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Urban Outfitters Lawsuit Puts Retail Tech Platform in the Hot Seat

Urban Outfitters‘ markdown messages may be impacting more than the retailer’s profit margins.

A class action lawsuit filed in Florida alleges that Urban Outfitters sends unsolicited promotional text messages to consumers without them having knowingly signed up for them.

From June 19-June 30, the company sent plaintiff Martin Tooley at least five promotional text messages containing language such as “50% Off hundreds of styles ENDS TONIGHT” or “ALL DRESSES (seriously, all of them) are ON SALE.”

The suit claims that Urban Outfitters sent the same text messages to other class members throughout Florida and the rest of the U.S. But the messages sent to Florida residents allegedly violate the state’s Florida Telephone Solicitation Act (FTSA), which went into effect July 1, 2021, due to lack of “prior express written consent.”

In Florida, four points constitute any agreement with prior express written consent. The agreement must bear the consumer’s signature in writing and include the phone number to which the signatory authorizes a telephonic sales call to be delivered.

Additionally, the agreement must clearly authorize that the party making the phone call, text message, or voicemail, can deliver or will deliver the message using an automated system or a recorded message.

Finally, this consent includes a “clear and conspicuous” disclosure informing the contacted party that they are authorizing the phone call, text message or voicemail; and that they are not required to directly or indirectly agree to enter into any agreement as a condition of purchasing property, goods or services.

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Piling onto the claims that Urban Outfitters contacted him without written consent in the state of Florida, Tooley’s complaint takes a national scope. According to the filing, Tooley registered his phone number with the national do-not-call registry in September 2009.

Under the federal Telephone Consumer Protection Act (TCPA), “no person or entity shall initiate any telephone solicitation” to consumers register their phone number on the national do-not-call registry.

As such, according to the lawsuit the retailer’s texts constitute telemarketing because they encouraged the future purchase or investment in property, goods, or services, i.e., the sale of Urban Outfitters clothing.

Urban Outfitters used a messaging platform to transmit the text message blasts automatically and without any human involvement, the complaint said. Although not identified by name in the lawsuit, the links displayed in the retailer’s text messages to Tooley confirm that the platform is mobile messaging solution Attentive, which merchants and brands use to deliver targeted promotions to consumers.

A testimonial on Attentive’s website describes the technology’s impact at Urban Outfitters.

“Through tests like these, we were able to learn that sending texts to active customers across channels will create incremental demand. You don’t have to choose between a text or an email or a push notification—customers like to engage with brands across all channels,” according to Bryan Jengehino, global mobile marketing associate manager for Urban Outfitters.

In the suit, the plaintiff claims that the retailer was not required to and did not need to use the platform to send messages, but did so to maximize the reach of its text message advertisements “at a nominal cost.”

According to a case study, Urban Outfitters partnered with Attentive to launch its text message marketing channel and quickly grew subscribers using list growth tools, including Attentive’s “Email-First” sign-up unit to collect both email addresses and phone numbers.

Attentive can select and dial numbers automatically from a list of numbers, which is a feature the plaintiff said the retailer used. Tooley’s case also indicates that the platform can schedule a time and date for the future transmission of text messages, and it has an auto-reply function that automatically transmits text messages.

The text messages, Tooley alleges, caused the plaintiff and the class members harm, including statutory damages, inconvenience, invasion of privacy, aggravation, annoyance and wasted time.

The plaintiff is seeking statutory penalties of $1,500 for each call in violation of the FTSA, on behalf of a proposed class numbering in the “tens of thousands.” When accounting for the total potential class members, Tooley is seeking more than $5 million in damages.

Along with the damages, Tooley demanded that Urban Outfitters take affirmative steps to preserve all records, lists, electronic databases, or other itemization of telephone numbers associated with the communications or transmittal of the calls.

“Upon information and belief, defendant maintains and/or has access to outbound transmission reports for all text messages sent advertising/promoting its services and goods,” the suit said. “These reports show the dates, times, target telephone numbers, and content of each message sent to Plaintiff and the Class members.”

The suit comes as Urban Outfitters parent Urbn saw second-quarter net sales increase 2.2 percent over the same period last year to $1.18 billion. But the Urban brand itself has seen better days, with comparable sales sliding 9 percent. And across Urbn’s entire brand portfolio, gross margin contracted 5.9 percent to 31.7 percent, largely due to increased markdowns.

Urban Outfitters isn’t the only retailer recently in hot water for potentially violating FTSA laws. Photography service and stationery retailer Shutterfly is currently entangled in a similar class action lawsuit filed in Florida court in July, in which the plaintiff alleges receiving three different text messages from an automated system operated and used by the home goods seller.

Similarly, the plaintiff alleges that neither she nor any of the proposed class members ever consented to such text messages and that the messages were formed and delivered through Shutterfly’s platform.