires, Chain Faces $250M Class Action

In a world of evolving technology, it's no surprise that businesses are trying everything they can to reach consumers.

Chicago small business lawyers know one method that has proven especially effective is text messaging. It tends to generate quick results because it is blasted straight to the phones of thousands of consumers with little effort and minimal expense.

In fact, it may cost you less than 1 penny per text - unless, of course, you don't get permission first.

That is the lesson that pizza chain Papa John's appears to be learning the hard way, as a federal judge in Seattle allowed a case against the pizza giant to be granted class action status, paving the way for participants of the case to seek $500 for each unwanted promotional text received in 2010. It is slated to become the largest anti-spam lawsuit in history. All total, the company, in conjunction with its contractor OnTime4U, blasted about 500,000 messages, which plaintiffs contend were unsolicited and therefore illegal.

Some consumers said they were getting 15 or more text messages from the chain, one right after the other, sometimes in the middle of the night. The messages offered deals for pizza.

Reportedly, all it took was for these consumers to purchase a pizza. The company would save the phone number obtained from the order and forward it to its marketing team at OnTime4U. However, it did not request permission from customers before the information was forwarded.

The first lawsuit was filed in the spring of 2010, and prompted the company to cut ties with the promotional firm and issue a warning to all of its corporate employees and franchise owners that such tactics were "most likely illegal."

As far as can be ascertained, it does not appear the company continued with these texting promotions after it received complaints.

The Telephone Consumer Protection Act, found in 47 U.S.C. 227, holds that it is illegal for a company to send an unsolicited advertisement via telephone (or text, or fax or e-mail) unless the consumer has given prior express permission.

Regardless of what happens with Papa John's, there are a few things that businesses and advertisers can take away from this case. One is that getting permission is key. If you are a small business with concerns about how to obtain this permission legally, you need to contact an experienced business lawyer for advise.

Secondly, you won't likely be able to claim you weren't liable just because the messages were sent by a third party.

Thirdly, you have to be careful in assuming that the more text messages you send, the better the return on investment. In this case, the fact that the company sent out hundreds of thousands of messages ultimately led to the lawsuit and nothing but grief. Those customers who received multiple messages at all hours were not apt to go buy more pizza - they were irritated.

Before you get any major marketing effort off the ground, it's a good idea to consult with an attorney to make sure your efforts will be in compliance with all local, state and federal laws.

Jeremy A. Gibson & Associates is a law firm dedicated to business litigation in Chicago and elsewhere in Illinois. Call 877-452-4529 for a free consultation.

Additional Resources:
Papa John's faces $250 million spam lawsuit, Nov. 13, 2012, By Olivia Smith, CNN Money