On October 17, 2012, the U.S. Court of Appeals for the Ninth Circuit held that the Telephone Consumer Protection Act of 1991 (TCPA) applies to automated telephone calls made to customers already enrolled in a retailer’s “rewards” program, finding that even informational calls can constitute telemarketing.

In Chesbro v. Best Buy Stores L.P., Dkt. 11-35784 (9th Cir. Oct. 17, 2012), Michael Chesbro filed a class action lawsuit after receiving automated telephone calls on his residential line from Best Buy regarding his enrollment in a Best Buy rewards program.  The automated calls provided information concerning program benefits and informed him of the expiration date of certain program coupons.  The district court granted summary judgment in favor of Best Buy, holding that the TCPA didn’t apply because Best Buy’s phone calls were merely courtesy calls and did not advertise specific goods or services. 

The Ninth Circuit reversed, stating that the calls “urged the listener to redeem his Reward Zone points,” and “[r]edeeming Reward Zone points required going to a Best Buy store and making further purchases of Best Buy’s goods.  Therefore, the Court held that the calls were “unsolicited advertisements, telephone solicitations, and telemarketing” since they “were aimed at encouraging listeners to engage in future commercial transactions with Best Buy to purchase its goods,” and“[a]ny additional information provided in the calls does not inoculate them.”  The Court also summarily determined that Chesbro did not give his prior express consent to receive the calls.

Chesbro makes clear, at least in the Ninth Circuit, that service or informational calls to customers regarding a rewards or loyalty program may violate the TCPA if the calls encourage the customer to engage in future commercial transactions.  Therefore, companies with such programs should review their automated customer service and informational calls to ensure that they will not be construed as advertising or solicitation, or perhaps discontinue such calls altogether.  In addition, Chesbro highlights the importance of being able to prove customers’ prior express consent to receiving calls subject to the TCPA.