Is Your Credit Union Afraid To Call Its Members?

September 14, 2020 at 9:32 am Leave a comment

This may seem like a ridiculous question but the ridiculous part is that existing federal law has been so mangled beyond recognition that it is a question that any credit union concerned about complying with the Telephone Consumer Protection Act (TCPA) should be asking itself.

The need to clarify the reach and scope of this statute is underscored in a brief submitted by CUNA on Friday in a case pending before the Supreme Court.  The case, Facebook, Inc. v. Duguid, Noah, involves an appeal by Facebook challenging the scope of the TCPA, an issue which has split courts around the country.  CUNA was one of several prominent organizations which filed briefs to the court explaining how an expansive interpretation of the TCPA does more harm than good to consumers.

As readers of this blog know, the TCPA was well intended legislation passed by Congress in the early 90s to cut down on those obnoxious dinner time conversations you get from telemarketers and those disconcerting pre-recorded pitches that are left on your cell phone in the middle of the most important meeting of your day.  The basic idea is that consumers should not be subject to a deluge of automated marketing pitches without first giving their consent.

Unfortunately, as readers of this blog also know, this well intended concept has transformed into a tripwire of litigation with boundaries that are so unclear that many credit unions simply avoid using any technology which could potentially trigger TCPA compliance concerns.  According to CUNA’s Supreme Court amicus, 76% of credit unions responding to a 2017 survey reported that it is very difficult or somewhat difficult to determine whether or not their communications are TCPA compliant.  The result, according to the survey, is that 75% of responding credit unions have curtailed the use of more efficient technology simply to avoid running afoul of the TCPA and its strict liability for penalties of $500 per violation.  In fact, American Airlines federal credit union has abandoned the use of automatic technology altogether.  This is a remarkable concession from a $5.6 billion credit union with 235,000 members.

The core of the confusion comes down to the answer to that classic School House Rock ditty “Conjunction Junction, what’s your function?”  Under §227 (a) an “automatic telephone dialing system” means 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.

As succinctly explained in CUNAs brief, the court is being asked to decide whether the TCPA encompasses any device that can store and automatically dial telephone numbers, even if it does not use a random sequential generator.  If the answer is yes, then virtually any communications device this side of the iPhone triggers TCPA compliance.

Entry filed under: Compliance, Federal Legislation, Legal Watch, Regulatory. Tags: , , , , , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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