Is SMS Marketing Illegal? What You Can Learn from Papa John’s and Grubhub

September 12, 2018 | Back to the Blog

SMS-marketing-papa-johns

Is SMS marketing illegal?

With headlines about the lawsuits pertaining to the use of mass text alerts by both Papa John’s and Grubhub in the news, you may be wondering what this means for your business SMS strategy.

In this guide, we’ll be going over the wrongdoings each company made, as well as sharing the top lessons you can take away so you don’t make the same mistakes.

And with the GDPR in full swing, it’s only a matter of time before text message privacy is scrutinized even further, which is why it pays to be proactive here.

Let’s begin by discussing what Papa John’s did wrong first.

Learn From Papa John’s Troubles With SMS Marketing

Just five years ago, Papa John’s legal team settled a class action lawsuit over their illegal text message marketing strategy.

So what made their plan illegal?

Over 200,000 customers claimed Papa John’s team sent messages they never consented to receive.

This is equivalent to sending your customers spam, which is why it’s not legal.

Because of this, Papa John’s was forced to pay 220,000 customers a total of $11 million, which doesn’t include the close to $3 million in free pizza vouchers or the extra $2.45 million in legal fees.

Instead of learning their lesson, the national pizza chain continued to cross the legal boundaries with their SMS marketing.

In March 2017, a California man sued Papa John’s for sending him unwanted text messages even after he opted out.

This is why you must explicitly explain what your customers are signing up for when they opt-in to your mass texts.

And if they decide to jump off your list, that’s okay. By law, you have to let them.

Otherwise, you could face the same legal repercussions.

SMS-marketing-grubhub

Don’t Make Grubhub’s SMS Marketing Mistake Either

Grubhub made an even bigger mistake with their SMS marketing in 2016 and were also sued as a result.

This time, Grubhub’s team sent unwanted messages to their customers.

While this seems similar to Papa John’s transgressions, Grubhub took their strategy a step further by sharing advertisements from other companies, meaning customers’ information was shared with third parties without their consent.

This is a serious violation of the TCPA.

The Telephone Consumer Protection Act (TCPA) spells out the laws relating to commercial text messaging in the United States, which includes ensuring that businesses clearly disclose what they plan to use your number for.

Victoria Flores, the woman suing Grubhub, also claims these unwanted text messages also cost her per message, as well as wear and tear of her phone and battery life.  

As you can see from this example, without proper consent from your customers, you could get hit with these same penalties and legal fees.

And these aren’t the only lessons you can learn from these companies with regards to sending mass text alerts.

The Top 4 Lessons You Can Take Away Here

By understanding where Papa John’s and Grubhub went wrong, you’ll know the exact mistakes to avoid, starting with this one:

#1: Understand Who is Really At Risk Here

Papa John’s hired a text message marketing company called OnTime4U after they promised to increase the chain’s national profits.

In their defense, Papa John’s claims that since these texts were sent by a third-party vendor, OnTime4U, Papa John’s should not be to blame, according to their statements in court in 2010.

Unfortunately, this is not the case since OnTime4U was sending texts on behalf of Papa John’s.

It was Papa John’s responsibility to perform their due diligence and see what kind of SMS marketing campaigns this agency had in mind for them, which it seems they failed to do.

The lesson here is was made pretty clear.

If you decide to go with a third-party provider for your SMS marketing services, do your homework and make sure they are legitimate and don’t have a plan to spam your customers.

It’s also crucial you don’t take what text message marketing companies tell you at face value — research their concepts and strategies to guarantee they’re not breaking any laws in your company’s name.

Because, at the end of the day, your company is going to be the one held responsible, not theirs.

Another must-tackle item is:

#2: Understand How SMS Marketing Technology Works

Plaintiffs in the Papa John’s case also claim they were sometimes sent more than a dozen text messages in a row.

Even worse, many were sent in the middle of the night when their customers were trying to sleep!

Problems like these show a total lack of concern for customers.

Rather than considering time zones and the appropriate times to text people, Papa John’s simply delivered their messages just to get as many out as they could.

Whether the team knew or not, it was their responsibility to ensure their messages were delivered within a reasonable timeframe, which they did not do.

Learn from this mistake and make sure you know when your messages are being sent out, even if you use a third-party vendor to deliver yours.

It’s essential to keep mass text alerts within reasonable time frames and don’t bombard your customers with too many messages at once.

Ignore these bits of advice and you may also wind up with a multimillion dollar lawsuit on your hands just like Papa John’s.

That’s why it also pays to:

#3: Always Err on the Side of Consent

While this point was mentioned earlier, it’s so important it’s worth discussing in greater detail.

One of the violations that make cases against both Grubhub and Papa John’s so severe is the fact that neither obtained proper consent from their customers.

This is still a current problem today as you may have seen with the Global Data Protection Regulation, or GDPR as it’s known.

Getting consent to send your mass texts is not the same as simply obtaining a customer’s phone number.

Both Grubhub and Papa John’s made the mistake of assuming every phone number taken from an order was enough to prove these people also wanted to receive their marketing text messages.

As we know, that’s just not the case.

Even if you have a customer’s or client’s phone number, this doesn’t mean they want to receive text message ads from you.

Both companies could have saved themselves headaches and several millions of dollars had they simply erred on the side of consent.

To avoid this blunder, you must not only obtain consent to send text messages to the phone numbers you collect, you must also clearly explain where their information is going and what you plan to do with it.

If it’s not clear yet, err on the side of consent every single time and never assume someone wants to receive your SMS marketing.

And finally, you don’t want to get caught making the mistake of only being sales-focused at the expense of your subscribers.

#4: Put Your Customers Before Sales

Papa John’s hired their SMS marketing vendor (OnTime4U) because they wanted to quickly increase profits at the pizza chain’s franchises.

But, in doing so, they failed to put their customers first and used aggressive sales tactics that resulted in many more unhappy customers.

Not only will this hurt Papa John’s revenue in the short term, they also took a big hit in the long run and never came close to hitting their revenue targets.

Even worse, this debacle hurt the pizza chain’s brand reputation and set their marketing team back years.

All it takes is a few simple SMS marketing decisions to impact your business in its current and future state.

 

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By deciding to hand over a list of customer phone numbers to a third-party vendor without asking for customer consent, Papa John’s made the decision to put profits over people and it cost them a small fortune and their customer’s trust, something they may never fully recover from.

Get-rich-quick strategies are typically a recipe for disaster and expensive lessons for companies to learn. It’s surprising to many that a company as big as Papa John’s so obviously ignored the law in favor of profit.

As with every marketing decision you make, it’s important to think about what your clients and customers want, not just about sales.

Putting sales before your customers is a surefire way to quickly lose them and not make many future sales.

Avoid These Same Troubles With SMS Marketing

While the concepts we talked about today should be second-nature, even companies as big and popular as Papa John’s and Grubhub still make these costly mistakes.

But, after reading this guide, you won’t do the same, right?

Rather than putting your company at risk, make sure your SMS marketing tactics are legal and ethical — and always put your customer first.

You shouldn’t bombard your customers with unsolicited messages or continue sending mass text alerts if they’ve opted out from your subscriber list.

By practicing these lessons when it comes to your SMS strategy, you’ll both keep your company protected and your customers happy.

 

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About James Pelton

James Pelton is the Founder and CEO of Mobile Text Alerts

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