Best Practices

Automated Dialing And SMS Platforms: Legal Risks And Mitigation

Legal risks of using automated dialing and SMS platforms and effective strategies for risk mitigation in this comprehensive guide.

History Of Automated Dialing & SMS Platforms

In the early 1960s, before automated dialing and SMS platforms existed, large companies began employing Private Automated Business Exchanges (PABX) to handle large numbers of inbound and outbound customer calls. Shortly thereafter, the first call centers began to appear. By the early 1970s, they started using PABXs that incorporated automatic call distribution (ACD) technology, which employed a primitive computer algorithm that allowed calls to be filtered and assigned to the best possible agent available at the time.

Until the 1980s, call centers connected to telephone networks using analog lines. But, from then on, the industry began to see the impact of digital connectivity. Technology continued to develop throughout that decade. The 1990s and the beginning of the 21st century saw the emergence of IP telephony systems, which allowed companies to transmit telephone calls over the Internet. This led to the development of modern internet-based dialing and SMS software solutions.

Automated dialing and SMS platforms are now ubiquitous and available to millions of Internet users, and numerous Customer Relationship Management (CRM) systems incorporate some degree of automated predictive dialing, texting, voice broadcasting, and ringless voicemail functionality into a comprehensive consumer engagement platform.

For the sake of brevity, for the remainder of this article, we’ll refer to all Internet-based platforms that enable users to automatically transmit calls, sms, or prerecorded messages as “platforms.”

Modern platforms place an enormous amount of communications power into the hands of their users, but in the immortal words of Stan Lee, “With great power comes great responsibility.” Platform operators are often unaware of the risks associated with making such technology available to anyone with a valid credit card. They blithely assume that their users will operate them in compliance with applicable law. If they fail to do so, operators may believe that any legal trouble that results falls solely on their users.

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Automated Dialing & SMS Platform Legal Risks

In fact, operating a modern dialing platform can expose its owners to a wide variety of legal risks, and the potential liability associated with some of them are nothing short of catastrophic. A few of those risks are summarized below.

TCPA class action and individual litigation against Platform users: The Telephone Consumer Protection Act (47 USC §227 et seq) (TCPA) includes a statutory private right of action that enables ordinary citizens to sue companies that place marketing calls or text messages to them in violation of the statute. The private right of action can be based on two (2) distinct types of violations.

(1) §227(b) ATDS/SMS/Robocall Violations: These are violations of the sections of the TCPA that restrict the use of an automated telephone dialing system (ATDS) and artificial or pre-recorded voices. Section 227(b)(1)(A)(iii) prohibits using an ATDS to call a number assigned to a cellular service, and (§227(b)(B) prohibits initiating any phone call to a landline using an artificial or pre-recorded voice, absent the prior express written consent (PEWC) of the called party.

(2) §227(c) DNC Violations: These are violations of the TCPA section prohibiting calls to any number listed on the National DNC Registry, as detailed in §227(c)(5), absent PEWC.

Although in this case, the TCPA litigation is being brought against platform users, those very users could conceivably seek legal recourse against the platform itself based on a fraudulent concealment theory. To state a claim for fraudulent concealment, the platform user must show that the platform had a duty to disclose material information (in this case, the legal risks associated with unrestricted use of the platform), and intentionally concealed or otherwise failed to disclose that information, which was otherwise unknown to the user. Disgruntled users served with a TCPA lawsuit after using the platform could also conceivably bring legal action against the platform under a breach of express or implied warranty theory.

Mitigating the Risk of User-Initiated Litigation:

Fortunately, mitigating the risk of user-initiated litigation against automated dialing and SMS platforms based on fraudulent concealment or breach of warranty theory is a relatively simple matter. First, the terms of service governing the use of the platform should include properly drafted limitations of liability, disclaimers, and indemnification provisions.

In addition, the platform’s user interface should notify users that federal and state regulations govern the transmission of automated phone calls and texts, and of the restrictions imposed by the National and state-specific DNC registries, along with time/day calling restrictions and the obligation to secure prior express written consent before contacting consumers. Platform operators should also properly inform users of the potential risks of violations, including the risk of consumer-initiated TCPA litigation.

Regulatory Enforcement Actions Brought Against Automated Dialing Platform Users:

The TCPA can be enforced by the Federal Trade Commission (FTC), the Federal Communications Commission (FCC), and state-level law enforcement agencies, typically the attorney general. In connection with their enforcement authority, federal and state regulators routinely conduct investigations into reported violations, which may result in civil and criminal litigation. Users defending a regulatory enforcement action might attempt to sue the platform based on the theories outlined above.

Mitigating the User Regulatory Risk:

The risk mitigation strategies outlined in the previous section will also help insulate the platform against user-initiated litigation triggered by regulatory enforcement actions against platform users. In addition, dialing & SMS platform operators would be well advised to provide their users with some general guidance on how to properly comply with the statutes, rules, and regulations that apply to using the platform.

