Stefan SchulzText messaging marketing, or SMS marketing, has become increasingly popular because of its high returns on investment (ROI). In fact, the average ROI for SMS marketing in 2021 can be nearly 500% when properly implemented.
Due to these high success rates, floods of marketers, including smaller businesses, are implementing text message marketing into their arsenals. Many of these SMS platforms have streamlined implementations that make it easy to send out hundreds or thousands of messages with a push of a button.
There are, however, some concerns with text message marketing. As is the case with burgeoning business practices, there are plenty of regulations and laws to consider when implementing an SMS marketing plan.
In this article, we’ll be digging into the less-fun area of text message marketing. We’ll discuss text message marketing laws in America, Canada, and the EU while outlining what business owners should be aware of to be compliant with each law.
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Problems With Text Message (SMS) Marketing
While text message marketing allows businesses to reach wide audiences, the practice still comes with its fair share of issues. Sending promotions and reminders can bring you more conversions, but what if consumers don’t want those intrusions?
Just as spam and unwanted marketing emails have become an issue over the years, consumers share that sentiment with text message marketing practices. Without proper knowledge of SMS marketing laws, businesses might send unwarranted and irrelevant information about products and services.
Thus, spam has become another issue for text message marketers, and laws exist to shield consumers from unwanted text messages.
Furthermore, some companies might be acting maliciously and use SMS marketing techniques to get private information about their customers. In some cases, they’re unethically seeking consumer information without any intention of selling them any products or services.
As such, government institutions have stepped in to protect consumers from information thieves as well as unwarranted spam. The Cellular Telecommunications Industry Association (CTIA) is one of the acting authorities for imposing ethical text message marketing practices in the U.S.
Organizations such as the Mobile Marketing Association (MMA), the Federal Trade Commission, and the Federal Communications Commission are all monitoring, enforcing, and regulating SMS marketing rules.
But why is it important for businesses to pay close attention to text message marketing laws?
The Importance of Compliance
Just as breaking other laws and regulations reflect poorly on any company, infringing on text message marketing regulations can put a damper on your brand’s reputation.
For a field such as SMS marketing, where you’re addressing consumers in a much more private and direct manner, breaking these laws place implications on your company’s sense of morality. With concerns about user privacy at an all-time high, irresponsible use of people’s phone numbers will no doubt raise concerns among your customers.
Customers will start to trust your brand much less, and the high ROIs that you sought when you started using SMS marketing tools will backfire with a decreasing customer base.
Outside of brand reputation and customer retention, breaking text messaging laws will result in hefty fines and other penalties from the aforementioned organizations. Depending on the severity of the infringement, there’s a chance you’ll be paying out thousands of dollars.
What these penalties are and how much money they typically cost will be covered in a later section. For now, let’s take a look at what some of these text message marketing laws are.
Text Message Marketing Laws
We’ve been harping on SMS marketing issues and why it’s a bad idea for companies to break these. However, some businesses might be starting out with SMS marketing and aren’t even aware of these regulations.
To make sure you’re implementing your text message marketing strategies ethically and by the books, let’s take a look at some of the most important SMS marketing laws that are enforced today:
Telephone Consumer Protection Act (TCPA)
We start with the Telephone Consumer Protection Act or TCPA. It’s the main anti-telemarketing law and the most prominent regulator of SMS marketing.
Simply put, the TCPA prevents businesses from sending SMS marketing messages to consumers without consent. Regardless of whether a customer has a long-standing relationship with the business or provides their phone number, the business can’t text that customer without getting consent.
Businesses need written consent before sending marketing text messages, and verbal confirmation doesn’t abide by TCPA rules. Written, in this case, can mean digital signatures and not just paper confirmation.
Consumers need clear and obvious disclosure of the text messages they’ll be receiving. Ways to opt consumers into a TCPA-compliant SMS program include:
- Keyword texting, where a customer texts a keyword to a number to opt in to an SMS program
- Paper form, where consumers sign a paper form confirming their consent to joining a text message marketing list
- An online form that functions the same as the paper form but in a digital platform
Customers should receive a full description of the number of texts they’ll be receiving, their contents, full terms and conditions document, and instructions on how to stop or opt-out of an SMS program.
CAN-SPAM Act
The CAN-SPAM Act works in tandem with the TCPA. It handles the text spam aspect of text message marketing.
As the main authority of the CAN-SPAM Act, the FCC and FTC regulate commercial texts sent to wireless devices to protect consumers from unwanted commercial messages.
