On November 6, 2025, the Ecommerce Innovation Alliance (EIA), along with co-plaintiffs Postscript and Flux Footwear, achieved a decisive legal victory through settlement with the State of Texas in litigation challenging Texas Senate Bill 140 (SB 140). The settlement in Ecommerce Marketers Alliance, Inc. et al. v. State of Texas et al (Case No. 1:25-cv-01401, Western District of Texas) clarifies a critical issue discussed in previous articles: who must obtain a registration certificate before sending marketing messages to Texas residents?
Quick Article FAQs
What regulatory confusion did the Texas SB 140 litigation resolve for businesses engaged in SMS marketing?
The settlement clarified that businesses sending text messages exclusively to consumers who have affirmatively consented are not considered “telemarketers” under Texas law and are exempt from the registration requirements of Chapter 302, thereby removing uncertainty and compliance burdens for legitimate marketers
Does the SB 140 settlement eliminate legal risk when sending SMS in Texas?
No. While the settlement provides registration relief for consent-based marketing, private rights of action under the DTPA remain available to consumers, and businesses must still follow strict consent protocols and other substantive requirements to avoid liability
What steps should businesses take to remain compliant in Texas after the SB 140 settlement?
Businesses should ensure robust, documented consent practices, where consumers clearly and affirmatively opt-in before receiving marketing messages. Proper disclosures regarding sender identity, message nature, and opt-out options are essential, and ongoing legal and regulatory developments should be monitored for future changes
Background: The Texas SB 140 Controversy
As discussed in prior articles, Texas Senate Bill 140, signed by Governor Greg Abbott on June 20, 2025, and effective September 1, 2025, significantly expanded the state's telemarketing laws to encompass text messaging, multimedia messaging, and similar electronic communications. The bill's stated purpose was laudable: curbing abusive spam and scam text messages that consumers did not wish to receive.
Prior to SB 140, Chapter 302 required businesses engaging in "telephone solicitation" to register with the Texas Secretary of State, posting a $10,000 security bond and paying a $200 annual registration fee. However, the registration form mandated extensive disclosure of sensitive information. In addition to detailed descriptions of products and services and copies of sales scripts, the form also required the names of all principals, officers, and directors, along with their sensitive personal information such as home addresses, dates of birth, and driver's license numbers. All of this information becomes part of the permanent public record, exposing proprietary business strategies and sensitive personal information to competitors and the public.
Beyond registration burdens, SB 140 dramatically increased litigation risk by establishing direct private rights of action under the Texas Deceptive Trade Practices and Consumer Protection Act (DTPA) for violations of Chapters 302, 304, and 305. Previously, consumers faced procedural barriers, including mandatory administrative complaints before pursuing litigation under certain provisions. The new framework permits consumers to bypass these prerequisites and file lawsuits immediately, with available remedies including statutory damages of $500 to $5,000 per violation, which could be tripled for knowing or intentional violations.
The SB 140 Registration Conundrum
As SB 140's September 1st effective date approached, the ecommerce and SMS marketing industries faced widespread panic and confusion, with many companies that exclusively conducted consent-based marketing wondering whether the registration requirement applied to them. The law's vague language left businesses unable to determine with certainty whether they fell within regulatory scope, particularly regarding how to determine "purchaser location" in real-time and whether exemptions for "customers" applied to their campaigns.
Many small and medium-sized businesses faced an impossible choice: incur substantial registration costs ($10,000 bond plus $200 fees, legal consultation expenses, and ongoing compliance costs estimated at $2,000-$5,000 annually, abandon the Texas market entirely, or risk catastrophic liability exposure.
According to exclusive data obtained by the EIA from the Texas Secretary of State, as of September 19, 2025—three weeks after SB 140 took effect—only a handful of new registrations had been processed and approved, suggesting that most businesses determined they did not fall within the law's scope, or simply ceased Texas SMS marketing operations.
The SB 140 Constitutional Challenge
On September 1, 2025—the same day SB 140 took effect—the Ecommerce Innovation Alliance filed a federal lawsuit in the Western District of Texas, Austin Division, seeking declaratory and injunctive relief. Co-plaintiffs included Postscript, a leading SMS marketing platform and EIA board member, and Flux Footwear, LLC, a Texas-based ecommerce brand. All the plaintiffs operated exclusively consent-based text message marketing programs, sending communications only to consumers who had affirmatively opted in to receive such messages.
The complaint advanced two primary constitutional arguments:
1. First Amendment Violation: Chapter 302, as expanded by SB 140, unconstitutionally restricts protected commercial speech by imposing registration, bonding, and disclosure requirements on businesses engaged in consensual, non-deceptive communications with customers who have requested to receive marketing messages.
2. Void for Vagueness: SB 140's undefined key terms—including "purchaser located in the state," "customer," "retail establishment," and inconsistent references to "call," "telephone call," and "telephone solicitation"—render the statute unconstitutionally vague, providing insufficient notice of prohibited conduct and enabling arbitrary enforcement
The plaintiffs sought preliminary and permanent injunctions prohibiting enforcement of Chapter 302's requirements against businesses operating consent-based text messaging campaigns.
The Main Dispute
The main legal dispute centered on a critical question of statutory construction: what does the term "call" mean in Chapter 302's expanded definition of "telephone solicitation"?
SB 140 amended the definition to read: "A call or other transmission, including a transmission of a text or graphic message or of an image, initiated by a seller or salesperson to induce a person to purchase, rent, claim, or receive an item." The amendment notably removed the word "telephone" before "call," leading many to conclude that the definition no longer incorporated limitations found elsewhere in Texas law.
