The TCPA regulates what consent and how businesses can call residential landlines and call and text cell phones. A direct selling company may be liable under the law for calls made by its distributors. In Makaron v. Enagic USA, Inc., No. CIV 15-05145, a California court certified a class action against the Enagic USA based on allegations that Enagic distributors made calls that violated the TCPA.
The TCPA requires a business that is calling a residential landline or cell phone with a marketing message, using a prerecorded message or artificial voice, to have the recipient’s prior express written consent. That same prior express written consent is required for a business to call or text a cell phone using an autodialer. Consumers can sue for $500 to $1,500 per call or text message, and class action settlements and judgments can reach into the multi-millions for nationwide class action cases.
A company can be held liable even for TCPA violations of its independent contractors. In Makaron, the plaintiff alleges that Enagic is liable because the distributors were employees of Enagic, or the company had sufficient control over how distributors made calls, or the company knew about and approved of the distributors’ calling methods that allegedly violated the TCPA. The plaintiff will of course have to submit sufficient evidence for these assertions to actually impose liability on Enagic. But the U.S. District Court for the Central District of California found there was sufficient information to certify a nationwide class action against Enagic. 2018 WL 1311400 (C.D. Cal. Mar. 13, 2018).
Takeaway: Having sufficient language in contracts and company policies to require TCPA compliance by independent contractors, such as distributors, is essential to avoiding TCPA claims. Companies should also be alert to complaints about independent contractors violating the TCPA, and avoid any action that could be considered even tacit approval.