6 minutes
While there have been countless articles, webinars and presentations on the Telephone Consumer Protection Act and the 2015 Federal Communication Commission Declaratory Ruling and Order clarifying TCPA, I have clients and friends in the credit union industry that remain unconcerned about their risks. In this article, I hope to provide you with six reasons that the TCPA and the FCC rules must be on your radar for risk management.
Reason #1: All your phones are autodialers.
Many of the “unconcerned” have sagely advised me that the TCPA consent provisions only apply to autodialers, and their credit unions don’t use autodialers. Although it has been said many time in many ways, let me add my voice to the message: Every phone in your credit union is an autodialer under the rule. An autodialer, as defined by the FCC, is any telephone equipment that has the capacity to store or produce and dial random or sequential numbers even if it is not presently used for that purpose.
While some phones and phone systems currently lack the capacity to meet the “autodialer” definition, the FCC has expanded the definition of autodialer to include phones and phone systems that can be modified or reconfigured in the future to meet the “autodialer” definition.
Virtually every phone and phone system in use today already stores numbers. Moreover, as the phones and phone systems are also software-driven, they are readily capable of modifications and updates, which could include adding the dialing functions that make up part of the “autodialer” definition. As such, you need to assume that you and your phone system are subject to the TCPA requirements.
Reason #2: You don’t know who you’re calling.
The TCPA requirements (including the consent requirements) apply to the “called party,” the telephone subscriber or the non-subscriber customary user of the telephone. The called party is not the intended called party. If the telephone number provided by your member has been reassigned, you have one opportunity to call the reassigned number, determine the reassignment and cease future calls. Any future calls to the reassigned number will almost certainly violate the TCPA consent requirements.
Unless your employees are well trained to properly confirm the identity of each called party for each call and to properly handle calls that go to voicemail (as voicemail may identify the number as reassigned), your credit union has a strong likelihood of multiple calls to a reassigned number. Our firm has already heard of “professional plaintiffs” buying large batches of phones with reassigned numbers expressly for the express purpose of inviting compliance violations of TCPA. Moreover, in the case of text messages, I have heard of no practical way of determining whether a text message recipient is a reassigned number. As such, the likelihood of multiple texts to a reassigned number in violation of the TCPA poses a significant risk.
Reason #3: You don’t know what kind of phone you’re calling.
As anyone who had delved into the TCPA requirements knows, there are significant distinctions between the TCPA protections and consent requirements for wireless and land telephones. As a general proposition, wireless telephones have far stronger TCPA protections, consent requirements and prohibitions than land telephones.
Our firm has heard of credit unions making the wireless/land distinction based upon members’ identification of telephone numbers on membership and loan applications as “home numbers” or “cell numbers.” Any reliance on such distinctions in such applications is futile. In a time when many people have replaced land lines altogether with wireless phones, any assumption that a “home number” is not a wireless phone is risky at best.
As the TCPA places no requirements on your members to identify if their telephone numbers are wireless or land numbers, it is dangerous to make any assumption (other than the assumption that all numbers are for wireless telephones).
Reason #4: You don’t know if you have consent.
Even if your credit union has obtained a TCPA-compliant prior express consent from a member to make calls and texts, the FCC Declaratory Ruling states your member “may revoke consent at any time and through any reasonable means.” The FCC Declaratory Ruling goes on to state that your credit union “may not limit the manner in which revocation may occur.”
Consequently, your member can stroll up to the 19-year-old teller on a payday Friday and announce “my telephone number is 111-222-3333 and I don’t want any texts or phone calls to my cell phone from the credit union.” Alternatively, the member might leave a voice mail for any credit union employee to the same effect (regardless of that employee’s role in your credit union). Any future calls or texts to that member’s cell phone will almost certainly violate the TCPA consent requirements. Training all employees on TCPA requirements (and particularly TCPA consent revocation requirements) is essential.
Reason #5: You can’t control your vendors.
For the purposes of the TCPA, your collection agency, third-party call centers and any other vendors making calls on your credit union’s behalf expose your credit union to potential liability for TCPA violations. Not only do you generally lack the authority to properly audit and control these vendors, most of you will find that your contracts with these vendors absolve such vendors of most compliance violation liability and actually require your credit union to indemnify these vendors from liability if any lawsuits are filed related to such violations. Our firm has seen several recent vendor contracts that expressly address TCPA in a way that provides strong protections for the vendor and significant risks for the credit union. As with so many compliance issues, your vendor contracts (and the audit, control and liability provisions therein) are a critical risk point for TCPA liability.
Reason #6: There is real money involved.
TCPA provides for statutory damages of $500 per call for any violation and up to $1,500 per call for willful violations. As you might imagine, it does not take many calls even to a single member for the potential damages to add up. Moreover, with relatively low numbers required for class action certification, TCPA and the 2015 Declaratory Ruling have sprouted a cottage industry of professional plaintiffs and aggressive plaintiffs’ attorneys ready to make money at your expense.
Sadly, several credit unions are already embroiled in these time- and money-wasting lawsuits. If you have relied on the old adage “that’s why we have insurance,” I caution you to review your existing insurance and bond coverages. I think you likely will find that your coverages do not include TCPA violations. This is one case in which I will not lay fault on the insurers – how do you properly insure, calculate risks and determine premiums when 100 percent TCPA compliance appears to be impossible?
The purpose of this article is not to engage in apocalyptic fear-mongering, but rather warn you of yet another significant compliance threat that cannot be ignored by the credit union industry. I have nothing to sell you other than my plea that you contact your compliance professionals and attorneys to develop and implement a plan to mitigate this risk.
John DeLoach is one of the managing shareholders of the Williams Gautier law firm in Tallahassee, Fla., which has represented credit unions in Florida, Georgia, Alabama and throughout the United States for more than 40 years. For more than 20 years, DeLoach has focused his practice on representing credit unions in compliance, contract, transaction and corporate matters. Reach DeLoach at 800.377.3325.
