Last year, I bought my first home ever with a small loan of $300,000 from my parents. Here is a photo of that home:

Buying this home felt like the embodiment of the American dream that had seen instilled in me since I was made to recite the pledge of allegiance with the guiding voice from the intercom once a day for almost 8 years (approx. 15s * 180d * 8y = 21600s, or 125.58 renditions of Axel F’s masterpiece “Crazy Frog”). I was also starting my company, and we had just gotten into YCombinator. Nothing could have been better and, overall, I still didn’t feel satisfied — my neighbor’s fence was a whole foot taller than mine and the HOA denied my claim to extend my fence to 8 feet.

Distraught by my circumstances, I decided to dive even deeper into my work. That’s when I was reminded of something that would soon become lucrative for me: my former Google co-worker (paid approx. $700,000 USD / yr) told me to “invest in things that separate [you] from the ground”. That’s when it clicked — if I wanted to have a successful texting platform, we’d need to find the right customers to use our product. The right customer? Mattress firms.

Sleeping Well

In a land of silicon valley paychecks, there were surely more than enough rich people in San Francisco to buy mattresses. The issue was no one was going to the mattress stores, but they wouldn’t necessarily have to. We were going to bring the mattress store to them.

We got to work designing a text chatbot that would text our partnering mattress store’s customers in the middle of the night when they were sleeping on their current (obviously bad) mattress. We decided to train this model using human reinforcement learning techniques. Within a few days, my AI-first co-founder Ivan had a working prototype.

The first version wasn’t perfect, but it did illuminate something surprising: the bot was 𝓯𝓻𝓮𝓪𝓴𝔂. But it would work perfectly. At the best, the customer would really enjoy the experience, and at worst, it would be great publicity for the mattress firm.

So we decided to launch it, and it was huge hit! Within 8 hours, Insomnobot3000 had sent over 50,000 texts to over 500 people. The traction we were seeing was bigger than ever — is it what PMF feels like? Continuing onwards over the course of the month we sent over 1.5m texts, reaching over 10,000 happy customers. And thanks to our efforts, the mattress firm was able to launder 10x its normal margins.

However, just shortly after our month long campaign I received this letter from the federal government.

We were in violation of 47 CFR § 64.1200(c)(1): “No person or entity shall initiate any telephone solicitation to any residential telephone subscriber before the hour of 8 a.m. or after 9 p.m. (local time at the called party’s location)”.

Soon, my phone received a barrage of calls from Kaplan & Drake law firm + Levin, Gold & Barrett law firm. We were facing fines of $1500 for EACH text. Luckily, we knew a great lawyer (he’s the same guy that represented SBF). Unfortunately, he did a similar job, and we now owe $15m in fines.

Bye-Bye My American Dream

When I first saw the number, I didn’t know what to say. There were too many zeros to count — was it 15,000,000 or 1,500,000? Either way, it was bad. I remember opening a bottle of green apple sake, and I took the shots like they were nothing. I techniquely didn’t need to sell my house just yet but the sake got to me and I listed it on Zillow. It sold 2 hours later at $20k, which put us just that much closer to paying off our debts.

So What Is 47 CFR § 64.1200(c)(1)?

In short, 47 CFR § 64.1200 is the FCC’s rules enforcing 47 U.S. Code § 227, e.g., the TCPA (Telephone Consumer Protection Act). If you’re in the business of text messaging and you don’t know it, you might be making a rather costly mistake. After all, if the Big Papa can’t escape it, you probably can’t either.

The TCPA sets regulations on how businesses can text consumers. While it might not seem like these are working, especially when you receive your 10th remote work scam text, the TCPA is why you don’t receive a flood of random marketing texts in the middle of the night. As a business, you must stay cognizant of these requirements to keep your business safe from fines.

How Much Are TCPA Fines?

1. $500 per violation

Under 47 U.S.C. § 227(b)(3), each unauthorized call or message — such as sending a marketing SMS without prior express consent — can result in a $500 fine.

2. Up to $1,500 per willful or knowing violation

If a court determines that the violation was willful or knowing, the fine can be tripled to $1,500 per message. This applies even if the sender was aware of the action but not necessarily that it was illegal. This is what Papa John’s was found responsible for in its $16.5M fine court case.

3. “Up to” $500 for Do Not Call (DNC) violations

Violations of the DNC rules under 47 U.S.C. § 227(c)(5) may result in fines up to $500 per call, with the exact amount determined by the court. If you don’t know what the Do Not Call list is, it’s just this — https://www.donotcall.gov/ registry which allows consumers to opt out of telemarketing.

So you can see, these fines get really expensive, even enough to take my home away.

How Are These Fines Enforced?

Per Message Basis: Each individual call or text is considered a separate violation.
Class Actions: Multiple violations can lead to class-action lawsuits, potentially resulting in millions of dollars in damages.
Stacking Violations: Courts may allow for stacking of penalties, such as combining fines for both unauthorized calls and DNC list violations, leading to higher total penalties.

As you can see, this can get extremely expensive very quickly. In fact, in March 2021, the FCC issued a fine of $225 million against the Texas-based telemarketers John C. Spiller and Jakob A. Mears, after they made approximately one billion robocalls to people across the country. This may have been calls, but texts can be similarly expensive, such as Papa John’s needing to pay $16.5M in 2013 for sending texts to non-consenting numbers.

How You Can Avoid TCPA Fines

Luckily, it’s pretty easy to avoid TCPA fines as long as you use some common sense in your messaging.

Obtain Express Written Consent: Secure clear, documented permission before sending marketing texts or calls. You can include something like a checkbox with information on what types of texts you’ll be sending with an offer for 10% off with text opt-in.
Honor Opt-Out Requests: Provide easy opt-out options (e.g., replying “STOP”) and promptly remove contacts from your lists. You also need to watch out for messages like “stop pls”.
Scrub Against Do Not Call Lists: Regularly update your contact lists to exclude numbers on the National and internal Do Not Call registries. This is a bit more relaxed. Some people may be on the DNC but choose to opt-in to your text messages.
Respect Contact Time Restrictions: Limit calls and texts to between 8 AM and 9 PM local time of the recipient. It may seem quirky to send night texts, but it will get you in trouble fast. As this restriction is newer, there are currently a ton of lawsuits incoming regarding these “time of day” violations. Strangely though, the legal theory around this area is not solidified, and despite messages being received at a prohibited “time of day”, texts from listed consumers have opted into may be considered “telemarketing” and not “telephone solicitation”. However, even in that case, the consumers may not have specifically consented to receiving messages between the hours of 9:00 P.M. and 8:00 A.M. But, to be safe, you should avoid these hours until the legal precedence is built for this area.
Maintain Accurate Records: Keep detailed logs of consents, communications, and opt-out requests to demonstrate compliance. Not keeping these or obtaining these may put you in a situation like ViSalus, which had to pay $925 million in fines in 2020 for robocalls without consent. ViSalus later went bankrupt.
Train Your Team: Educate employees on TCPA regulations to ensure consistent and compliant communication practices. It’s not too hard to understand, and if you need something to show them, send them this!

FYI: we’re not affiliated with Casper. I have personally wanted a purple mattress but cannot afford it yet. Send more texts and help me humbly?