November 17, 2015
The Honorable Greg Walden
Chairman
Communications and Technology Subcommittee
2182 Rayburn House Office Building
Washington, DC 20515
The Honorable Anna Eshoo
Ranking Member
Communications and Technology Subcommittee
241 Cannon House Office Building
Washington, DC 20515
Dear Chairman Walden and Ranking Member Eshoo:
On behalf of the Credit Union National Association (CUNA), I am writing to urge you to address the problematic recent Omnibus Declaratory Ruling and Order (“Order”) concerning the Telephone Consumer Protection Act (TCPA) during the Committee on Energy and Commerce’s Subcommittee on Communications and Technology hearing on oversight of the Federal Communications Commission (FCC). CUNA represents America’s credit unions and their more than 100 million members.
Credit unions have serious concerns about the FCC’s TCPA Order because it has impacted their ability to communicate with their members about pertinent account information. The ability to freely communicate with members can help prevent identity theft and stolen data, mitigate the harm once such events have occurred, and give consumers the chance to receive other important information about their account such as overdue payments.
Background of FCC TCPA Order
This past summer the TCPA Order immediately went into effect after being agreed upon through a party-line vote at an FCC meeting, without being put out as a proposed rulemaking with a notice and comment period.[1] As soon as it was released, credit unions were sent into a state of disarray about how they could instantaneously comply with a document that is well over 100 pages, and is filled with onerous language and unclear nuances. It has been problematic for credit unions with fewer compliance resources, but has also been extremely problematic for those more likely to face frivolous class action lawsuits when there is ambiguity in the law.
While the FCC purported to recognize the importance of communications between financial institutions and consumers, its ruling in practicality creates obstacles to credit unions’ ability to communicate with their members. 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 when cell phones were considered a luxury item and smartphones were still years away from production. Furthermore, it disregards consumers’ preferences to use new technologies and modern forms of communication.
Surely when passing the TCPA decades ago, Congress did not have in mind to arbitrarily scrutinize and limit communications between credit unions, who are not-for-profit, member-owned financial cooperatives,
The Honorable Greg Walden
The Honorable Anna Eshoo
November 17, 2015
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and their members. This action by the FCC has not only restricted important communications, but has attracted the attention of law firms seeking to profit from frivolous class action litigation and the exorbitant attorneys’ fees and statutory damages associated with TCPA lawsuits. Time and again, frivolous class action litigation has proven costly and detrimental to the mission of credit unions to serve their members and provide the best products and service offerings at competitive rates.
Unfortunately, the confusion created by this Order will only increase this disruption of the ability to serve credit union members and drive new frivolous class action litigation.
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.
However, the conditions that must be met to qualify for these exempted calls are difficult, if not impossible, to meet. The Order requires that the exempted calls must be 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 technology and resources to be able to do this is far from readily available.
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. The technicalities associated with each of these requirements create many unanswered questions. For example, it is not clear what “event” is defined as.
Additionally, the exemption only allows calls and text messages to be sent to wireless numbers provided by the customer of the financial institution. An example of a problem with this is it could preclude another member of a family with a different number, but who is impacted by the account update, not to be allowed to receive a call about it. These are just a few examples of problems associated with the conditions to qualify for the exemption for financial institutions.
White House Budget Exemption for Debts Owed to the Federal Government
While the Administration believes this Order is suitable for others seeking to communicate with consumers, it just recently provided an exemption for the federal government from the TCPA in the White House budget for 2016. The exemption for the federal government allows it to make calls without the prior express
The Honorable Greg Walden
The Honorable Anna Eshoo
November 17, 2015
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consent needed by others using autodialing systems. This means that while credit unions and others have to meet extensive conditions to contact their members, there is a double standard for those in federal agencies. We appreciate the Administration’s recognition that the TCPA Order is unworkable, and hope it will support reforms by others such as credit unions who it also does not work for in its current form.
The Expansion of What is Considered an Autodialer is Problematic
Another concerning aspect of the Order is the expansion of what is considered an autodialer. Notably, dissenting FCC Commissioner Ajit Pai expressed concern that the language used in the Order is so expansive it could even cause a device like a smartphone to now be considered an autodialer. Currently credit unions and others are not even able to interpret from the Order whether the calling system they use qualifies them to be subject to the TCPA. 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 muddled guidance and lack of certainty for those seeking to comply is great for those looking to profit from frivolous class action litigation, but exasperating for both member-owned credit unions and consumers looking for certainty in the law.
Other Issues that Could Stifle Communication with Credit Union Members
Additionally, the FCC creates ambiguity about how consumers can revoke their consent for all autodialed calls 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. Since it is not clear what is a “reasonable” way of revoking consent, credit unions arguably could have to monitor all communications, in every manner, with every member and every employee. This could be particularly problematic 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.
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.
The Honorable Greg Walden
The Honorable Anna Eshoo
November 17, 2015
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Congress Should Express Appropriate Oversight Authority
Decades old, the TCPA has become severely outdated and obsolete in the face of new technologies and forms of communication. It is imperative that Congress take action to illuminate the negative consequences that this Order will have on both financial institutions and consumers, and consider what actions can be taken to assure communication between the two can continue.
In issuing the Order, the FCC not only ignored the petition and comments of several industries, but far exceeded the scope of the authority Congress granted it. Also, as noted the FCC did not provide an opportunity for notice and comment on the Order, which allowed it to circumvent some of the protections provided in the Administrative Procedures Act and Congressional Review Act. I urge you to address this overreach during your hearing and take action to hold the FCC accountable to provide more transparency to those seeking to comply with laws under its jurisdiction.
On behalf of America’s credit unions and their more than 100 million members, we thank you for your attention to this important matter and we look forward to working with Congress and the Administration to create a rule that protects the consumer, while ensuring credit unions can freely communicate with their members.
Sincerely,
Jim Nussle
President & CEO
[1] 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).