Does your company use automated dialing software, call or text consumers’ cell phones, send pre-recorded voice messages or buy prospect lists? These are just a few examples of the types of activities that may require Telephone Consumer Protection Act (TCPA) compliance. TCPA violations can spark major fines, damage your company’s reputation, and result in D&O claims.
The Cost of TCPA Noncompliance
The TCPA was signed into law in 1991 to provide consumer protections against unsolicited telemarketing. Over the years, it has evolved alongside telemarketing practices and now covers texts as well as calls and faxes.
Under the TCPA, consumers can sign up for the National Do Not Call Registry, and businesses must honor this. Additionally, businesses must obtain consent before using auto-dialers or prerecorded messages to send calls or texts.
Failure to comply with the TCPA can be costly, with fines of $500 to $1,500 per violation as well as the risk of class action litigation. Because alleged infractions often involve multiple consumers, the costs can add up quickly, sometimes resulting in millions of dollars. Companies may face additional fines under state regulations.
In one recent example, the FCC has proposed a fine of nearly $4.5 million against Telnyx LLC over allegations of an illegal robocall scheme. In another case, National Mortgage News says Anywhere Real Estate has agreed to pay $20 million to settle a TCPA lawsuit that was about to go to a jury trial.
For large corporations, these fines may be manageable. For microcaps, they can be financially disastrous.
TCPA Compliance Just Got Harder
New TCPA rules went into effect in 2025, increasing the compliance burden for businesses.
According to The National Law Review, businesses can no longer use a single instance of consumer consent that applies to multiple sellers and partners. Instead, they must follow a one-to-one consent rule, acquiring written consent for each marketer that is “logically and topically related” to the website used to obtain consent. Additionally, businesses cannot insist on a single way of revoking consent. Instead, they must allow consumers to revoke prior consent through any reasonable method, such as replying stop to a text.
These new requirements are now in effect, and have been for several months, so businesses should be in full compliance. However, some businesses may still be using call lists that include numbers with improperly obtained consent, or they may not have updated their business practices to be in full compliance. As a result, they may be exposing themselves to regulatory fines and class action lawsuits. Business leadership may also be exposing themselves to D&O claims and personal liability.
Implications for Board Members
Consider a scenario in which a company is accused of TCPA violations, with a total of approximately 2,000 alleged incidents. The fines could be anywhere from $1 million to $3 million, and a class action lawsuit could be even more expensive once defense costs and settlements or jury awards are factored in.
These costs are significant, and they may be only the beginning of a company’s troubles. TCPA violations are not just a violation of federal law. They’re also a violation of consumer trust. Unwanted calls and texts have become a major annoyance, and companies found guilty of such practices may be seen as untrustworthy, harming the business’s reputation and having a difficult-to-quantify impact on the bottom line.
It could also affect shareholder value. Between the hefty fines, expensive lawsuits, and reputational damage, the company’s stock prices could suffer. When that happens, shareholders may file a lawsuit against the company and its board of directors.
Governance Responsibilities
Board members are ultimately responsible for the company’s policies and management. If the company’s practices are found to be in violation of federal law, the board members can be held accountable. A shareholder lawsuit may name individual board members, putting their personal assets at risk if the company is not able to provide indemnification.
Does your D&O coverage protect you?
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Does your policy include regulatory exclusions or limitations that could reduce coverage?
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Do you have sufficient limits? D&O policies provide three sides of coverage to protect both the company and its leaders, but these sides share a limit, so it’s possible to exhaust coverage and leave nothing for the leaders. Excess side A coverage can provide additional coverage to address this problem.
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Will you have coverage if the company goes bankrupt? Lawsuits can be filed even after a company has failed and coverage has terminated. Robust tail coverage can provide extended protection.
Are you confident that your D&O protection is comprehensive enough to shield you from liability? Don’t take chances. Contact NSI for a complimentary review of your D&O coverage.
