Advertising Law Blog

A cautionary tale for retailers has reached a very expensive conclusion in Florida. The practice of sending text message advertisements has cost Abercrombie & Fitch $10 million to settle a class-action lawsuit filed under the Telephone Consumer Protection Act (TCPA).  Judge Marcia G. Cooke recently approved the settlement between the retail clothing business and a class of over three million text recipients.

The lawsuit, Chimeno-Buzzi v. Hollister Co. (filed in 2014 in the Southern District of Florida) was filed after the lead plaintiff received 19 messages between June 4 and August 21, 2014 directing her to Abercrombie & Fitch’s website.  The plaintiff alleged she never consented to receive the texts, and there wasn’t much dispute because the defendant’s records showed that it received an opt-in request from the prior owner of the plaintiff’s cell phone number. The plaintiff acquired the number in question shortly before June 4, 2014.

Discovery revealed that the defendant had sent texts out to 3,738,465 different cell phone numbers promoting Abercrombie & Fitch, Hollister and Gilly Hicks brands of clothing. The TCPA provides a remedy of $500 per illegal call or text, with possible trebling in case of intentional violations.

Abercrombie & Fitch had no real argument that it possessed valid consent from the plaintiff for the text messages, as required by the TCPA. Instead, it asked the Court to stay the case while the Federal Communications Commission (FCC) decided whether text senders could avoid liability to new cell phone owners in situations where they had valid consent from the prior owner and no notice that the phone number in question had changed hands.

The FCC did not give Abercrombie & Fitch the result it had hoped for.  On July 10, 2015, the FCC ruled that “the TCPA requires the consent not of the intended recipient of a call, but of the current subscriber” and that liability begins with the second call or text to the new owner of the phone number.  Without any realistic hope of winning the lawsuit, Hollister quickly agreed to the $10 million settlement less than a month later. The Court approval process took several months.

The cornerstone of the settlement agreement is Hollister’s payment of $10 million dollars.  After the class attorneys receive their fees (an amount that has not yet been determined) and costs of administration and notification of the 3,738,465 class members are deducted, those class members who return a valid claim form will split the fund.

Takeaway: The settlement of this lawsuit is yet another example of how failure to vigilantly comply with the TCPA can prove very costly to retail businesses. We strongly suggest that business consult with experienced TCPA attorneys before embarking on text messaging or autodialing marketing campaigns.