Rack Room Shoes, Inc. (Rack Room) has agreed to pay up to nearly $26 million to settle a class action lawsuit alleging violations of the Telephone Consumer Privacy Act (TCPA).  The lawsuit, Goldschmidt v. Rack Room Shoes, Inc., centers on claims that defendant Rack Room violated the TCPA when it initiated a text message campaign using an automatic telephone dialing system to target consumers without their express written consent.

According to the complaint, Rack Room owns and operates over 400 retail footwear stores across 24 states.  Plaintiff is a Florida resident who received various text messages promoting Rack Room’s business and goods.  He alleged that the “impersonal and generic nature” of the text messages and the use of a short code from where the text messages originated established that Rack Room utilized an automated text messaging platform to transmit those messages.

Plaintiff argued that the transmission of these text messages violated the TCPA, which prohibits telemarketing calls and texts to a wireless number using an automatic telephone dialing system without the recipient’s prior express written consent.  Plaintiff claimed he never provided such consent to Rack Room and that he and other members of the putative class were each entitled to a minimum of $500 for each violation under the TCPA.

While denying liability, Rack Room agreed to the following to settle this matter:

  • to make available a settlement fund up to $25.97 million;
  • to provide a $10 rewards voucher to each class claimant; and
  • to institute policies and procedures to ensure it complies with the TCPA.

Under the proposed settlement order, the certified class consists of those who received a text message from Rack Room – specifically those who enrolled in the Rack Room Reward Program or the Off Broadway Reward Program by providing their cell phone number and received a text message on or after April 2, 2014.  According to the proposed settlement order, approximately 5.2 million individuals are members of the settlement class.

This proposed settlement highlights the costly risks of sending text messages to consumers without appropriate consent.  Companies should carefully evaluate their marketing strategies and practices around the use of consumers’ cell phone numbers, and should ensure that appropriate express written consent is obtained before sending promotional text messages to consumers.  Also of significant importance is ensuring that evidence of that consent is maintained by the company in order to rebut any claims that proper consent was not obtained.