The facts
Sarah, a licensed real estate agent in Miami, FL, used an automated dialing system to send pre-recorded marketing calls and text messages promoting her listings and services. She frequently used the practice to reach new prospects she had not previously met. Some phone numbers on her contact list were registered on the National Do-Not-Call (DNC) Registry, and Sarah had not obtained prior express written consent from those recipients for calls or texts.
One recipient, Mr. Carter, filed a complaint alleging that Sarah’s automated calls violated the Telephone Consumer Protection Act (TCPA) by contacting him without consent and despite his number being on the DNC Registry. Mr. Carter stated that he had repeatedly requested to be removed from all marketing call lists but continued to receive multiple automated calls per week over a period of three months. He described the calls as intrusive and disruptive, occurring during his work hours and late evenings, causing him significant distress and frustration. He sought damages for the unsolicited calls and demanded that Sarah cease all further communications immediately.
The result
Sarah promptly reported the claim to her real estate Errors & Omissions (E&O) carrier before incurring any legal fees. The investigation confirmed that the claim arose from Sarah’s professional real estate services and that the alleged TCPA violation was unintentional.
Thanks to the policy’s supplementary payments section, the insurer covered $50,000 in legal fees and related expenses, providing Sarah with expert legal defense and support throughout the process. This coverage allowed Sarah to focus on her business without the stress of upfront legal costs. The insurer’s involvement helped resolve the claim without Sarah facing any fines or penalties. Because these payments are not subject to the deductible, Sarah was also spared her $1,000 per claim deductible.
It is important to note that while the insurance covered Sarah’s defense costs, it did not cover any actual TCPA fines or FCC penalties, which can be substantial. This highlights the importance of understanding and following TCPA rules to prevent such exposures.
Risk factors
Under the TCPA, fines for unauthorized automated calls or texts can be significant. For each call or text sent without proper consent, fines can start at $500 and increase to $1,500 if the violation is found to be intentional. The Federal Communications Commission (FCC) can also impose penalties of up to $10,000 per unauthorized call. Additionally, violating the National Do-Not-Call Registry can lead to fines exceeding $50,000 per violation. Some states, like North Carolina, have even higher penalties. These fines can add up quickly, especially if multiple calls are involved, making compliance essential to avoid costly legal and financial consequences.
Risk factor #1
Use of automated dialing systems or pre-recorded messages without obtaining prior express written consent from recipients can lead to unintentional TCPA violations and statutory penalties.
Risk factor #2
Failure to maintain and update records of consent and to routinely check contact lists against the National Do-Not-Call Registry increases the risk of unintentional violations.
Risk factor #3
Lack of staff training on TCPA compliance and vendor oversight can result in improper marketing outreach and liability exposure.
The claim scenario is strictly documented for illustrative purposes only and provides an example of what a policy could cover. It is intended to provide a general overview of the program described. Please remember only the insurance policy can give actual terms, coverage, amounts, conditions and exclusions. Program availability and coverage are subject to individual underwriting criteria.
