A legal cottage industry developed as a result of numerous federal and state statutes and regulations regarding telephone, fax, e-mail and other uninvited solicitations to businesses and residences for various products and services. The Seventh Circuit United States Federal Appellate Court recently upheld a $4,200,000 judgment against a lawyer for 8,430 unsolicited fax newsletter/advertisements ($500 each), sent by his advertising agency without an opt-out provision. The legal community realizes the importance of these restrictions and the fact that it and its clients can profit from those who fail to comply.
Numerous class action suits have been initiated nationwide against businesses that market their products and services through telephone, fax and e-mail solicitations. Generally, the class representative, a party that received the improper solicitation and who seeks to represent hundreds or thousands of similarly situated recipients, is rewarded for its actions in any settlement or verdict, as is its attorney, by a recovery well in excess of what other class members receive. Although each class member’s damages may be miniscule, class damages may be substantial when multiplied by thousands or millions, and statutory penalties, triple damages, attorneys’ fees and defense costs can be staggering. Being involved in such litigation, whether brought by a private individual or a government entity, is a costly and time-consuming legal quagmire. These new regulations are in addition to the long-standing claims such as false advertising, copyright/trademark violations, unintended warranties, defamation, unsupported claims, consumer fraud and other marketing related issues.
There are steps a business can take to reduce its exposure to such claims. Knowing the laws, rules and regulations that may apply and avoiding violations is the first defense, as ignorance of the law is no defense. Obtaining insurance to defend and indemnify you in the event of any inadvertent violation is important. Comprehensive General Liability policies may provide sufficient coverage, or an advertising liability or other riders may be needed. Knowing the parties you retain to provide marketing services, ranging from providing the target list, to preparing the content, to delivering the message, is also important. Your agreements with such parties should contain sufficient warranties and representations to protect you in the event any aspect of their services violates any law, a promise to indemnify and protect you in the event of any problems, and sufficient insurance or assets to back-up that promise.
At Brooks, Tarulis & Tibble, LLC, we can advise you as to some of the risks of your proposed marketing campaign and help you to locate other professionals that can assist you in marketing your business with minimal exposure to these risks. If I can provide you with further information in this regard, please contact me.