Marketing is the lifeblood of the banking industry. How to reach customers, when to reach customers, incentivize customers, and generate new sales and leads is a non-stop part of the industry. With people living their lives increasingly online, foot traffic has continued to decrease year over year, so banks are forever looking for new ways to connect with prospective clients. In the marketing-driven world, regulators and lawmakers alike have established restrictions on the ways in which marketing businesses, like banks, may engage with consumers.
The Telephone Consumer Protection Act (TCPA) emerged in response to growing concerns about invasive and unsolicited telemarketing practices that were becoming increasingly common in the late 1980s and early 1990s in the United States. As complaints about these intrusive telemarketing tactics mounted, Congress recognized the need to protect consumers from these unwanted communications. The TCPA was passed in 1991 to address these concerns and regulate various aspects of telemarketing, automated calls, and fax communications. It aimed to regulate telemarketing calls and specific practices, granting the Federal Communications Commission (FCC) regulatory authority under the law.
Over the years, the FCC implemented various rules under the TCPA, including establishing do-not-call lists and creating a national Do-Not-Call registry in 2003 to cover most telemarketers. The regulations also targeted reducing hang-up calls and dead air by imposing restrictions on autodialers and requiring Caller ID transmission. The FCC updated its rules in 2012, requiring explicit consent for automated calls and providing an opt-out mechanism for consumers. Further revisions in 2019 and 2021 introduced exemptions for reassigned telephone numbers, eliminated opt-out notices for fax advertisements with prior consent, and implemented exemptions for certain types of calls made by financial institutions.
Financial institutions, including banks and credit unions, fall under the purview of the TCPA regulations, subject to enforcement by regulatory bodies such as the FDIC, the Federal Reserve, the OCC, and the NCUA, not the FCC. Under section 8 of the Federal Deposit Insurance Act, these agencies can enforce compliance, issue cease and desist orders, restitution, and impose civil money penalties for TCPA violations. Declaratory rulings by the FCC serve as guidance for interpreting and applying TCPA regulations in specific scenarios. However, violations are cited based on the TCPA and its implementing rules rather than on these rulings. Violators may be fined up to $51,744 per violation, and each call may be considered a separate violation.
There is the closely related Telemarketing Sales Rule (TSR). This rule issued by the FTC affects the Telemarketing and Consumer Fraud and Abuse Prevention Act. This legislation gives the FTC and state attorneys general law enforcement tools to combat telemarketing fraud, gives consumers added privacy protections and defenses against unscrupulous telemarketers, and helps consumers tell the difference between fraudulent and legitimate telemarketing. A question that occasionally comes up on hotline is whether TSR applies to banks. In short, no, it does not. Banks fall outside of the FTC’s jurisdiction and, therefore, they are not subject to TSR.
If you have any questions or concerns about the TCPA or TSR, please feel free to contact the Compliance Hub hotline. You may also find our TCPA Cheat Sheet useful!