Federal Constitutional Challenge Filed Against Texas SB 140 SMS Marketing Regulations

On September 1, 2025, a coalition of e-commerce businesses and industry advocates filed a federal lawsuit in the Western District of Texas challenging the constitutionality of Texas Senate Bill 140 (SB 140). The plaintiffs, Ecommerce Innovation Alliance, Flux Footwear, and Postscript, argue that the new law’s expansive regulations on text message marketing violate fundamental constitutional protections and impose unreasonable burdens on legitimate businesses that only send messages to customers who have given their consent.

This legal challenge represents a significant test case for state-level SMS marketing regulations and could have far-reaching implications for how businesses communicate with their customers across the United States.

December 2025 Update

The Texas Attorney General settled the case and provided some clarity.

Background: The Legislative Intent vs. Legal Reality

The Problem SB 140 Was Meant to Solve

Texas Senate Bill 140 was conceived with laudable intentions. According to the lawsuit, Senator Bob Hall, the bill’s sponsor, repeatedly emphasized that the legislation was designed to protect consumers from “unwanted and unsolicited text messages” and “unauthorized text messaging peddlers.” The legislative record shows consistent messaging that SB 140 was about protecting Texans from spam and scam texts—not regulating legitimate business communications with consenting customers.

How the Law Actually Works

SB 140 amended Chapter 302 of the Texas Business & Commerce Code to extend telemarketing regulations that previously applied only to phone calls to now include text messages. The law requires businesses sending commercial text messages to Texas residents to:

1. Register with the Texas Secretary of State and pay a $200 fee
2. Obtain a $10,000 bond, certificate of deposit, or letter of credit
3. Provide extensive disclosures with every marketing text message
4. Submit detailed reports and maintain current registration information

The Critical Drafting Error

The lawsuit reveals what appears to be a significant legislative drafting error that transformed SB 140 from a targeted anti-spam measure into a broad regulation affecting all commercial text messaging.

Originally, SB 140 would have simply incorporated Chapter 304’s definition of “telephone call” into Chapter 302. This definition includes an important exception: transmissions to mobile numbers that customers “have agreed to receive” are not considered “telephone calls” subject to regulation.

However, during the legislative process, a substitute version removed the word “telephone” from the definition of “telephone solicitation,” effectively severing the connection to the consent exception. This change, which the plaintiffs argue was likely an inadvertent scrivener’s error, brought consent-based text messaging back within the law’s scope.

The Constitutional Challenges

First Amendment Commercial Speech Violations

The lawsuit’s primary constitutional challenge centers on the Central Hudson test for commercial speech restrictions. Under this Supreme Court precedent, regulations on commercial speech must:

1. Address lawful, non-misleading speech
2. Serve a substantial government interest
3. Directly advance that interest
4. Be narrowly tailored

Where SB 140 Fails the Test:

The plaintiffs argue that while protecting consumers from unwanted messages is a substantial government interest, SB 140 fails the third and fourth prongs because:

• It doesn’t materially advance the stated interest: International scammers and domestic bad actors are unlikely to comply with registration requirements, while legitimate businesses bear the entire compliance burden
• It’s not narrowly tailored: The law applies to all commercial text messages, even those sent to customers who specifically requested them

Due Process Vagueness Challenges

The lawsuit raises two significant vagueness challenges:

1. Location Ambiguity The law applies to messages sent to “purchasers located in Texas,” but businesses have no reliable way to determine where customers will be physically located when messages are delivered. With number portability and travel, area codes don’t indicate current location, and real-time location data is protected information that wireless carriers don’t share with businesses.

2. Undefined Terms in Exemptions SB 140 includes exemptions for messages to “current or former customers” and businesses operating “retail establishments,” but these terms are undefined, creating uncertainty about who qualifies for protection.

The Practical Business Impact

Compliance Burden

The registration requirements under SB 140 are extraordinarily comprehensive, requiring disclosure of:

• Personal information about officers and employees (including home addresses)
• Business financial institution details
• Criminal and civil litigation history of leadership
• Detailed product descriptions and sales literature
• Supplier and manufacturer information

All this information becomes public record, raising significant privacy and competitive concerns.

Disclosure Requirements

Perhaps most problematic are the mandatory disclosures required with every marketing text message. These include:

• Complete street address of the sending location
• Salesperson’s location (potentially home addresses for remote workers)
• Detailed information about promotional offers
• Manufacturer details for sale items

Given that text messages are limited to 160 characters, these disclosures could require 2-3 additional messages per marketing communication, dramatically increasing costs and creating the very spam problem the law was meant to prevent.

Penalty Structure

The enforcement mechanisms create severe financial exposure:

• Civil penalties: Up to $5,000 per violation
• Private lawsuits: Texas Deceptive Trade Practices Act claims with attorney fees
• Criminal liability: Class A misdemeanors punishable by up to $4,000 in fines and one year in jail
• Surety claims: Recovery against the required $10,000 bond

For a platform like Postscript, which sent over 1 billion messages to Texas area codes in a 365-day period, potential exposure could exceed $13 billion daily.

