Posts tagged ‘TCPA’

SC Makes it Easier to Reach out and Touch Someone

It’s been more than a week now since a unanimous Supreme Court dramatically narrowed the reach of the Telephone Communication Protection Act (TCPA) and you can still hear the moans coming from class action attorneys everywhere who were feasting on alleged violations.

Since 1991, Congress has prohibited businesses from using auto-dialers to reach out to consumers without first getting their permission.  An auto-dialer is a device that 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.”

Violations of the Act start at $500 and go up to $1,500 for willful violations.  In recent years, the TCPA has been used against both banks and credit unions.  In Facebook, Inc., Petitioner v. Noah Duguid, et al, Facebook was sued by a disgruntled consumer who received text messages that someone was trying to access his account.  The problem was that he, like your faithful blogger, is one of the 10 people left in the universe who doesn’t have a Facebook account.  Since Facebook reached out to him without his permission using an automated system, he claimed that it violated the TCPA.

Had his argument been successful, every cell phone in America would come within the reach of the TCPA.  In contrast, the Supreme Court decided as a matter of statutory interpretation that Facebook had the better side of the argument.  The Supreme Court ruled that for the TCPA to apply, the automated system must use a random or sequential number generator to both store and produce numbers to call.  Facebook uses an automated system to call its members, but does not use a random or sequential number generator. 

The Court said that it was up to Congress to give Mr. Duguid the interpretation he was looking for.  Senator Markey indicated that he plans to do just that.  In the meantime, hundreds of suits are legal dead ends.

April 9, 2021 at 9:22 am Leave a comment

Is Your Credit Union Afraid To Call Its Members?

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.

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

Why This TCPA Case Matters To Your Credit Union

The Supreme Court yesterday heard a case challenging the constitutionality of the Telephone Consumer Protection Act (TCPA). If press reports are accurate, the justices seem as confused about the TCPA as every business and credit union that has struggled with its restrictions. It’s possible, just possible, that this case will result in giving you more flexibility to reach out to your members.

The TCPA generally prohibits businesses from calling, emailing or texting consumers using auto-dialers without first getting their permission. The statute contains an exception however for calls involving the collection of federal loans. For example, the statute doesn’t bar lenders from pestering former students with robocalls about repaying their delinquent college loans. In addition, as I have explained in many a blog, the statute not only applies to robocalls but to any call made using a system capable of making robocalls.

In Barr v. American Association of Political Consultants Inc. the Association argues that these exceptions demonstrate that the statute violates the First Amendment since its restrictions are based on the content of the robocaller’s message. A lower court agreed but refused to strike down the entire statute. Instead, that court eliminated the exception in the statute that allows Federal debt collectors to make unsolicited phone calls. In the case before the Supreme Court, the consultants are asking the court to confirm that the statute violates the First Amendment. According to the Court watchers, most justices seem inclined to agree that the statute violates the First Amendment.

The exciting part for our purposes (yes I get excited easily) is that the Court may find that its only remedy is to strike down the statute in its entirety. This is no minor issue. The TCPA has become the single most litigated consumer protection law in the country. Its broad interpretation has exposed many a credit union to a potential class action lawsuits and made it more difficult than it should be for the industry to reach out to its members.


May 7, 2020 at 9:55 am 1 comment

Tawdry Misconduct At NCUA Uncovered By Inspector General

Reports of marijuana consumption, visits to strip clubs and possible sexual harassment involving NCUA’s office of General Counsel are some of the highlights from a report released by the Office of Inspector General on Friday. Some news just speaks for itself.

 Reach Out And Block Someone

There are many times when legislators and regulators use a chainsaw when they need a scalpel. The leading example of this unfortunate impulse continues to be the TCPA and its regulatory framework which not only take aim against obnoxious robo-calls but are also making it difficult for legitimate businesses including banks and credit unions to engage in rudimentary member communication.

Just how big a deal is this? Recently NAFCU and CUNA signed on to a letter with representatives of several other industries highlighting the practical consequences of the FCC’s overzealous implementation of the fatally antiquated federal statute.

According to the letter, callers and consumers “are not receiving proper notice or procedural protections with blocked or mislabeled calls. If left unchecked, these issues will have significant negative impact on consumers…” For example, the letter noted that two factor identification requests are being blocked as are security related messages and fraud alerts. These aren’t all that useful hanging out in your SPAM folder.

