There's been recent activity from some class action law firms that have gotten my attention. We've had a few dealers forward demand letters regarding Can-Spam and Do not Call claims. These hostile letters threaten class action implications, and before you can shout out "arbitration", remember that arbitration agreements are usually signed at closing and only provide coverage if a vehicle is purchased. To make matters worse, these letters came from different firms in different parts of the country, so it's not like it is just one firm taking an interest in these potential cases.
What's This All About
While the letters vary to a degree, they all claim that their consumer clients received unsolicited text and email messages offering to sell and/or finance a vehicle. Some claimed that the consumer is registered on the National Do Not Call list and that such a message is a violation that entitles the consumer to damages. One of the letters included Telephone Consumer Protection Act allegations and possible claims due to improper use of an auto dialer. Each of the letters make demand for information about systems used, names of vendors, and other proprietary matters.
Now For Some Good News
Happily, I don't believe any of these letters will turn into lawsuits. In one, the consumer in question had filled out an online credit application and had consented to future contact. In another, the recipient was a previous customer of the dealer and had executed a consent disclosure for future contact when the vehicle was purchased. That's great news for those dealers in question, because defending a class action lawsuit can be a "bet the business" scenario.
Not So Fast
Let's not celebrate too fast, though, because there is a lot to unpack here. I recently looked at a credit application consent that was very narrowly worded to only apply to communications that result from a vehicle purchase and creation of an account. Had that been the wording being relied upon to create a defense in one of the above-mentioned letters, the outcome isn't quite so clear. In another document I reviewed, the consumer's consent to communications only applied to servicing and collection efforts and didn't cover sales and marketing solicitations, which lots of dealers regularly send with the belief they have legal coverage.
Tip of the Week - Don't take Your Disclosures for Granted
This week's tip is to double check online credit applications, consent disclosures, pre-qualification campaigns, and other documents that are being relied upon to offer protection from these types of actions. While you are at it, check those paper credit applications being signed at the dealership and those consent to communicate forms that are so popular. Make sure they offer broad protection from these types of cases, because based on what we've seen, there's a bunch of lawyers looking for an easy payday. For any questions please reach out to Ignite at info@ignitecp.com
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