Key Players in the Lawsuit

E-commerce Innovation Alliance (EIA)

A Florida-based nonprofit representing e-commerce businesses and technology vendors. EIA focuses on helping companies navigate telemarketing laws and addressing unintended consequences of consumer protection statutes.

Flux Footwear

A Texas-based athletic shoe company with nearly 200,000 SMS subscribers, an estimated 9-10% of whom have Texas area codes. Flux offers customers 20% back on their first purchases when they opt into text messaging.

Postscript

A leading SMS marketing platform serving over 26,000 ecommerce businesses, with approximately 9-10% of messages sent to Texas residents. As a founding EIA member, Postscript emphasizes compliance and requires customers to obtain proper consent before sending messages.

Legal Strategy and Implications

Standing Arguments

The plaintiffs establish standing through several theories:

• EIA: Associational standing representing members who would individually have standing
• Flux: Direct injury from potential prosecution and compliance burdens
• Postscript: Potential liability as a “salesperson” under the statute and injury from enforcement against customers

Requested Relief

The lawsuit seeks:

• Declaratory judgment that SB 140’s requirements are unconstitutional as applied to consent-based messaging
• Preliminary and permanent injunctions prohibiting enforcement against plaintiffs and EIA members
• Attorney fees under 42 U.S.C. § 1988(b)

Broader Industry Implications

The “Mini-TCPA” Trend

Texas SB 140 represents part of a broader trend of states enacting “mini-TCPA” laws following the Supreme Court’s decision in Facebook v. Duguid, which narrowed federal TCPA protections. Other states have taken different approaches. Oregon, for example, specifically allows businesses to rely on area codes for compliance purposes.

Compliance Challenges for National Businesses

The lawsuit highlights the practical impossibility of compliance for businesses operating across multiple states with varying SMS regulations. The lack of standardization creates a patchwork of requirements that may effectively chill legitimate business communications.

Potential for Litigation Abuse

The plaintiffs argue that SB 140’s broad scope and severe penalties create opportunities for “serial plaintiffs and opportunistic law firms to exploit technicalities or ambiguities” rather than address genuine consumer harm.

Legal Precedents and Likely Outcomes

Commercial Speech Doctrine

The lawsuit relies heavily on Central Hudson and its progeny, particularly recent Fifth Circuit decisions in cases like Free Speech Coalition v. Paxton and National Religious Broadcasters v. FCC. The commercial speech analysis will likely focus on whether the law’s broad application to consent-based messaging materially advances consumer protection.

Vagueness Challenges

The vagueness claims face the heightened scrutiny applicable to laws affecting First Amendment rights. Courts have been increasingly willing to strike down regulations that fail to provide clear guidance, particularly when they chill protected speech.

Preliminary Injunction Prospects

The plaintiffs appear to have arguments for preliminary relief, given:

• Likelihood of success on First Amendment and due process claims
• Irreparable harm from chilled speech and compliance costs
• Public interest in protecting constitutional rights
• Lack of harm to defendants from maintaining the status quo

Industry Best Practices and Recommendations

For Businesses Operating in Texas

While the lawsuit proceeds, businesses should consider:

1. Documenting consent practices thoroughly
2. Reviewing exemption eligibility under current law and, if not exempt, potentially proceeding with registration and/or taking risk mitigation steps, such as not texting those who have not consented and made a bona fide purchase
3. Consulting legal counsel on compliance strategies
4. Monitoring legal developments closely

For the SMS Marketing Industry

This case underscores the need for:

• Industry-wide advocacy for reasonable regulations
• Clear consent documentation standards
• Coordinated legal challenges to unconstitutional restrictions
• Legislative engagement to prevent similar overreach

Conclusion

The challenge to Texas SB 140 represents a critical moment for the SMS marketing industry and digital commerce more broadly. While protecting consumers from unwanted communications is a legitimate goal, regulations must be carefully crafted to avoid trampling constitutional rights and harming legitimate business activities.

The lawsuit’s success could establish important precedents limiting states’ ability to impose overly broad restrictions on consent-based commercial communications. Conversely, if Texas defends the law successfully, other states may follow with similar regulations, creating a fragmented and potentially unworkable compliance landscape.

The case also highlights the importance of precise legislative drafting when regulating digital communications. The apparent scrivener’s error that expanded SB 140’s scope illustrates how minor changes in statutory language can have significant practical consequences for businesses and consumers alike.

As this litigation unfolds, it will likely influence not only Texas law but the broader national conversation about how to balance consumer protection with business communication rights in the digital age. The outcome could shape SMS marketing practices for years to come and establish important boundaries for state regulation of interstate digital commerce.

---

This analysis is based on the complaint filed September 1, 2025, in the Western District of Texas. Legal proceedings are ongoing, and outcomes may vary based on additional facts and legal arguments presented during litigation.