CUNA letter to NCUA concerning FCC order
WASHINGTON, DC (August 4, 2015) —
Ms. Gail Laster
Director, Office of Consumer Protection
National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314
Dear Ms. Laster:
On behalf of the Credit Union National Association (CUNA), I am writing to express concerns I have about a new declaratory ruling and order from the Federal Communications Commission (FCC) that is affecting the ability of credit unions to communicate important information to their members in a timely matter on their cell phones. CUNA represents America’s credit unions and their more than 100 million members.
On July 10, the FCC issued an Omnibus Declaratory Ruling and Order (“Order”) about the Telephone Consumer Protection Act (TCPA) that immediately went into effect. While CUNA supports the concept of preserving consumers’ rights to privacy on their cell phones and protecting financial information, this Order goes far beyond the scope or purpose of the TCPA – which incidentally was enacted in 1991 before cell phones and mobile devices were commonly used. The Order disregards consumers’ preferences to use new technologies and modern forms of communication, and makes it more difficult for credit unions to communicate with their members about fraud, data breaches, and other pertinent account updates.
As a result of the FCC’s Order, we have concerns that the scope of the TCPA will now be expanded on a technical basis and will sweep in additional important communications from financial institutions to consumers. Surely when enacting the TCPA, Congress did not intend for communications between credit unions, who are not-for-profit, member-owned financial cooperatives, and their members to be arbitrarily scrutinized or limited. Nevertheless, the FCC’s actions will not only restrict important communications, but could also harm credit unions by making them subject to TCPA related class-action litigation. Such litigation has increased because of the lack of clarity surrounding this law from the FCC and courts across the country, and has been extremely costly and time-consuming for impacted defendants. The majority of this class-action litigation is initiated not by aggrieved consumers, but instead by plaintiffs firms seeking to take advantage of exorbitant attorney’s fees and statutory damages. Unfortunately, the confusion created by this Order will only increase the frivolous litigation in this area.
The Exemption for Financial Institutions Provides Minimal Relief
In its Order, the FCC recognized the importance of receiving information from financial institutions. It provided an exemption for calls concerning: (1) transactions and events that suggest a risk of fraud or identity theft; (2) possible breaches of the security of customers’ personal information; (3) steps consumers can take to prevent or remedy harm caused by data security breaches; and (4) actions needed to arrange for receipt of pending money transfers.
CUNA encouraged and filed comments in support of this exemption. However, the conditions that must be met to qualify for this exemption are difficult, if not impossible, to meet because the Order requires that even the exempted calls are free-to-end-user calls, or in other words, there can be no charge of any kind to the consumer. This requirement puts the onus on financial institutions to ensure that notifications do not count against a recipient’s plan for minutes or texts. The way to make sure these communications are free according to the FCC is, “to work with wireless carriers and third-party service providers to ensure that recipients of notices under the requested exemption are not charged for those messages.” Not only is this impractical, it is not clear what “third parties” on a wide scale provide such services to assure that calls can be free. Moreover, this policy has the effect of discriminating against prepaid phone users or others that may not participate in a typical cell phone plan. It is also not reasonable to consult with a consumer’s wireless carrier before every call they receive, particularly when circumstances are exigent. For instance, arguably many credit union members would prefer to use a few of their minutes to instantly learn about fraudulent transactions, rather than waiting for a credit union to jump through the hoops of assuring that the call was free.
Other conditions to qualify for this exemption apply as well. For example, a credit union must initiate no more than three messages (whether by voice call or text message) per event over a three-day period for an affected account; must offer recipients within each message an easy means to opt out of future messages; and must honor opt-out requests immediately. Again, if a credit union member was asked whether it was more important to learn about fraud or other account information, or for their credit union to abide by some arbitrary number of contact attempts, they would probably choose to be informed about the status of their account above all else.
