Text Messaging Companies Pay $3 Million to Settle TCPA Class Settlement for “Spam Texting”

Spam Texting

Introduction

In a case styled Cullan & Cullan LLC v. M-Qube, et al., Case No. 8:13-cv-00172, pending in the United States District Court of Nebraska, a group of mobile messaging companies have agreed to a $3 million settlement in a class action lawsuit filed by customers alleging that the companies had collaboratively caused them to incur numerous unwanted charges to their cellphones without prior consent.

M-Qube Inc., Mobile Messenger Americas Inc. and CF Enterprises Pty. Ltd. agreed to pay up to $3 million for alleged violations of the Telephone Consumer Protection Act (“TCPA”).

The companies facilitate payment transactions between third party companies and wireless carrier consumers — enabling the use of text messaging for cellphone devices for different phone service providers.

According to the class action settlement agreement, the messaging companies will refund customers for their unwanted subscriptions, with no cap on the amount of refunds, and pay at least $60 or up to $100 for each unsolicited text message until the companies reach $3 million. If the amount per text message drops below $60, the companies can either increase the settlement amount, or release this part of the settlement.

Additionally, M-Qube has agreed to injunctive relief, which will terminate all current SMS programs operated through Verizon Wireless, AT&T, Sprint and T-Mobile.

The Allegations

According to the Complaint, the defendants were alleged to have illegally subscribed customers to their services. This unauthorized subscription allowed defendants’ advertisements to be sent to the customers’ cellphones. These messages imitated phone notifications, causing the consumer to open the message once they received it. The plaintiff claims that this caused unnecessary financial stress to the customer and violated the TCPA by both sending unwanted messages and for violating federal communication regulations.

The text spam class action lawsuit was filed on June 6, 2013, alleging that the companies were sending unsolicited text messages related to mobile content, including ringtones and information alerts, to the customers’ cellphones. When customers clicked on the messages, they were prompted to put in their phone number, which was supplied to the mobile messaging companies. The wireless companies would then notify the wireless carriers that the customer had subscribed to their services. As a result, the wireless company charged the customer’s phone bill for the subscription service through a practice known as “cramming.”

Overview of the TCPA

Any company found to have unintentionally violated the TCPA may be face a statutory penalty of $500 per violation, while penalties for violations deemed to be “intentional” can reach up to $1,500. In general, companies must adhere to a specific set of requirements when calling customers, according to the federal law, which include:

  • Companies must maintain a “do-not-call” (DNC) list of consumers who have asked not to be called, which is to be honored for five years.
  • The law prohibits companies from sending messages through certain automated telephone equipment or by way of an artificial or prerecorded voice to an emergency line, such as: “911”, a hospital emergency number, a physician’s office, a hospital or health care facility, a cellular telephone, or any service for which the recipient is charged for the call.

TCPA litigation has increased dramatically in recent years, and Cullan & Cullan LLC v. M-Qube, et al., appears to continue the trend of companies being sued under this statute.