Of course all this was predictable. Remember that this past summer the FCC rushed out regulations giving telephone companies greater protections to more aggressively block suspected robo-calls. At the time credit unions and others warned that this proposal would result in unintended harm to consumers. The FCC went ahead with the rule but coupled it with a mechanism to create a “safety valve” to ensure that consumers could alert the FCC to the fact that legitimate calls were being blocked. The letter includes suggested modifications to the blocking techniques of phone companies. Hopefully some of these will be implemented but I’m not holding my breath.

Get Ready for One Wild Financial Rollercoaster

I’ve included a graph of the Ten Year Treasury Note which continues to drop lower and lower and lower. Combine this with a precipitous drop in oil price and the spreading coronavirus pandemic and today isn’t a good day to check out how your 401k is doing.

March 9, 2020 at 9:19 am Leave a comment

Why Robocall Crackdown Is Hurting Your Credit Union

Contrary to popular belief the biggest obsession in DC right now isn’t the impeachment trial; it’s auto dialing. While it’s hearting to see that the Democrats and Republicans can agree to something, the result of this bi-partisan obsession is that it’s trickier for your credit union to legally communicate with its members than it should be.

First we have yet another decision– Glasser v. Hilton Grand Vacations Co., LLC, No. 18-14499 (11th Cir. 2020)- interpreting what an auto dialer is for purposes of the Telephone Communications Protections Act. Remember, whether or not your credit union is subject to the TCPA is totally dependent on whether or not it is using an auto-dialer when it reaches out and touches someone. Law 360 is reporting that the 11th Circuit refused to allow an individual to go forward with this class action lawsuit claiming a violation of the TCPA.

The case got my attention because the court agreed with an earlier decision by the Court of Appeals for the D.C. Circuit which I have blogged about – ACA International v. Federal Communications Commission- which rejected an expansive interpretation of auto-dialer championed by our friends on the West Coast. The split between the circuits increases the likelihood that the Supreme Court will have to decide how to interpret the TCPA.

Of course, the more logical step would be for Congress to amend the TCPA to make sure that it outlaws abusive telemarketing as opposed to acting as a tripwire for class action lawsuits. But the odds of anyone in Congress voting for a bill which could be attacked as weakening the TCPA are about as good as Donald Trump being removed from office by the Senate.

All this is happening against the backdrop of heightened regulatory vigilance of auto dialers. For example, the DOJ is seeking to shut down two auto dialer companies that facilitated auto dialer operations based in New York and Arizona, which the government claimed specialized in ripping-off the elderly. In addition, regulators are continuing to review whether even more TCPA regulations should be amended. As a matter of fact, it was this comment letter from CUNA last night that got me thinking about this subject for today’s blog.

There is a reason I am providing you with this parade of horribles. No one likes robocalls, or has sympathy for companies that facilitate shams intended to pressure people into giving up their money. But there are legitimate businesses, such as credit unions, which use this technology every day to communicate with their members about legitimate topics. The current frenzy has regulators using a hatchet to deal with legitimate issues when they should be using a scalpel. I don’t see this ending any time soon. So for those of you who haven’t done so already, take a good look at the type of technology you are using and start thinking of ways that you can avoid getting caught in the regulatory dragnet.


January 30, 2020 at 9:43 am Leave a comment

Are You Using Your Credit Reports Illegally?

I’m asking this question to highlight an enforcement action announced by the CFPB yesterday against several companies which, if the allegations are true, blatantly violated several sections of the Fair Credit Reporting Act (FCRA) by obtaining credit reports under false pretenses and passing them around like stewardesses passing  out airline peanuts. I want to highlight the case not only because of its accusations, but because I wanted to provide you an ever so gentle reminder to use your credit reports consistent with the reasons you obtained them in the first place.

15 U.S.C. 1681b(f) permits entities to obtain prescreened credit reports provided that the individuals who qualify under the criteria will receive a firm offer of credit. A “firm offer” is an offer that will be honored subject to certain exceptions. The bottom line is that credit reports are not to be used simply to facilitate marketing, but are instead to be used for legitimate underwriting purposes.

The lawsuit that the CFPB announced yesterday is against several companies, ranging from a mortgage broker to a student loan debt consolidator to a mortgage lender that apparent did not get this memo. For instance, Monster Loans obtained prescreened lists from Experian, ostensibly to offer mortgage loans. There would, of course, be nothing wrong with this if that was all that Monster Loans used these lists for. However, Monster Loans subsequently distributed these lists to third parties, including an entity that specialized in student loan debt consolidation.

Although I’m concentrating on the FCRA part of the complaint, the defendants are also accused of engaging in unfair and deceptive practices, and the Telemarketing and Consumer Fraud and Abuse Prevention Act by marketing these deceptive loan products over the phone. This allegation underscores, yet again, why it is so important for all institutions to understand TCPA and ensure proper compliance.

