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updated: 11/22/2016 9:50 AM

‘Smart home’ providers may be liable under the TCPA

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By Isaac Colunga and Deepali Doddi
attorneys, Ice Miller LLP

Congress passed the Telephone Consumer Protection Act (TCPA) in 1991 with the simple goal of stopping automated phone calls that consumers did not consent to receive. It is becoming easier and easier to violate the TCPA and the Federal Communications Commission interpreted the statute so that the restrictions on automated phone calls extended to text messages as well. This interpretation has made it that much more difficult for businesses to comply with the TCPA. A new area has emerged by which companies are communicating with consumers by text message or otherwise and sharing data about those consumers' personal lives and homes. We call this the "Internet of Things."

The Internet of Things and smart homes

The "Internet of Things" (IOT) refers to an "interconnected environment where all manner of objects have a digital presence and the ability to communicate with other objects and people." With the IOT, the possibilities for using a variety of interconnected devices and objects -- ranging from appliances to HVAC systems to vehicles to energy grids -- to enhance your daily life and increase efficiencies are endless.

One interconnected feature of our lives is the "smart home." A smart home involves a collection of devices and appliances that synchronize over a network and automatically share information with each other about the user's activities and preferences. Consumers can now choose from a myriad products to build their smart homes that allow them to use their cellphones or tablets to remotely control the temperature and lighting within their residences, turn on appliances, unlock doors and monitor the security of their homes. As technology evolves, home automation devices will grow more "intelligent," relying less frequently on overt user commands to function -- a thermostat will sense your presence when you walk into a room, for example, and automatically adjust to your preferred temperature.

The TCPA implications of smart home technologies

To achieve compliance with the TCPA in particular, smart home technology vendors must be careful to use consumers' cellphone information to communicate with them only in a manner that is consistent with the consumers' consent. Smart home security systems serve as a prime example. A critical feature of an automated home security system is the ability to detect possible intruders, perhaps by identifying a door or a window that is opened while the homeowner is out of the house. After sensing that a door or window is open, the security system alerts the homeowner's cellphone via text message. The text message alert may even provide options to trigger an alarm or notify law enforcement of an emergency. This is a really useful feature, but providers must consider the consent that the TCPA requires when sending these messages.

The FCC rules implementing the TCPA, as applied to text messages, differ depending on whether the text message contains a noncommercial message or the text message was sent for marketing purposes. If the text message is purely informational, then to show that the consumer has consented, the FCC requires only "express consent," which is generally obtained when the person receiving the text message willingly provides his or her cellphone number to the sender. The requirement differs, however, if the text message contains marketing or advertising. If it does, then the FCC would expect the provider to have met the more stringent prerequisite of obtaining "prior express written consent."

Smart home consumers who wish to receive purely informational text messages from smart home vendors, such as alerts of suspicious activity in or around their homes, voluntarily provide their cellphone numbers to the vendors. In such cases, smart home vendors can presume that their customers have expressly consented to receiving informational text messages from them. To avoid liability under the TCPA, smart home vendors must ensure that they craft text message alerts that are entirely noncommercial and do not, in any way, contain information that may be construed as "advertisements" or "marketing" for their services or products.

Alternatively, if smart home vendors elect to send marketing communications to their customers' cellphones via text message -- whether the marketing communications are embedded within their informational text message alerts or comprise stand-alone text messages -- they must be willing to partake in the more difficult process of obtaining their customers' "prior express written consent." A vendor may obtain prior express written consent electronically through a website form submission or an opt-in text message. But, the vendor must critically review the consent language and ensure the consumer knows what he or she is agreeing to receive. Smart home vendors must remember that under the TCPA, a consumer's willingness to receive informational text message alerts has no bearing on whether he or she has consented to receiving commercial text messages.

As smart home vendors continue to use text messaging to send alerts to their customers' cellphones, they should be mindful that their communication practices will be scrutinized for compliance with the TCPA.

*Isaac Colunga is a partner in Ice Miller's Litigation Practice Group. He is a member of the Class Action Defense Team and defends companies in class action litigation. Deepali Doddi is an associate in Ice Miller's Data Security and Privacy Practice Group. They may be reached at isaac.colunga@icemiller.com and deepali.doddi@icemiller.com.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.