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Ah, the Telephone Consumer Protection Act (TCPA)...that ole' chestnut. There hasn't been much change to this law, which went into effect back in 1991. Clarifications have been issued—as recently as 2013—however, the core ruling hasn't shifted since inception regarding contacting a debtor using an autodialer or pre-recorded message. If you don't know what the TCPA is and how it impacts the financial services industry, you can read one of our previous blog post that covers the TCPA basics. However, in this article, we'll dive a little deeper into how a financial institution can navigate the particulars of obtaining express consent from borrowers, specifically for the purposes of contacting them on a mobile device.
Obtaining consent is essential for your financial institution and for your collections team. Securing consent to contact a borrower allows your institution and collections representatives (in-house or outsourced) to contact them on their mobile devices during the various stages of the collections process.
What does TCPA say?
The TCPA mandates that in order for a collections rep to call a customer on their mobile device using an autodialer or pre-recorded message, the consumer must have given "prior express consent." There are exceptions to the rules including calling a consumer manually—which can be done at any time—and non-commercial calls, such as calls intended to prevent fraudulent activities or data breach notifications.
Between January and November 2018, there's been more than 2,315 TCPA-related cases filed across the country. That's an average of 200 cases per month!
Why is mobile phone consent important?
The TCPA ruling, while clear in certain areas when it comes to telemarketing and advertising calls, is ambiguous when it comes to collections-related calls. Some courts, such as the Ninth Circuit Court, have made connections between TCPA and cases targeting a financial institution's TCPA practices. Other courts around the country have made their own determinations. In many cases, smaller courts have ruled in favor of the financial industry. However, it's tough to predict how a specific court will react to a case as each circuit court ruling only defines the act for that particular jurisdiction. The rulings are not universal. Therefore, many compliance experts will err on the side of caution and maintain a conservative approach to TCPA compliance.
Between January and November 2018, there have been 2,315 TCPA-related cases filed across the country. That's an average of 210 cases per month! Many cases have been filed because the plaintiff has misunderstood how the law extends to third-party vendors.
The question financial institutions and collection partners should be asking are:
What controls are in place to obtain cell phone contact consent?
What processes do you have when someone revokes consent?
At the end of the day, consumers have the right to determine how they wish to be contacted and have rights to revoke consent-to-be-contacted on their mobile devices. Of course, provided it is done in a reasonable manner, and consistent with the revocation guidelines provided by the creditor or loan agreement, when applicable.
Obtaining contact consent
Perhaps the most effective way to obtain cell phone contact consent from a borrower is to add a permission disclosure on a credit application, clearly stating the terms of the loan agreement relative to the methods the creditor can/will use to contact the borrower. When potential borrowers sign and submit their application, that action will serve as the "written agreement between consumer and seller" allowing the financial institution, and by extension their collection partners, to contact the borrower.
Consent revoked considerations
When a consumer decides to revoke their call consent, which they have a right to do at any time, the financial institution must honor the caller's request—as long as the consumer used a reasonable method to initiate the revocation request. While the "reasonable method" is open for some interpretation, it's best to take a conservative approach and honor the request to remove their number from the call list.
When a consumer revokes their call consent, what's your process to address that? If you're working with an outsourced collections provider and the caller revokes consent to your third-party collector, how is that information communicated back to your financial institution? Establishing a written process internally and with your collections partner will help to ensure these accounts are properly flagged, and consumers who have revoked consent to receive autodialer calls to their mobile devices are not contacted accidentally through your dialer system.
Consumers are exercising their right to revoke consent more frequently, and the number of TCPA-related cases continues to rise. Financial institutions should consider reviewing their processes for obtaining cell phone call consent and how they handle a revoked consent across the institution and its partners.
Chris Cote has been with SWBC since 2011 and has more than 12 years of experience in the financial services industry. As the Compliance Officer for the SWBC Financial Institution Group, he works closely with unit management to ensure operations remain compliant with state and federal regulations and guidelines. He is also responsible for the quality assurance team that monitors calls for multiple SWBC divisions.