Spam has become such a modern reality that we hardly think twice about the occasional promotional email, and junk mail is the single largest use of the United States Postal Service.
In a case that I recently came across, lead plaintiff Beverly Nunes is heading a class action lawsuit against the social media giant, alleging that it illegally spams the phones of users and nonusers alike with text-message ads from third parties in order to prop up its bottom line. This case invokes the Telephone Consumer Protection Act and raises questions about the long-term economic viability of Twitter and its ilk.
The Problem of Monetizing
As anyone who has ever used Twitter can attest, the social network is completely free to use. There are paid options for companies that want more users to see their posts, but this doesn’t seem likely to justify the massive investments in the tech giant. Other companies, like SnapChat, which is famous for, among other things, rejecting a multi-billion dollar acquisition deal despite having no source of revenue whatsoever.
The problem is similar to the issues that led to the bust of the dotcom bubble in the 1990s. These companies can sometimes obtain extremely significant adoption among users – Facebook has over 100 million U.S. users alone – but by lacking a way to monetize without alienating users, they run the risk of ending up relying on investor money indefinitely.
The lawsuit alleges that Twitter makes almost 90 percent of its revenue from ads – 70 percent of which comes from mobile devices. Furthermore, the company allegedly processes nearly 1 billion text message tweets per month.
The problem is that the Telephone Consumer Protection Act requires that customers opt-in before they can legally be sent promotional calls or text messages. While there are a few users that have opted-in already, most people are unsurprisingly hesitant in consenting to ads via text. The lawsuit alleges that Twitter also sends texts to numbers recycled by mobile carriers, causing non-Twitter users to be bombarded with ads.
The Telephone Consumer Protection Act of 1991
The TCPA was passed into law in 1991 in order to restrict telephone solicitations and the use of automated dialing systems. These regulations have evolved over the years, eventually resulting in the National Do Not Call Registry in 2003. There are a number of provisions included in the TCPA and among them are restrictions on promotional text messages.
Nunes is seeking class certification, damages for each violation of the TCPA – which may be up to $1,500 per violation – and an injunction to stop Twitter from spamming her and other non-users. If her allegations are true, she and her class have a strong case for compensation.
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