On that brief note, its time for you to receive my annual Super Bowl prediction, which as you all know, is considered tier-one capital for credit unions and their employees. I like the Seahawks to take on the Chiefs with the Seahawks winning in a dramatic last-second field goal by the score of 20-17. Peace out.

January 10, 2020 at 9:18 am Leave a comment

Time for Congress to Update the TCPA

It seems that hardly a week goes by without some court ruling further confusing the issue of when businesses, including financial institutions, are violating the TCPA. What’s more, the courts are as confused as businesses when it comes to what the statute requires. Consequently, I would say that one of the most important things Congress can work on now that its summer recess is over is updating the TCPA.

Let’s face it, as it currently stands, there is just too much confusion about when the statute does and does not apply. On the one hand, we have a ruling by the Court of Appeals for the D.C. Circuit clearly stating that it should not be interpreted as extending to phones simply because they have the capacity to auto-dial. On the other hand, there was a ruling months later by the Court of Appeals for the Ninth Circuit which seems to reach the exact opposite conclusion. Recall Marks v. Crunch San Diego, LLC.

When this statute was passed by Congress, telemarketing was a meddlesome- bordering on obnoxious- business practice in which low-paid dialers would call people up and try to pitch them on something they really didn’t need. Some of that still exists, and it should be dealt with, but the cell phone is now an integral part of commerce and customers expect that the businesses with which they work will text them and provide them with needed information. This is a development that was inconceivable to the crafters of the TCPA, and with which Congress must now grapple. Its failure to do so is ultimately hurting commerce, and hurting consumers.



September 9, 2019 at 9:34 am 1 comment

More Proof that the TCPA is a Mess

Can a company be sued for violating the TCPA based on sending out a single unsolicited text message? Yesterday, the Federal Court of Appeals for the Eleventh Circuit ruled that an individual lacked standing to bring a claim against an attorney who texted an advertisement for legal work. Here is why Salcedo v. Hanna is worth noting:

  • It means that you now have a split between the Ninth Circuit, which covers the Pacific coast, and the Eleventh Circuit, which has jurisdiction over Alabama, Florida, and Georgia. This means that there is an increased likelihood that the Supreme Court will have to decide who is right and who is wrong.
  • It also underscores just what a mess the TCPA has become. It was passed in 1991 before anyone besides Al Gore really cared much about the internet, cell phones were the size of bocce balls, and there was no texting.
  • The result is that courts have been left to grapple with basic questions, including whether texting applies to the TCPA- the Supreme Court has ruled it does.

Call me whacky, but given the important role that texting is playing in commerce these days, no business should have to guess how many texts it can send out before being subjected to a multimillion dollar class action.

News Flash: Millennials like money

While reading The Wall Street Journal on my bus ride into work this morning, I came across this astounding piece of analysis: the Conference Board released a study indicating that millennials are the happiest people in the workplace today. Why? Their age demographic has seen the greatest uptick in salaries as a result of the incredibly tight labor market we have been experiencing in recent years.

According to a survey, “Satisfaction regarding wages rose a staggering 9.8 percent among those aged 35 and under. However, workers in their peak earning years—those between 33 and 54—remain most satisfied.” A millennial is anyone born between 1981 and 1996. I’m joking around a little, but the survey is actually worth taking a look at.

On that note, enjoy your long weekend. I’m back on Tuesday to mark another year of blogging. In all honesty, I really thought that it would last about six months, which is the amount of time I figured it would take me to really get someone angry at the Association. Thanks for reading.

August 30, 2019 at 9:31 am 1 comment

Just What Is a Robocall Anyway?

As really hardcore readers of this blog know, my wife has suggested that I am a beater of dead horses. While I respectfully disagree some issues really do get under my skin and right now one of those is the recent ruling by the FCC banning robocalls. A recent decision by the Court of Appeals for the 9th Circuit underscores that the FCC did not ban robocalls. Instead, it made it even more difficult to reach out to members using equipment that could make robocalls. I’ve explained this before but the 9th Circuit decision underscores just how unworkable the 1991 statute has become. Duguid v. Facebook, Inc., No. 17-15320, 2019 WL 2454853, (9th Cir. June 13, 2019)

When Congress decided to clamp down on unsolicited marketing phone calls it decided to do this by placing restrictions on the equipment used to make such phone calls. Consequently the TCPA’s consent requirements are triggered any time “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.” 47 USC 227(a)(1)(A).

