What handy gadgets our mobiles can be. In fact, we take phone numbers for granted, not much caring what the person on the other end is using so long as "Can you hear me now?" gets a "Yes."
But consider the following statistics from a federal survey released in December 2013:
* Nearly 40% of American homes had only wireless phone service--no landlines at all. In 2009, that figure was only 23%.
* Sixteen percent of all homes received all or nearly all calls on cell phones, in spite of having landline phones, too.
* Two-thirds of adults ages 25-29 lived in households with cell service only.
Add to these statistics another figure: Telephone companies are said to "recycle" as many as 37 million telephone numbers annually, and there is no mechanism for an organization, like a bank, to determine if a cell number in its customer records has been reassigned.
While these statistics may be very interesting to the bank's marketing department, these are critical facts for the compliance function.
Banks face exposure to a variety of parties who see them as deep pockets. One growing exposure lies in the world of cell phones under the strictures of the Telephone Consumer Protection Act (TCPA) of 1991, its implementing rules, and ongoing governance of those rules by the Federal Communications Commission. A law originally enacted to prevent intentional abusive contact patterns has been worked around to be a plaintiff moneymaker. While the TCPA covers all types of calls, the vast increase in cell phone usage has increased the potential liability.
Scoping out the risk
Any company, including banks, that needs to contact customers for many necessary reasons--warnings about potential fraud, alerts about low balances in accounts, payment reminders, and collections for unmade payments--can potentially be the target of a lawsuit under the TCPA if a plaintiff claims that he has been contacted on his cell phone using an "automatic telephone dialing system" (or autodialer) or a pre-recorded voice without his consent. (Overall in TCPA, the penalty can be $500 per call, text, or fax, or even more if willful disregard is proven. There is no cap on damages.)
In a white paper issued last fall, the U.S. Chamber's Institute for Legal Reform stated that:
"The TCPA has become a juggernaut: a destructive force that threatens companies with annihilation for technical violations that cause no actual injury or harm to any consumer. TCPA litigation will continue to expand and threaten well-meaning businesses with astronomical statutory damages unless something is done to limit those damages."
The numbers multiply because calls--which count even if no one picked up or no message was left--are repeated in attempts to reach the customer.
Further complicating matters are calls made to numbers that were originally held by customers who have then changed their phone service and whose numbers have been recycled to unrelated parties.
In the Chamber's white paper, The Juggernaut of TCPA Litigation: The Problems with Uncapped Statutory Damages, it is pointed out that the technology and business practices were very different in 1991, resulting in special protections for cell phones, for example. Receiving calls on the old-style cell phones could be very expensive, for instance.
The paper also notes that typically these matters don't go to trial, but are settled, generally in fear of the potential monetary totals that could be reached. Consumers have been known to "stockpile" such calls, not reaching out to object or point out that they are not the proper party. Besides law firms that look for such cases, in which many class-action plaintiffs themselves receive minimal payments, there are numerous places online where consumers can find out how to work the law to actually trigger such contacts.
Attempts to pass legislation that would provide some middle way or broad protections for essential and necessary contacts--potentially including a cap on legal damages--have not succeeded thus far. …