What the New Texas Telemarketing Law Really Means

Some new telemarketing regulations went into effect for Texas last Fall. While so-called industry “experts” raised all sorts of alarm bells about this, the reality is quite a bit different, and it seems we need to explain this.

There are two different sets of regulations that govern telemarketing in Texas. One is Chapter 302 regarding telephone solicitation, and the other is Chapter 304 regarding telemarketing. Putting aside certain technical changes to the definitions in these regulations (texting is now considered the same as a telephone call), the net-net is that Texas broadened the potential liability a contractor could face for violating the State’s telemarketing rules. They did this by expanding the ability of a consumer to sue for damages – specifically by allowing a consumer to bring litigation against a contractor under the Texas Deceptive Trade Practices and Consumer Protection Act (DTPA). The DTPA allows a successful plaintiff to seek treble damages, a mental anguish award, and attorney’s fees. And just as importantly, a plaintiff recovering damages under one provision of a federal or state telemarketing law can also now pursue damages under the DTPA – so even a single violation of a telemarketing rule could allow a consumer to allege multiple federal and state statutory violations and recover multiple damage awards.

In other words, and somewhat surprisingly, Texas leapfrogged into the upper echelon of states that make it extraordinarily problematic (expensive) for a contractor that commits even a single telemarketing violation. With potential penalties ranging from $500 to $5,000 per violation – and when you add in the recovery of damages for “mental anguish” and recovery of legal fees – it’s easy to see how this opens the door to serial litigation and class actions by consumers.

But we keep fielding questions from clients that are reading alerts and newsletters from telemarketing attorneys and vendors warning about a recent case in Texas in which a serial plaintiff filed telemarketing claims against the New York Tribeca Group LLC for 34 unwanted phone calls. The Texas District Court awarded the plaintiff $170,000 in damages because the defendant had failed to have a registration certificate allowing them to engage in telemarketing (that alone carries up to a $5,000 violation per call). Apparently, contractors are panicking because they had never been advised to obtain the Texas telemarketing registration certificate, and they were immediately rushing to do so.

Indeed. The problem, as is often the case, is that many times telemarketing rules and regulations do not apply to our industry the way they apply in other industries. It’s a shame that we repeatedly see clients settling lawsuits – even class action cases – for reasons that are completely improper, simply because their attorneys have no idea what they’re doing. And these alerts warning about this damage award in Texas reflect the same problem. The fact of the matter is that the Texas telemarketing registration requirement doesn’t usually apply in our industry. Why? Because we’re not actually conducting telemarketing sales over the telephone, but rather through a face-to-face meeting that occurs after the lead has been set. And there is an exemption in the law for exactly that level of conduct.

Are these recent changes to Texas telemarketing regulations concerning? Absolutely. But all it means is that you need to ensure that you are in proper compliance with state and federal telemarketing rules. The same advice we’ve been providing for 30 years. Bring yourself into compliance, and you have little to no worries – just understand that if you’re not in compliance, your potential downside is now more significant in Texas.

Berenson LLP serves as counsel to the remodeling and home improvement industry, providing legal compliance solutions, quality control counseling, litigation defense, and agency representation to industry clients throughout the United States. This client alert is intended to provide general information regarding industry legal issues and developments to our clients and other friends. It should not be construed as legal advice or a legal opinion on any specific facts or situations. For further information on your own situation, we encourage you to contact an attorney at the firm. For more information on the legal solutions provided by Berenson LLP, please contact us by phone at 561.429.4496 or by email at info@berensonLLP.com.