TCPA Class Action And Individual Litigation Against The Automated Dialing & SMS Platform Operator:

Although dialing platform users are directly liable for the calls and texts they send using the platform, TCPA class action attorneys have made numerous attempts to hold platforms themselves directly or vicariously liable for the actions of the platform users. For example, costly litigation along these lines has been filed against Twilio[1], RingCentral[2], Voicent[3], Five9[4], Nextiva,[5] YTel[6], and Constant Contact[7], to name just a few. Although dialing platforms have a range of potent defenses in such cases, the cost of litigating those defenses can be significant, and the potential damages if they fail can easily drive the platform out of business.

In addition, it should be noted that for each of the many TCPA lawsuits filed against automated dialing platforms in state and federal court, there have been multiple out-of-court prelitigation settlements between platforms and TCPA litigants, resulting in millions of dollars flowing into the coffers of class action lawyers, which allowed the targeted platforms to circumvent the bottomless liability that can result from full-blown class action litigation.

Mitigating The TCPA Risk:

To mitigate the risk of TCPA litigation brought against platform operators, platforms should never determine the dates and times that user calls or texts should be sent (except when sending them would violate a day/time restriction), or from dictating the time, duration, frequency, or content of any calls or texts, which should be at the sole discretion of the user.

Platforms should also avoid providing consumer contact data, which can potentially result in an accusation that the platform operator is in the business of selling leads and initiating contact, as opposed to being a neutral tool.

Regulatory enforcement actions brought against the platform operator:

Perhaps the most severe risk automated dialing and SMS platforms face is a regulatory enforcement action brought by the FCC, FTC, or a state attorney general for facilitating illegal calls, robocalls, or SMS messages. The FCC’s recent focus on curbing the flow of illegal robocalls, including its orders requiring service providers to implement caller authentication technology, improve call-blocking efforts, and deploy other robocall mitigation strategies, underscores how important it is for platform operators to ensure they are doing everything within their power to prevent users from transmitting illegal robocalls. Failing to implement those strategies presents a host of FCC enforcement risks, and the agency has not hesitated to act against call platforms deemed to be responsible for illegal robocalls. For example, in 2017, the FCC issued a $2.88 million dollar fine against a platform operator for this very reason and has also sent cease and desist letters to voice service providers suspected of facilitating illegal robocalls.

Mitigating The Regulatory Risk:

The platform should monitor usage patterns and flag suspicious activity to mitigate the risk of regulatory litigation brought against automated dialing and SMS platform operators. For example, if the platform provides outbound DIDs, it should regularly search the FTC’s DNC complaint database to determine whether any of the numbers assigned to users have been reported to the FTC in connection with a DNC or scam-related complaint.

Likewise, the platform should track comments on consumer complaint blogs such as and the NoMoRobo Robcaller Lookup page to determine whether any user-assigned numbers are associated with any posts. The deluge of information shared by consumers on the Internet, while often wildly inaccurate, can sometimes reveal a kernel of truth.

If complaints tied to a particular user’s DIDs hit a pre-determined threshold, the platform should conduct an informal investigation to ensure that the user is not using the platform in an illegal or improper manner. In addition, it is incumbent upon the platform to maintain proper records of all numbers assigned to users, including the dates and times such numbers were under a particular user’s control.

Platforms should also carefully monitor any users whose activity triggered a regulatory subpoena. In addition, to responding to the subpoena, the platform should undertake a thorough internal investigation to determine whether there is anything suspicious in the usage patterns of that particular user, and take immediate if such patterns become evident.

Finally, dialing platforms should instruct their users to maintain the integrity of the caller IDs issued to them by properly registering their campaigns, rigidly adhering to all consumer DNC and stop requests, monitoring and responding to any consumer-initiated complaints, and undertaking all steps necessary to ensure compliance on an ongoing basis.

The bottom line is this: If a platform is aware that a user is violating the law (or should have become aware had it taken the steps outlined above), it must suspend that user immediately, rather than assist the user to engage in additional violations.

[1] Schuster v. Twilio, Inc., filed in the Middle District of Florida on July 9, 2019, and Wick v. Twilio, Inc., filed in the Western District of Washington on June 15, 2016.

[2] Supply Pro Sorbents, LLC v. RingCentral, Inc., filed in the Northern District of California on April 21, 2016

[3] John v. Voicent Communications, Inc., filed in the Southern District of Florida on January 7, 2016

[4] Linlor v. Five9, Inc., filed in the Southern District of California on December 27, 2017

[5] Hernandez v. Nextiva, Inc., filed in the Central District of California on April 19, 2017

[6] De La Cabada v. Ytel, Inc., filed in the Northern District of California on October 30, 2019

[7] Warner v. Constant Contact, Inc., filed in the Southern District of Florida on November 6, 2019