Recent discussions on platforms like LinkedIn have sounded the alarm regarding Texas Senate Bill 140 (SB 140), suggesting dire implications for ecommerce businesses engaging in SMS marketing. Posts highlight concerns about new registration requirements and potential litigation risks. While SB 140 does introduce significant changes, a closer look at the legal analysis suggests that the immediate panic may be overstated for many businesses, particularly those already adhering to best practices like obtaining consumer consent.

Let’s break down the key concerns and why they might not be as universally impactful as feared.

Chapter 302: Registration and the $10,000 Security Bond

A major point of concern revolves around Chapter 302 of the Texas Business & Commerce Code, which regulates telephone solicitations. SB 140 explicitly amends the definition of “telephone solicitation” to include “a transmission of a text or graphic message or of an image”. This means that text messages are now directly subject to these regulations. Generally, sellers making telephone solicitations in Texas are required to register with the state and post a $10,000 security in the form of a bond, letter of credit, or certificate of deposit.

However, a crucial exemption could alleviate this burden for many ecommerce brands:

• “Customers” (Section 302.058) Chapter 302’s requirements do not apply to a business soliciting a former or current customer, provided the business has operated under the same name for at least two years. The key here lies in the interpretation of “customer.” The statute defines “purchaser” but leaves “customer” undefined. According to Texas legal principles, undefined terms are given their ordinary, commonly understood meaning.
  
  • The ordinary meaning of “customer” often extends beyond someone who has completed a purchase to include individuals who patronize a business or even visit with the intention to buy (e.g., someone who walks into a physical store). 
    
  • Dictionary.com includes various definitions of customer, including “Informal. a person one has to deal with.”  Similarly, Webster’s includes “any person with whom one has dealings”.  Meriam Webster provides both “patron” and “guest” as synonyms for customer.
    
  • Therefore, there’s a reasonable argument that individuals who have visited an ecommerce store and provided consent to receive marketing text messages are “customers” for the purpose of this exemption, even if they haven’t yet completed a purchase.  This is particularly true when the person has taken the extra step of providing their prior consent and requested to receive promotional messages, like discount codes, because they have a desire to make a purchase.
    
  • If this interpretation holds, only businesses that have not operated under the same name for the past two years would likely need to register to send text messages to Texas residents.

While plaintiff attorneys may test this interpretation, and businesses should consult their own legal counsel (not online pundits) before deciding how to proceed, the analysis provides a strong basis for arguing that many established ecommerce businesses who send messages only to those who have provided prior express consent are already exempt under these provisions.  

Chapters 304 & 305: New Private Rights of Action

Many have also rightly pointed out that SB 140 modifies Chapters 304 and 305 to allow individuals to bring private actions for violations, treating them as false, misleading, or deceptive acts or practices under Texas’s Deceptive Trade Practices Act. This is indeed a significant shift, creating a new avenue for consumer litigation.  However, the underlying provisions of these chapters are also not likely to apply to consent-based SMS marketing:

• Chapter 304: Texas Do-Not-Call List
  
  • Chapter 304 of the Texas Code relates to a Texas Do Not Call List.  This Chapter of Texas law has actually included “text messages” within its definitions since as far back as 2007, so its reach is not materially changed by SB 140.  The requirements of Chapter 304 are explicitly limited to an “unsolicited telephone call”. Since ecommerce brands utilizing reputable platforms are already required to obtain consent before sending messages, these communications are by definition not unsolicited.
  • Furthermore, Chapter 304 does not apply when there is an “established business relationship” (EBR). Texas law defines an EBR broadly as “a relationship that: (A) is formed by a voluntary two-way communication between a person and a consumer, regardless of whether consideration is exchanged; (B) pertains to a consumer good or service offered by the person; and (C) has not been terminated by either party”. This further supports that consent-based messaging falls outside the scope of Chapter 304.
    
• Chapter 305: Prohibited Telephonic Communications
  
  • SB 140 also added a private right of action for violations of Chapter 305. However, Chapter 305 itself does not include definitions that explicitly extend its provisions to text messages.
  • Crucially, Chapter 305 explicitly provides that consent is a defense to its provisions regarding calls to mobile phones. Since most ecommerce businesses already know they should obtain consent for SMS marketing, the provisions of Chapter 305 should not apply.

Conclusion: Stay Calm and Consent On

While SB 140 introduces real legislative changes, including expanding the definition of “telephone solicitation” to include texts and creating new private rights of action, a thorough and more careful reading of the existing law and the recent analysis suggests that ecommerce businesses diligently obtaining consent from their customers and prospects may already be exempt from many of the newly highlighted requirements.  

The emphasis on consent remains paramount. For those who ensure their SMS marketing practices are built on clear, voluntary consumer consent, the “sky falling” in Texas might just be a passing cloud.

It is always advisable for businesses to consult with legal counsel to assess their specific situation and ensure compliance with all applicable laws.

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