A chilling text message for dealers
Some retailers are wary after $2.5 million settlement against Lithia
This year's $2.5 million legal settlement against Lithia Motors Inc. for sending unwanted text messages to customers kept Shawn Petley on edge as he picked a digital marketing vendor for Quality Imports in Fort Walton Beach, Fla.
Petley, e-commerce director for Quality Imports, said the group two months ago chose an experienced national vendor with several large clients in an effort to avoid the hot water that Lithia found itself in.
"We had to ensure that if we were jumping feet first that we had a vendor with the right resources and were compliant on all its text programs," said Petley, who chose Trumpia as Quality Imports' digital marketing vendor. Trumpia, of Anaheim, Calif., lists among its clients Harley-Davidson and ESPN.
Dealerships send texts, short messages on cell phones, to sales and service customers. The texts can tell a customer when his or her car's oil change has been completed, for instance, or they can advertise a new-car rebate.
Quality Imports has five franchises and three rooftops at its location between Pensacola and Panama City in the Florida panhandle. The franchises are BMW, Mercedes-Benz, Toyota/Scion and Mazda.
The Lithia texting case, which sent shock waves through dealerships' digital marketing departments late last year, was still a hot topic at the Digital Dealer Conference and Exposition this month in Orlando.
In the case, Lithia was hit with a class-action lawsuit for broadcasting to 57,800 consumer cell phones text messages that failed to adequately allow the recipients to opt out of future texts. That option is crucial because, unlike mass e-mails or phone calls, most text messages are charged to recipients whether solicited or not.
A second Lithia broadcast text went to 48,000 of the previous recipients, 6,190 of whom said that they tried to opt out but were unable to.
In a settlement reached in February, Lithia's third-party text vendor, DMEautomotive, agreed to pay the $2.5 million settlement against Lithia, according to court documents. The settlement agreement is awaiting approval by a federal district court judge in Seattle.
Publicly held Lithia, of Medford, Ore., ranks No. 9 on the Automotive News list of the top 125 dealership groups in the United States with retail sales of 44,537 new vehicles in 2011. DMEautomotive declined to comment for this story.
Victor Vella, e-commerce director for Spitzer Auto Group, said the Lithia settlement caused him to slow a push into text messaging.
The group was "gung-ho" for texting because of the medium's effectiveness in reaching an exploding population of mobile-phone users, Vella said. "People use text. It's easy. It's the now generation," he said.
But rather than launch an automated broadcast campaign using texts to market sales and service, Vella said the 16-store group in northeast Ohio is experimenting with manually texting some customers from one store.
"We're dabbling. We're really nervous," Vella said.
Petley said he is pushing ahead with Quality Imports' broad texting campaign because the group believes it must offer customers options for its messages. He said all customers buying or having vehicles serviced at the stores can "opt in" to receiving dealership communications via texts.
The group also has had 300 customers in the past two months agree to join a "text club," in which they receive a discount or exclusive offer once a month.
Said Petley: "Texting gives us an opportunity to reach people the way they want to be reached."
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