A class action lawsuit against a brokerage alleging telephone solicitations in violation of the TCPA is proceeding after the court denied a motion to dismiss the case. The court found that the claimant’s allegations were sufficient to potentially hold the brokerage directly and vicariously liable for the actions of their agents.
Specifics of the case
Specifically, the court held that a brokerage may be directly liable for a call made by a third-party telemarketer, such as an independent contractor, if the brokerage (1) initiates a call on its own behalf or (2) acts through a third party but is so involved in the placing of a specific telephone call as to be directly liable for initiating it. In this case, the agents making the calls (callers) identified themselves as acting on behalf of or as part of the brokerage. Therefore, the court found it reasonable to infer that the brokerage initiated the calls and texts at issue. Additionally, because the callers read from the same or similar scripts to promote the brokerage, the court concluded it was reasonable to infer that the brokerage controlled and was sufficiently involved in initiating the calls and texts as to be directly liable.
The court also found that the brokerage could be vicariously liable for a call made by a third party when an agency relationship exists between the brokerage and the callers. Vicarious liability claims cannot rely solely upon allegations that a call was made simply to aid or benefit the brokerage. Instead, it must be grounded in apparent authority, actual authority, or ratification. Here, the brokerage’s website featured callers as being their real estate agents and encouraged consumers to contact them directly through the brokerage’s main website. Further, when the claimant contacted the brokerage to request that calls cease, the “Designated Managing Broker” identified herself as the callers’ manager; confirmed that the claimant’s contact number had been added to the brokerage’s internal do not call list; and assured the claimant that calls would stop. These factors supported a reasonable inference that the agent had apparent authority to place calls for the brokerage, potentially making the brokerage vicariously liable under the TCPA for the actions of its agents.
The development of this case is significant as it could signal a shift towards more liability for brokerages for agent-led marketing activities and require brokerages to reevaluate their compliance programs to avoid legal exposure.
Class action exposure
TCPA claims can be particularly costly as 3 out of 4 TCPA cases are filed as class action lawsuits, according to the National Law Review. This means the majority of businesses named in a TCPA lawsuit aren’t just facing one angry claimant, they’re typically defending against a whole class of them, significantly raising the potential damage and exposure for firms. Since statutory damages for TCPA violations can reach $500-$1,500 per message, a few marketing mistakes multiplied across hundreds or thousands of claimants can quickly turn into a multi-million-dollar lawsuit.
Overview of the TCPA
The TCPA is a federal law that governs telemarketing activities in the US by:
- regulating the use of technologies, such as automated or pre-recorded text messages, calls, and voicemails; and
- prohibiting solicitation calls to individuals on the National Do-Not-Call (DNC) Registry, subject to certain exceptions.
Many states have also enacted their own version of the federal TCPA, often referred to as mini-TCPA laws, which can impose greater restrictions regarding how recipients can be contacted and for what purposes. The applicability of these laws can depend, in part, on the physical location of the person being called or the area code of the phone number being dialed, which complicates compliance efforts.
Implications for real estate agents
The 2025 updates to the TCPA rules, some of which go into effect on January 31, 2027, and the emergence of mini-TCPA laws could significantly impact your marketing strategies and client communications. To avoid violations, consider the following:
- Reevaluate marketing strategies: Recent changes to the requirements and restrictions on auto dialers may lead you to rethink your marketing strategies to prioritize personalized communication and genuine engagement over unsolicited marketing efforts. Traditional methods, such as cold calling, may become less viable, prompting you to explore alternative methods of outreach since certain activities, such as manual calls and texts, emails, mailings, or social media campaigns, are not regulated by the TCPA.
- Enhance record-keeping practices: Implement robust record-keeping practices. This includes maintaining detailed logs of consent obtained from clients and prospects, which can be crucial in the event of a dispute. It may also require you to update your existing contact list and customer relationship management processes to ensure compliance with the new requirements.
- Provide training and compliance: Educate and train staff about the new TCPA rules to ensure compliance, e.g., how to maintain and update lists of consumers who have provided required consent as well as those who have opted out of marketing communications; or how to routinely check names and numbers against the DNC Registry. These steps can help you avoid unintentional violations and the associated penalties.
- Explore compliance tools: Explore technical solutions to TCPA compliance to help reduce risks and improve lead quality and call experience. If you use vendors for lead generation or outreach, make sure you review your agreements and vendor policies to verify compliance with the TCPA and DNC Registry and to negotiate for appropriate warranties and indemnification by vendors for TCPA liability.
- Seek legal guidance: Given the complexities of the new TCPA rules, consulting with legal experts specializing in telecommunications law can help to ensure that your marketing practices align with the latest regulations and mitigate the risk of regulatory and legal issues.
Victor can help
While TCPA regulations may seem daunting, they can also provide an opportunity. By understanding the implications of these changes and adapting your marketing strategies accordingly, you can navigate these changes confidently and in compliance with the law.
Victor is here to help. That’s why we’ve added TCPA Fees and Expenses Coverage to our errors and omissions (E&O) policy form. This offers you coverage up to $50,000 per policy period for reasonable and necessary legal fees incurred while responding to actions brought under the TCPA, subject to certain terms and conditions.
In partnership with the National Association of REALTORS® under NAR REALTOR Benefits®, Victor provides a first-class E&O insurance program for NAR members. Several premium credits are available, as allowed by state law, including credits for being an NAR member and holding select NAR designations. Get your free quote in just a few easy steps—click here to get started.
