Maintaining effective member communications is an essential element of every credit union’s operations.
What could be better than conveniently reaching members on their mobile phones, and doing so in the most cost-effective manner?
An automated telephone dialing system (ATDS) and the utilization of so-called “robocalls” (and “robotexts”) offer great promise. Using an automated communications system is a relatively nonintrusive and inexpensive element of an overall communications strategy.
Mobile telephones serve as the primary communication method for many of your members and as an essential tool for the credit union’s collections, marketing, and account services departments.
Unfortunately, recent Federal Communications Commission (FCC) guidance has cast doubt over the current methods of using an ATDS.
FCC declaratory ruling and order
Congress passed the Telephone Consumer Protection Act (TCPA) of 1991 to protect consumers from unwanted telemarketing calls to both landlines and mobile phones.
On July 10, 2015, the FCC issued a Declaratory Ruling and Order (FCC 15-72) to address nearly two dozen petitions related to the agency’s interpretation of several key TCPA provisions. The FCC ruling has provided little comfort and almost no practical safe harbors for the financial services industry.
The ruling presents several significant issues credit unions might need to address, but one area of particular concern is the TCPA’s consent requirement for using an ATDS to contact consumers’ mobile phones.
Basically, credit unions can’t use an ATDS to initiate a call or text without first obtaining the consumer’s prior express consent.
The level of consent depends on the automated communication’s purpose. The TCPA recognizes three types of communications: telemarketing, nontelemarketing, and informational.
A telemarketing call has a higher standard within the regulations and requires a consumer’s “prior express written consent.” This type of consent must include a very detailed disclosure and the affirmative written approval of the member, specific to the consent.
A nontelemarketing call merely requires a consumer’s “prior express consent” (oral or written). A classic example would be an automated collections reminder or “please call” message.
The TCPA allows purely informational communications calls—such as notification that a member’s card has been involved in a breach, or other security advisories—with a consumer’s oral consent.
Because of the higher consent standard for telemarketing calls, it’s essential the nontelemarketing and informational calls remain free of any and all marketing content. Once a credit union includes any element of a marketing or cross-selling message in the communication, the higher express written consent standard likely will apply.
Although a detailed requirement exists for prior express written consent, the FCC guidance provides little insight regarding the technical requirements. Each credit union must make its own determination regarding the adequacy of the consumer’s consent.
Obtaining prior express consent
It’s conceivable—but far from assured—that including a disclosure in your credit union’s standard agreement could meet minimum prior express written consent requirements. Recent litigation has highlighted a trend whereby the nature and conspicuousness of the disclosure has come under increased scrutiny.
Credit unions might try securing prior express consent by running an automated call utilization report to identify members the credit union has called multiple times via the automated system. The credit union can then initiate an outbound calling campaign to seek those members’ consent.
Ask these members for their express verbal consent (“press 1” to opt in, “press 2” to opt out) to use the member’s mobile telephone for occasional reminders. If given, the system will note their consent clearly. If not, the system will code the account to exclude it from an automated calling campaign.
Follow up on the initial consent with an appropriate letter confirming consent, indicating that standard messaging and mobile phone rates might apply, and provide details of your opt-out procedures. In this way, you can quickly establish express consent with the members more likely to benefit from the automated reminder system.
Several organizations promptly challenged the FCC ruling in court, and have requested additional clarifications and modifications. So, it’s conceivable the court will illuminate the requirements of prior express consent over the coming months and years. But for now, unless you’re certain your institution complies with the TCPA, you might consider temporarily suspending ATDS use while you re-evaluate your processes and conduct a full program review.
TCPA compliance review
Follow these steps to evaluate your credit union’s TCPA compliance:
• Review your member disclosures to determine the nature and extent of current member consent to automated communications.
• Conduct a full communications inventory to identify all instances of automated member contact by phone or text. This must include communications initiated by vendors on behalf of the credit union. For each contact, identify the primary method and purpose of the contact
• Streamline the “opt-out” process by designating a phone number and/or website members can use to opt out of telephone communications. Note you must allow members to opt out of these types of communications at any time and in any “reasonable” manner.
• Include training and modified procedures on the TCPA consent and opt-out process for all applicable staff.
• Initiate a full data scrub to identify mobile telephone numbers currently in your database and ensure their placement in the proper data field. Why? Many consumers are transferring their existing landline numbers to a mobile phone.
The consumer doesn’t need to notify you of that change, but once complete, the full protection of the TCPA will blanket the new mobile phone and existing telephone number. A variety of sources exist to determine which numbers associate with wireless carriers.
Full TCPA compliance will be an immense, credit union-wide undertaking that requires resources, effort, and coordination among multiple operational areas.
At a minimum, a successful program update requires the participation of representatives from marketing, collections, information technology, branch operations, lending, card services, call center, and compliance.
Beware of TCPA lawsuits
TCPA provides for either actual damages or statutory damages ranging from $500 to $1,500 per unsolicited call or message. In determining the amount of statutory damages to award, courts analyze whether the defendant “willfully” or “knowingly” violated TCPA.
In February 2015, a federal court approved a $75.5 million settlement of a class-action suit against Capital One and several collections agencies for violating the act.
The financial services marketplace is rife with consumer protection attorneys identifying opportunities for litigation and filing the appropriate demand letters and lawsuits. The more members credit unions contact through automated systems, the higher the compliance risk. Nail down your TCPA compliance now before it’s too late.
DAVID A. REED is a partner in the law firm of Reed and Jolly PLLC.