Text Message Litigation Du Jour: Taking Aim at Refer a Friend Texts Under Washington’s CEMA
In what may emerge as a new trend in text message litigation, several class action lawsuits targeting “refer-a-friend” text message programs allege violations of Washington’s Consumer Electronic Mail Act (CEMA). This week, a Washington federal judge approved a $9 million settlement for a CEMA case filed in 2021 against Robinhood stemming from its refer-a-friend program. In recent months, class actions alleging CEMA violations have been filed against Block Inc., parent company of Cash App, and Capital One.
CEMA prohibits initiating or assisting in the transmission of an electronic commercial text message to a telephone number assigned to a Washington resident unless the subscriber has clearly and affirmatively consented in advance to receive the text message. The law defines "assist the transmission" as “actions taken by a person to provide substantial assistance or support which enables any person to formulate, compose, send, originate, initiate, or transmit a… commercial electronic text message…” Those familiar with the TCPA, the federal statute that predominates most text message class action litigation, will immediately recognize the broader scope of CEMA to apply not just to an “initiator” or “maker” of text messages, but also those who provide substantial assistance. The broad scope of the statute paired with statutory damages of $500 per violation have class action attorneys taking aim at refer-a-friend texts that have generally remained outside the crosshairs of TCPA litigation since the FCC’s 2015 Order gave guidance on how to avoid liability when running a refer-a-friend program.
While the specific facts in each case differ, the refer-a-friend programs at issue generally function by encouraging customers to send text messages to their friends encouraging the friends to sign up for the defendants’ services. The customer then receives compensation or other rewards from the defendant for friends who sign up using the customer’s referral link. To varying degrees, the defendants facilitate sending the text messages by encouraging the customer to send the messages, providing message copy and, in some instances, facilitating the customer’s selection of contacts to message and opening the customer’s native text messaging app through which the customer would then send the message. The Robinhood and Cash App cases focus on the defendants’ assistance in the transmission of the text message, while the Capital One case takes a slightly different approach, alleging that its customers are acting as agents of Capital One, therefore the marketing messages sent to customers’ friends are sent on Capital One's behalf.
Courts have yet to provide much interpretation of the statutory text of CEMA in the context of refer-a-friend text programs. However, companies would be wise to avoid encouraging or facilitating the sharing of referral codes or links via text message, or other actions that could broadly be considered “assisting the transmission” of such messages to recipients who may be Washington residents.
Originally published by InfoLawGroup LLP. If you would like to receive regular emails from us, in which we share updates and our take on current legal news, please subscribe to InfoLawGroup’s Insights HERE.