It prevents businesses from sending unwanted messages to consumers. By law, commercial messages have to be easily identifiable as an advertisement. Consumers must also be able to unsubscribe from these messages.
The CAN-SPAM Act doesn’t apply to messages about existing consumer-business relationships or transactions. For example, it won’t apply to delivery notifications.
Canada’s Anti-Spam Legislation (CASL)
If you’re a Canadian business or conduct business with Canadian residents, their Anti-Spam Legislation known as the CASL is important to consider.
Passed in 2014, it’s essentially the Canadian version of the TCPA. Under the CASL, businesses that want to send texts to consumers have to meet three requirements:
- Clear consent
- Provide identification information
- A clear unsubscribe mechanism
There are two ways of providing consent in this case – implied and expressed.
Implied consent is when an individual provides their contact information to a business in some way, which implies consent. Express consent is when a consumer explicitly agrees to a text message marketing service.
General Data Protection Regulation (GDPR)
The General Data Protection Regulation, or the GDPR, is the main electronics communication law for the European Union.
It applies to any business that does business with countries in the EU or handles EU citizens’ data. It has seven principles of compliance:
- Obtain consent
- Report security breaches to customers within 72 hours
- Provide customers the right to access their personal data
- Provide customers the right to reuse their personal data outside of the business
- Allow customers to have their data erased permanently
- Have appropriate security measures to protect user data
- Have a Data Protection Officer (DPO) at the ready
The GDPR applies to both text message marketing services and data protection in general. This means this law could bleed into other aspects of your marketing strategy.
Privacy and Electronic Communications Regulations (PECR) and Data Protection Act
Finally, we have the Privacy and Electronic Communications Regulations (PECR) and Data Protection Act. These laws work in conjunction with the GDPR and are used by the UK.
The PECR is relevant to any electronic marketing methods and website tracking tools, such as cookies. It recognizes that opening up access to digital mobile networks adds new risks to personal privacy just as it provides opportunities for businesses.
The Data Protection Act governs how businesses use consumers’ personal data. Their information must be used fairly, lawfully, and responsibly. They can only access this data when relevant and can’t store it for longer than is necessary.
Similar to the GDPR, consumers have a right to know how their data is being used.
Penalties for Text Message Marketing Laws
Now that we have an idea of what these text messaging marketing laws are, it’s important to recognize the penalties for breaking them. Knowing what’s at stake provides greater insight into how your business can avoid these damages.
Telephone Consumer Protection Act (TCPA)
Consumers can file a lawsuit against a business for breaking the TCPA’s terms. Consumers can receive:
- Up to $500 for each violation of unsolicited phone calls
- Up to $1,500 for willful violations of phone and text message solicitations
There are no caps on statutory damages, meaning violations can potentially result in thousands of dollars.
The CAN-SPAM Act
As enforced by the FTC, the CAN-SPAM Act can cost businesses up to $16,000 per violation. There are no maximum penalties.
The CAN-SPAM Act can also be enforced by other agencies for more variable financial penalties, such as by the FCC or state agencies.
Canada’s Anti Spam Legislation
Companies that don’t comply with CASL regulations face penalties such as criminal charges, civil charges, personal liability for company employees and officers, and financial penalties of up to $10 million.
General Data Protection Regulation (GDPR)
There are two tiers for GDPR penalties.
The first tier is for violating any articles regarding controllers and processors, certification bodies, and monitoring bodies. The fines for these cases can be as much as 10 million Euros or 2% of the firm’s worldwide annual revenue, whichever is higher.
The second tier is for violating articles regarding processing, consent, data subjects’ rights, and transferring information to other organizations. These violations result in a 20 million dollar fine or 4% of the firm’s worldwide annual revenue, whichever is higher.
Privacy and Electronic Communications Regulations (PECR) and Data Protection Act
The maximum penalty for violating the PECR is about 500,000 Euros, or $630,000. Infringing on the Data Protection Act can cost up to 17.5 million pounds, or 4% of annual global turnover, whichever is greater.
Leveraging Text Message Marketing Legally
The landscape around SMS marketing is changing. This means businesses have to pay attention to laws around the world to make sure they’re complying with regulations.
Understanding these laws and doing text message marketing by the books will result in a safe and sustainable method of making conversions and getting high ROIs in the future.
If all this legal talk and consequences scare you, consider hiring an SMS marketing agency to handle all your texting needs for your business.
The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.
Ashlea Hernandez
Geoff Cudd
Claire Fountain
