Auto dealers need to carefully review their third-party vendor agreements to ensure they comply with the Telephone Consumer Protection Act, a federal law to protect consumers from unwanted communications.
That’s what three Harris Beach Murtha attorneys wrote in the most recent edition of the Massachusetts State Auto Dealers Association magazine. Attorneys Thomas S. Vangel, Lindsey M. McComber and James F. Radke, members of the firm’s Automotive and Vehicle Dealerships Industry Team, write a regular column for the association and tackled the subject of third-party vendors complying with the TCPA on page 32 of the latest edition. It is also available in this pdf document.
The three noted auto dealers are more routinely relying on third-party vendors to engage with customers and market their inventory and that increases risk under the TCPA, which is enforced by the Federal Trade Commission.
“Calling or texting a number using an autodialer without obtaining prior express written consent for marketing calls or texts violates the TCPA.,” they wrote. “Additionally, the law requires businesses to include a clear opt-out mechanism with any text messages they send… Because these damages are calculated on a per-violation basis, violations can result in steep penalties in class action lawsuits.”
The attorneys detailed a Massachusetts case where an auto dealer was targeted in a class action lawsuit because a third-party vendor called potential callers despite their names being on the national do-not-call registry.
Fortunately for the dealership, the vendor had a website with detailed terms and conditions that contained an arbitration provision, and the plaintiff consented to those terms when she enquired about a car in 2024. The court found the plaintiff was bound by her arbitration agreement.
“This ruling is significant. The dealership will likely avoid the substantial expense of a class-action lawsuit, because the arbitration agreement contained a class-action waiver,” the attorneys wrote. “It is critical that dealers understand the risks of using third-party lead generators and/or AI tools to initiate contact with potential customers. Dealers and their counsel should carefully review their vendors’ terms of service to ensure that they are protected. Dealers must also train their personnel and maintain written policies and procedures to prevent TCPA violations and avoid the significant financial and reputational harm that can result from a violation.”
Read the full article for more details.
