The Industry's Leading Source For F&I, Sales And Technology


Text Education

August 2012, F&I and Showroom - Feature

by Jim Radogna

A recent ruling involving one of the industry’s largest dealer groups serves as a reminder that with new technology comes new legal challenges.

The name of the group isn’t important, but the class-action lawsuit filed against it in July 2011 is. The case involved a text-message marketing campaign the group and its marketing agency launched in April 2011. At the heart of the case, according to the court filings, was the group’s failure to honor consumer opt-out requests.

Plaintiffs’ attorneys said more than 60,000 people received text messages in the course of the ill-fated campaign. The defendants claimed it was a technical error, but they ultimately agreed to a $2.5 million settlement.

Text marketing can be a great way to reach consumers. But promotional text messages are subject to a number of federal and state restrictions that can be extremely confusing. In fact, they can be much more difficult to deal with than rules governing telemarketing or e-mail marketing. That’s because many consumers are charged for text messages and the government feels they should be afforded additional protection against unwanted solicitations.

In many cases, the consumer must give express permission to a dealership before they can be sent a single promotional text message. That rule stands even if the store has an existing relationship with the customer. Let’s review a couple of other things you need to know before launching a text marketing campaign:

1. Avoid the "Do Not Call" List:

Until recently, businesses were allowed to send text messages to consumers on the DNC list — so long as they could prove there was an established business relationship. That changed six months ago, when the Federal Communications Commission (FCC) amended the Telephone Consumer Protection Act (TCPA) and removed that exception.

2. No Automated Dialers:

Businesses are not allowed to send any text messages whatsoever to a cell phone using an automated dialing system — mechanical or computerized — unless they’ve received prior express written consent. And that goes for service reminders as well.

3. CAN-SPAM Rules Do Apply:

A text message may also be considered an e-mail if it is sent to an e-mail address that contains a domain name after the "@." An example would be If that is the case, the text must comply with all of the standard CAN-SPAM requirements (e.g., text must contain your physical mailing address, cost-free opt-out mechanism, etc.).

4. E-mailing Wireless Devices:

The CAN-SPAM Act also prohibits sending commercial e-mail messages to wireless devices without express prior authorization. And having an established business relationship with the recipient is not enough.

Confusing, right? Well, here are some suggestions to help protect your store against legal challenges:

• Consult the national DNC list and your company’s lists before sending a text message.

• Determine whether your delivery meets the CAN-SPAM Act’s "e-mail" definition.

• Put a process in place to ensure that all opt-out requests are honored quickly and permanently.

• Develop an employee policy regarding text messaging and educate your staff on proper procedures.

• Appoint an in-house compliance coordinator to monitor text messaging by employees and vendors.

• Consider instituting a policy of always obtaining a recipient’s express written authorization before sending a text message.

• If you use an outside vendor to administer your text marketing campaigns, never assume the vendor knows all the rules and regulations. Always consult knowledgeable legal counsel first.

Just remember, it’s certainly not difficult to find a lawyer who’s ready, willing and able to sue a car dealer.

Jim Radogna is president of San Diego-based Dealer Compliance Consultants Inc. He can be reached at


  1. 1. Thomas A. Kelly [ November 11, 2012 @ 11:20AM ]

    Excellent reporting....Thanks!


Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  


So Here's the Deal

Ronald J. Reahard
Avoiding the AAA Objection

By Ronald J. Reahard
Top trainer advises F&I pros to eliminate the ‘I have AAA’ objection by downplaying the very real — but relatively minor — roadside assistance benefit included with most service contracts.

(Video) Capture Missed VSC Sales

By Ronald J. Reahard
In response to a reader question, the magazine’s F&I wiz updates his plan for re-pitching service contracts to customers who declined the protection at the time of delivery.

The Dealer Moved My Goal Posts

By Ronald J. Reahard

Addressing F&I’s Internet Problem

By Ronald J. Reahard

Done Deal

Gregory Arroyo
Protecting F&I’s Future

By Gregory Arroyo
The editor responds to a reader’s question about whether F&I managers are being replaced by iPads and digital retailing tools.

Game Almost Over

By Gregory Arroyo
With the CFPB’s controversial guidance officially repealed, the editor delves into what the bureau was really after in its targeting of dealer participation.

The Repair Is Covered

By Gregory Arroyo

Change Is Happening

By Gregory Arroyo

Mad Marv

Marv Eleazer
I Love F&I. How About You?

By Marv Eleazer
His Madness challenges F&I professionals to decide right here and now whether F&I is your career or just a job.

Is That Legal?

By Marv Eleazer
Is manipulating a sales agreement to accommodate a customer’s request to cash out of a dealer-arranged retail sales contract allowed? His Madness gets answers from the industry’s top legal mind.

Overcome Your F&I Weaknesses

By Marv Eleazer

Proper Deal Structure Moves Mountains

By Marv Eleazer

On the Point

Jim Ziegler
Bound to Fail

By Jim Ziegler
Da Man returns with a message to vehicle manufacturers jumping into the subscription waters: It ain’t gonna happen.

Sharpen Your Survival Skills

By Jim Ziegler
‘Da Man’ has a plan you can use to survive the collapse of the car business and remain profitable through the dealer apocalypse.

Sales Rock Stars Still Exist

By Jim Ziegler

The New Stooges

By Jim Ziegler