By Carl Pry
A look at recent news reveals some pretty high penalty numbers for violations of the Telephone Consumer Protection Act (or TCPA), the federal law that regulates telemarketing. One reason for these high numbers is the TCPA contains onerous penalty provisions: $500 to $1,500 for each individual noncompliant robocall or text message (with no damages cap), a private right of action (meaning consumers can sue) and class action claims.
Banks may also be at risk for calls and texts initiated by third-party telemarketers, which makes it all the more important to ensure any telemarketing operations are in full compliance with the rules.
Amendments added within the last few years added complexities to the TCPA, but the basic requirement is this: a bank or third-party telemarketer must obtain prior express written consent either (1) before placing any telemarketing call to a wireless number using an automatic telephone dialing system (ATDS); or (2) delivering any prerecorded telemarketing message to either a wireless or residential landline number.
What is a Telemarketing Call?
The TCPA defines a telemarketing call as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods or services, which is transmitted to any person.” Note there is no “primary purpose” requirement here; any message containing an advertising message could be considered a telemarketing call, even if the primary purpose of the call is transactional.
What is an ATDS?
The TCPA defines an automated telephone dialing system as “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.” These are also known as autodialers.
Prior Express Written Consent
For these types of calls, what must be obtained? To constitute “prior express written consent,” there must be a written agreement, entered into before any telemarketing calls or texts are placed, between the telemarketer and the called party that:
- Contains a clear and conspicuous disclosure that authorizes the company to initiate telemarketing calls and/or texts using an ATDS or an artificial or prerecorded voice; and specifically states the consumer is not required to sign the agreement in order to receive goods or services.
- Identifies the specific number the company is authorized to call.
- Is signed by the recipient (e-signatures are acceptable here).
These agreements should be company-specific, meaning affiliates, partners, or other third parties making telemarketing calls on behalf of the bank should obtain their own consent.
Note that this consent must be written, not verbal (which was allowed prior to October 2013), and “express,” meaning obvious. If a consumer merely provided the bank his or her telephone number on an online form or within the context of a business transaction (also allowed previously), it is not sufficient.
Also note that any form of consent allowed under previous rules is not “grandfathered.” There is also no longer any sort of “established business relationship” exemption for prerecorded telemarketing calls to landlines. In each case, new prior express written consent must be obtained.
Carl Pry
Carl G. Pry, CRCM, is a managing director for Treliant Risk Advisors in Washington, D.C., where he advises clients on a wide variety of compliance, fair lending, corporate treasury, and risk management issues. Email: cpry@treliant.com