The plaintiff in this case brought a claim under the TCPA after receiving several unsolicited messages for Facebook even though he belongs to that rare group of people such as your faithful blogger who has never belonged to Facebook and never will. No one seems to know how or why he got these messages. In seeking to dismiss this lawsuit, Facebook made a frontal assault on the breath of the statute and the way some courts and regulators have chosen to interpret it. Specifically it complained that under the existing interpretation of the TCPA it could be understood to include smart phones because they can store numbers and use automated response technology. Consequently, any use of a smart phone triggers the TCPA.

In rejecting Facebook’s argument, the 9th Circuit basically said that the statute says what it says and if it is being interpreted too broadly then this is an issue for Congress to address and not the courts. It explains that the text of the statute “provides no basis to exclude equipment that stores numbers including cell phones.” In other words, if you are calling up your member to inquire about a late bill payment or you are emailing a member to tell them about a loan product you think they may be interested in, the TCPA is implicated unless you are using a roto dialer.

Now why does this annoy me so much? Because despite of the uncertainty regarding the proper interpretation of the TCPA, the FCC rushed out regulations allegedly clamping down on robocalls. But this simply isn’t true. What the FCC actually did was clamp down on the use of equipment which could be used to make robocalls. But that doesn’t fit as neatly into a headline. It really is time for Congress to clean up this mess but then again the election is a mere year and a half away. No time for any work to get done.

One Down One To Go

Around 9:30 last night a weary Assembly passed legislation giving credit unions the right to participate in banking development districts for the first time since the legislation was passed in 1997. It now goes on to the Governor for his signature. Passage of the bill is a tribute not only to the tenacity of credit unions but to pioneering institutions like Lower East Side Federal Credit Union in Manhattan which were created specifically to address the needs of consumers who found themselves in banking deserts as banks began to contract branches.

As for the Holy Grail, our municipal deposit bill is still in the Assembly Ways and Means Committee. We will keep you posted on developments throughout the day. It still looks as if the legislature will be in town beyond today but we won’t know for sure until an official announcement is made. We will keep you updated on developments throughout the day. Let’s keep our fingers crossed.

June 19, 2019 at 8:43 am 2 comments

FCC Wants to Assume Your Members Don’t Want to Talk to You

Yesterday evening as I sat down to watch the first game of the Stanley Cup finals, I noticed that CUNA sent out a head’s up about a set of proposals from the FCC that would further complicate how you communicate with your members. Consequently, with one eye on the TV, I read this proposal from the FCC, which it issued on May 16th, and could act on as early as June 6th. While the game was much more entertaining, I must painfully admit that the proposal is much more important to your credit union, at least if you have the audacity to use this thing called the phone to reach out to your members.

First, it’s important to understand that the FCC has as its top priority facilitating the blocking of unwanted telemarketing phone calls. In fairness to the commission, the volume of complaints it receives from consumers is staggering. In 2015, the commission reaffirmed that voice service providers “may offer” consumers call blocking technology and in 2017 it again urged VSPs to more aggressively use technology to block calls which they determined were unwanted. Now the FCC is issuing a proposed declaratory ruling to provide a safe harbor under which VSPs may offer consumers programs to block calls appearing to be illegal through “call blocking programs” and blocking numbers not in a consumers list of approved contacts referred to as a white list.

There’s more tucked away here than meets the eye. First of all, as drafted, consumers would have to opt out of phone numbers that they don’t want blocked. Even assuming that consumers could be adequately informed about how to continue receiving information from legitimate sources, how will this approach be reconciled with our good friend the TCPA, under which credit unions have independent authority to reach out to members with whom they have an established business relationship?

The compliance geek in me also is concerned about how this is going to be reconciled with regulations which require financial institutions to take affirmative steps to reach out to members. For example, can you imagine how much fun it’s going to be explaining to a judge in a foreclosure suit that your credit union made repeated efforts to call a member about potential loss mitigation options but couldn’t get through to the member? In contrast, the delinquent member might legitimately have no idea that the credit union was not on hers or his list of approved contacts.

Now I am no technology expert; maybe there are legitimate ways to deal with all these issues. But what also got my attention about this proposal is that the FCC wants to act on at least parts of it on June 6th. In the immortal words of Simon and Garfunkel, “slow down, you’re moving too fast.” Let’s not get so frustrated by the deluge of telemarketing phone calls that we throw out the proverbial baby with the bath water.

On that note, I hope everyone had great holiday weekend. Enjoy your day.


May 28, 2019 at 8:38 am Leave a comment

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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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