The Banking Industry Challenges the TCPA

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The Banking Industry Challenges the TCPA
By:Sheri Greenhaus
Stage: Complete
Approved Version Exists: Yes
Approved Publish Date:May 15, 2015 11:04 AM
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Blog contributed by Gryphon Networks

The Federal Communications Commission (FCC)’s rules under the federal Telephone Consumer Protection Act (TCPA), particularly those regulations around automated dialers, are some of the most contested issues facing the financial services industry today.  Unlike other regulations bankers face, the TCPA does not regulate industry but behavior; therefore, blanket regulations are impacting all businesses across all markets regardless of how each organization utilizes automated dialers.  Unlike most robocallers, the financial services industry has a valid claim that their use of automated dialers is not only legitimate but a necessity for the benefit of the consumer.  Recently both the American Bankers Association (ABA) and the Consumers Bankers Association (CBA) filed separate petitions with the FCC asking for clarity on how bankers may appropriately and legally use automated dialers.

In order to understand the petitions, we must first understand the regulations around the use of automated dialers.  The TCPA restricts the use of automatic dialing systems, artificial/prerecorded voice messages, SMS text messages received by cell phones, and the use of fax machines to send unsolicited marketing  communications.  Specifically, the TCPA prohibits the use of an “automatic telephone dialing system” to contact “any telephone number assigned to a…cellular telephone service” without “express written consent” from the party being called.  Causing confusion in the industry and in the courts hearing thousands of TCPA suits, the definition of “automatic telephone dialing system” is broad and all encompassing; specifically, it is defined as “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator, and (B) to dial such numbers.”  The statutory definition also provides that in order to be considered an “automatic telephone dialing system,” the equipment need only have the “capacity to store or produce telephone numbers” without human intervention, even if that capacity is turned off.

While other industries may use automated dialers to create and dial telephone numbers arbitrarily for telemarketing purpose, the banking industry uses automated dialers as an essential tool for communicating with its customers.  Banks must engage in a wide range of informational, non-marketing communications from notification of potential fraud to data breaches to pending money transfers, all of which are beneficial to the consumer, and at times, in compliance with state and federal law.  When time is of the essence and bulk notifications must be sent, automated dialers reduce the time it takes to dial a number manually and reduces the chance of error of reaching an incorrect consumer and raising unwarranted red flags.  Unfortunately, more than two-fifths of American homes (44%) have only cell phones-no landline phone; therefore, without express consent, granting the bank exclusive permission to use an automated dialer to contact the consumer at the specified cell phone number, banks cannot contact almost half of the American households even if for beneficial consumer notifications.

Late last year, the ABA filed a petition asking the FCC for an exemption to the automated dialing rules that would permit calls to wireless telephone numbers without prior express consent,  if the calls were placed for one of the following reasons:

  1. Calls to notify consumers about risk of fraud/identity theft;
  2. Data breach of customer’s personal information;
  3. Steps consumers can take to prevent or remedy harm caused by data breaches; and
  4. Actions needed to complete a money transfer.

The ABA is asking that calls made be placed to wireless telephone numbers without consumer consent because, “all of these messages serve consumers’ interests and can be conveyed most efficiently and reliably by automated calls to consumers’ telephones, which increasingly are wireless devices.”

Similarly, the CBA also filed a petition in the fall of last year seeking clarity from the FCC on the definition of “intended recipient” under the TCPA so that financial institutions may know how to handle calls placed to what they believe are the intended recipients but instead the telephone number has been reassigned to another consumer.  The CBA has asked the FCC to declare that “called party” for purposes of the TCPA’s restrictions on automated calls placed to cell phones refers only to the “intended recipient” of the call.  By confirming that only “intended recipients” are “called parties,” the CBA claims the FCC will:

  1. “Prevent potential chilling of beneficial consumer communications;
  2. Shield consumers from higher costs stemming from institutions’ increased litigation and compliance expenses;
  3. Quash frivolous litigation that is inundating courts and creating inconsistent law; and
  4. All small businesses to grow and nonprofits to reach their goals without the threat of litigation.”

The CBA states that if a caller is liable for obtaining the consent of what they believe is the called party but the telephone number has been reassigned and the new identify of the called party cannot be ascertained before the call, then compliance with the prior express consent requirements is impossible.  Despite even the most well-meaning professionals, the use of automated dialers has forced an unprecedented amount of TCPA lawsuits, and “the continued confusion over the meaning of ‘called party’ under the TCPA prior express consent provision has created an environment of legal risk that prevents institutions from sending valuable non-telemarketing information to their customers by the most effective means.”

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