Best Buy forced to settle a TCPA class action lawsuit for $4.5m

Best Buy Co., Inc. (“Best Buy”), one of the largest electronics retailers in the country, is the latest business forced to settle an action brought pursuant to the Telephone Consumer Protection Act (“TCPA”).  According to the settlement agreement reached with the Federal Communications Commission (“FCC”), Best Buy has agreed to pay over $4.5 million in an effort to settle a pending TCPA class action lawsuit.  The TCPA class action settlement, which must still be approved by a federal judge, will conclude the class action lawsuit against Best Buy that was filed in the United States District Court for the Western District of Washington in April 2010.

TCPA Allegations against Best Buy

According to the underlying complaint, whenever purchases were made from Best Buy, Best Buy would automatically, and without the consumer’s knowledge, sign the consumer up for Best Buy’s Reward Zoneprogram.  Pursuant to the terms of the Reward Zone program,  consumers earn 1 point for every $1 spent at Best Buy.  Once the consumer reaches 400 points, he/she will receive a $5.00 credit to be redeemed at Best Buy.

Mr. Michael Chesbro, the named plaintiff acting on behalf of a class of consumers totaling more than 481,000 individuals, alleged that Best Buy used automated calls to contact consumers that were Reward Zonemembers, without obtaining prior consent in violation of the TCPA and Washington’s Automatic Dialing and Announcing Act.

The TCPA Class Action Settlement

Best Buy negotiated the TCPA class action settlement terms over many months, and on June 11, 2014,  negotiated a settlement amount of $4.5 million to stop the case from proceeding to trial.  After court expenses and fees are deducted from the settlement fund, $3.2 million will be divided up amongst the 481,000 members of the class.  This means that each member of the class will receive approximately $6.50 from Best Buy.  Additionally, pursuant to the settlement terms, Best Buy has agreed to refrain from further violating the TCPA and applicable Washington State law.

Protect Yourself against TCPA Class Action Claims

The TCPA has become the new favorite statute of class action plaintiff’s lawyers across the country.  We have been following a number of class action TCPA cases on a nationwide basis.  This wave of TCPA litigation has resulted in a number of substantial settlement awards, some amounting to over $30 million.  Because of this, it is becoming increasingly important for businesses to understand the scope of the TCPA and act affirmatively to protect themselves against class action claims and regulatory investigation.

To that end, it should be noted that courts in TCPA actions often look to the affirmative efforts of an officer/owner to determine whether he/she directed the acts which resulted in the alleged TCPA violation.  Where the officer/owner undertook deliberate efforts to implement TCPA compliant policies, courts will often rely upon this fact in denying personal liability and dismissing the TCPA action.  Clearly working closely with seasoned marketing lawyers is a critical component of such defense.