The Expansion of What is Considered an Autodialer is Problematic
Another concerning aspect of the Order is its expansion of what is considered an autodialer, with dissenting FCC Commissioner Ajit Pai even expressing concern that the language used is so expansive it could cause a device like a smartphone to now be considered an autodialer. In its Order, the FCC takes the position that “capacity” to dial randomly or sequentially should be interpreted broadly and provides little certainty about how to define an autodialer. Instead of providing examples of new technologies that are not autodialers, the FCC in the Order leaves it wide open for courts to interpret this definition. This ambiguous guidance, coupled with conflicting and disjointed case law in this area, will make it extremely difficult for credit unions to determine what types of calling devices may be considered an autodialer, and thus subject to the TCPA.
Other Issues that Could Stifle Communication with Members
To make calls to a consumer’s cell phone using an autodialer, financial institutions must have consumer consent. In a 2012 Report and Order from the FCC, it clarified that all autodialed or prerecorded telemarketing calls to wireless numbers and residential lines require prior express written consent. Furthermore, it eliminated the established business relationship exemption for such calls to residential lines, but did leave in place the requirement that prior express consent was needed for calls made for non-telemarketing purposes. In its most recent Order, the FCC makes clear that any “old” prior express written consent for telemarketing calls given before the 2012 guidance went into effect in October 2013, is no longer valid 90 days after the July 2015 Order was released.
In the July 2015 Order, the FCC creates ambiguity about how consumers can revoke their consent for all autodialed calls ̶ either for commercial or informational purposes ̶ stating that it can be done at any time and in any reasonable manner. This onerous language is problematic since consent could be revoked in almost any manner including through oral conversations, with an employee at any level, of a credit union. Arguably, if even possible, this could force credit unions to be required to have in place a system to monitor all communications in every manner with every member. For credit unions who are proud of the fact they often have employees at all levels who know their members and often have longstanding relationships with them, it would be nonsensical to require such formal records of all communications. However, in the absence of such records credit union could be subject to a TCPA violation if a consumer informed anyone at all in the credit union that they were revoking consent to receive autodialed calls and it was not properly catalogued.
Additionally, the Order increases the possibility of being liable under the TCPA when calling a reassigned number that the credit union has previously been given consent to call. The Order makes clear that callers can make only one call under a safe harbor before they are considered to have actual or constructive knowledge that the number was reassigned. The one call safe harbor does not account for the dozens of reasons it may not be possible to connect with the new holder of the number in one attempt. Additionally, the Order indicates that it does not matter whether the phone is answered; the caller is still considered to be on notice. For credit unions serving everyday working families who may switch jobs, move, or simply can no longer afford one type of wireless carrier plan over another, it makes no sense to penalize either the credit union or a member seeking information for switching numbers.
While there are several other concerning aspects of the Order, one last issue we want to bring to your attention is that the Order confirms that text messages sent from the internet to a phone are considered calls and subject to the TCPA. In 1991 when the TCPA was enacted text messaging was not even a concern or a form of communication. However, it has now been a common form of communication for over a decade. Instead of trying to take a step backwards and fit new technologies into an antiquated statute riddled with problems, it seems it would be better to consider how financial institutions and others can communicate in the safest and most convenient way with consumers utilizing modern forms of communication.
As previously noted, we are concerned that the FCC’s TCPA Order could negatively affect credit union members and create yet another regulatory burden. While the substantial compliance burdens associated with this Order are troubling, the fact that credit unions could be bait for frivolous and costly litigation in this area is even more distressing. We urge the NCUA to take immediate action with the FCC on behalf of credit unions and their more than 100 million members.
If you have any questions about our comments, please do not hesitate to contact me. Thank you for your attention to this matter.
Senior Director of Advocacy & Counsel
 In re Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling and Order, CG Docket No. 02-278, WC Docket No. 07-135, FCC 15-72 (July 10, 2015).
 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, FCC 12-21 (February 15, 2012).
Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 135 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit cuna.org. To find your nearest credit union, visit YourMoneyFurther.com.