However, Chapter 304 of the Texas Business & Commerce Code defines "call" as "a telephone solicitation"—and critically, excludes from the definition of "telephone solicitation" communications made to persons with whom the telemarketer has an "established business relationship" or to persons who have provided prior express written consent.
The plaintiffs argued that by removing "telephone" from Chapter 302's definition, the legislature severed the critical link to Chapter 304's consent-based exemption, inadvertently bringing legitimate opt-in marketing within regulatory scope. The State countered that despite the textual change, "call" must still be read as "telephone call" incorporating Chapter 304's definitions and exemptions.
Response and Settlement
On September 26, 2025, the State of Texas filed its opposition to the plaintiffs' motion for preliminary injunction, presenting an interpretation that fundamentally resolved the dispute. The Attorney General's office articulated several key positions:
1. Consent-Based Programs Exempt: The State does not interpret SB 140 as extending Chapter 302's registration requirements to businesses operating consent-based marketing programs.
2. Statutory Purpose: Applying SB 140 to consent-based marketing would be "at odds with the stated purpose" of the law and "teeters on absurdity," given that the statute exists to protect consumers against "false, misleading, or deceptive practices in telephone solicitation business."
3. Definitional Continuity: Despite textual changes, Section 302's definition of "call" should be interpreted to mean "telephone call" as defined in Chapter 304, thereby incorporating consent-based exemptions.
4. No Enforcement Intent: The Attorney General represented that no enforcement action would be taken against businesses sending messages with consumer consent, and that his enforcement authority is discretionary rather than mandatory.
The State's position effectively conceded the plaintiffs' core concern: that businesses operating compliant, opt-in SMS programs should not be subjected to registration requirements designed for spam and deceptive solicitations.
Settlement Terms and Dismissal
Following the State's clarifying representation, the parties filed a joint motion to dismiss the case without prejudice on November 6, 2025. The stipulation of dismissal confirmed that "businesses which operate consent-based text message marketing campaigns are specifically exempted from Chapter 302" and are not required to comply with its registration and disclosure requirements.
The Texas Secretary of State formally agreed to update public-facing website guidance, explicitly stating that businesses engaging in consent-based text messaging are not required to complete the Telephone Solicitation Registration Statement (Form 3401) or post the $10,000 security deposit.
Settlement Offers Compliance Clarity
The settlement provides immediate, substantial relief to thousands of businesses operating legitimate SMS marketing programs. Companies that had registered with the Texas Secretary of State may now reassess whether continued registration is necessary, potentially recovering the $10,000 bond and avoiding ongoing quarterly reporting burdens.
Businesses that had ceased Texas SMS operations or delayed program launches due to SB 140 uncertainty can now proceed with confidence, provided they maintain compliant consent-based practices. The clarification eliminates the need for expensive legal consultations regarding registration obligations, reducing compliance costs that many estimated at $2,000-$5,000 annually.
While the settlement provides critical clarity, it hinges on the term "consent-based text message marketing programs," requiring businesses to understand what constitutes sufficient consent under Texas law. The settlement's effectiveness depends on businesses implementing robust consent practices that align with both federal TCPA requirements and Texas standards.
In other words, to avoid the registration requirement, businesses should ensure consumers affirmatively opt-in before receiving marketing messages, with consent obtained through clear, unambiguous mechanisms (checkboxes, keyword campaigns, web forms). The request for consent must be clear and conspicuous, and disclose the name of the company, the nature of the messages, and inform consumers that their consent is not required for the purchase of any goods or services.
The settlement does not alter these fundamental consent requirements—it simply confirms that businesses meeting these standards are not subject to Chapter 302's additional registration regime.
Continued Liability Exposure
Despite the settlement, the Lone Star State is not completely safe for marketers. Several important limitations and ongoing risks remain, not the least of which is the expanded private right of action under SB 140.
While the Attorney General has clarified his enforcement position, the settlement does not bind private litigants. SB 140's enhanced private rights of action under the DTPA remain available to individual consumers who claim violations of Chapters 304 and 305 (such as contacting numbers on the Texas No-Call List or sending messages without proper consent).
And, while the settlement resolves the consent-based marketing question, other definitional ambiguities in SB 140 remain unaddressed, including how to determine "purchaser location" in real-time for mobile recipients who may travel across state lines.
Forward-Looking Considerations
The settlement of the EIA litigation against Texas represents a significant victory for consent-based SMS marketing, establishing clear legal boundaries that distinguish legitimate opt-in communications from the spam and deceptive solicitations targeted by SB 140. By confirming that businesses sending messages exclusively to consumers who have provided prior, affirmative consent are not subject to Chapter 302 registration requirements, the settlement eliminates substantial regulatory uncertainty and compliance burdens that threatened the viability of SMS marketing programs.
The settlement underscores a fundamental principle that should guide SMS marketing regulation: the law should target harmful, unwanted communications while preserving channels for consensual, value-adding interactions between businesses and their customers.
Looking forward, businesses should anticipate continued regulatory evolution at both state and federal levels. The EIA settlement provides a roadmap for how industry advocacy, combined with factual demonstration of legitimate business practices, can achieve reasonable regulatory interpretations that protect consumers without stifling innovation and growth in digital marketing channels. By maintaining strong consent practices, comprehensive documentation, and ongoing compliance monitoring, marketing professionals can confidently leverage SMS as a powerful, effective channel while managing legal risk in an evolving regulatory landscape.
