LEGISLATIVE ALERT: Michigan SB 1037 Would Harm Ecommerce Companies Nationwide

The Ecommerce Innovation Alliance (EIA) is closely following developments with a bill that would create a Michigan mini-TCPA, including a private right of action, and which may be debated before the end of the year.  Michigan Senate Bill 1037, which was introduced on October 16, 2024, is currently being considered by the Michigan Senate Committee on Finance, Insurance, and Consumer Protection. The EIA has significant concerns about the bill and recently met with the office of the committee chair, Senator Mary Cavanagh, to urge a more balanced approach.

Unintended Consequences for Ecommerce Businesses:

SB 1037 incorporates the most litigation-inducing aspects of other mini-TCPA statutes that we’ve seen proposed or adopted in a few states the past few years, including the Florida Telephone Solicitation Act (FTSA).  For those unfamiliar, the FTSA was one of the first mini-TCPA statutes adopted after the Supreme Court’s decision in Facebook v. Duguid, which limited the reach of the federal TCPA.  The FTSA was originally adopted in 2021 and immediately led to a flood of litigation in Florida courts.  The legislature revisited the bill in 2023 and made substantial changes to correct for the unintended consequences that were harmful to Florida businesses.  

SB 1037, if adopted as currently proposed, is also likely to create a flood of litigation in Michigan, because it will create unintended consequences and new risk for ecommerce businesses nationwide.

Here are some key areas where SB 1037 raises concerns for EIA members:

• Overly Broad Definition of "Telephone Communication": Including not only SMS and MMS, but all text and image-based messages including those sent using “mobile applications.” This definition creates uncertainty for businesses using push notifications and other app-based features and is inconsistent with federal telemarketing regulations.

• Inconsistent Auto-Dialer Definition: The bill's definition goes beyond the federal TCPA and could encompass platforms that send messages only to consenting customers. This creates unnecessary burdens for legitimate businesses.

• Unworkable Requirements for Text Message Marketing: Requirements to provide a first and last name and a voice-capable number are not compatible with how text message marketing actually works, particularly when using shortcodes. These should be replaced with clear rules for receiving opt-out requests via text message.

• Excessive Damages and Shakedown Lawsuits: The bill allows for private lawsuits with hefty damages for each message, even if the recipient consented initially. This encourages frivolous lawsuits and hinders innovation, potentially leading to job losses within Michigan businesses.

The EIA's Call to Action:

The EIA is urging Senator Cavanagh and the Committee to consider these concerns and work towards a solution that protects consumers while still allowing businesses to use legitimate communication channels. We are opposed to a bill of such importance being rushed through the Michigan Legislature during the “lame duck” session before the newly-elected members of the legislature are sworn-in in January.  

We believe that getting it right is of critical importance to the Michigan economy, Michigan consumers, and impacted businesses nationwide. 

A more balanced approach can be achieved by:

• Narrowing the definition of "telephone communication" to exclude messaging other than SMS and MMS.

• Aligning the auto-dialer definition with the federal TCPA to avoid confusion and unnecessary burdens.

• Creating clear, workable opt-out procedures for text messages.

• Limiting private lawsuits and focusing on enforcement by the Attorney General's office.

The EIA stands ready to work with Senator Cavanagh, the Committee, and all stakeholders to find a solution that protects consumers while fostering innovation and growth within Michigan's ecommerce sector. 

Stay Informed and Take Action:

Visit the EIA website at www.ecomm-alliance.org for further updates on this issue. Let your voice be heard while there’s still time! It is possible that action on this bill could happen in November and December, so it is important for ecommerce companies to let their voices be heard now.  Contact members of the Michigan Senate Committee on Finance, Insurance, and Consumer Protection and urge them to consider the EIA's concerns regarding SB 1037.