Advertising Law Blog

A federal lawsuit challenging the state of Texas’ recent expansion of telemarketing regulations to include text messages has ended with a stipulation of settlement that applies a more limited scope of the registration requirement for SMS marketing programs. This blog has previously covered this issue as businesses were vexed by the dilemma of whether or not registration as a telemarketer in Texas was required under a confusingly worded new state law known as SB 140.

The law was challenged on the first day it took effect, as the Ecommerce Innovation Alliance (EIA) and two businesses jointly filed a federal suit in the Western District of Texas. The complaint argued that SB 140 unconstitutionally imposed registration and disclosure requirements on businesses that send marketing texts only to consumers who have opted in. The plaintiffs correctly asserted that the law’s broad wording swept legitimate, consent-based marketing into the same category as unwanted spam. The lawsuit sought an injunction that would have blocked enforcement of SB 140 while the court decided whether the impermissibly hindered commercial speech.

In opposing the injunction, the State of Texas took the position that SB 140 was never intended to regulate businesses engaged in opt-in marketing programs. The Attorney General’s office explained that it interprets the statute’s definition of a “call” under Chapter 302 of the Texas Business and Commerce Code to exclude text transmissions sent with a consumer’s prior agreement. Under that reading, companies that send marketing messages only to willing recipients are not required to register or comply with Chapter 302’s disclosure obligations.

That interpretation proved decisive. On November 6, 2025, before the court issued a ruling, the parties filed a joint motion to dismiss the case, citing agreement on how the statute applies. The settlement document confirms that, as understood by the Texas Attorney General, businesses that operate consent-based text message marketing programs are exempt from SB 140’s registration and reporting requirements. The key language of the stipulation of dismissal stated that,” businesses which operate consent-based text message marketing campaigns are specifically exempted from Chapter 302” and are not required to comply with its registration and disclosure requirements.

While this development provides a strong basis for businesses to avoid registering as a telemarketer in Texas, it does not resolve the issue entirely. It is inevitable that most text messaging campaigns will eventually reach a consumer who did not opt in, because someone entered a number incorrectly, opted in when they did not have authority to do so, or the opt in was made by a prior owner of the mobile number. In such case, the plaintiff’s attorney will seek the enhanced penalties from an unregistered sender and the business will have a difficult time asserting a consent-based defense. 

But for the time being, the settlement effectively resolves the dispute while leaving SB 140 intact for its intended purpose, curbing unsolicited text solicitations. For marketers, it removes much of the uncertainty that triggered the litigation.