What Do Financial Institution Regulations Say About Telemarketing?

Federal laws and financial institution regulations allow certain calls from banks and credit unions but prohibit other abusive calls.

What Is Telemarketing?

Telemarketing is a form of advertisements in which businesses advertise their goods or services to consumers over the phone. This includes sales calls, text advertisements, and even fax marketing. Although these marketing methods may be effective, they have gained a bad reputation among consumers.

Between genuine telemarketers and scammers who bombard consumers with misleading telemarketing calls, most consumers dread the idea of receiving telemarketing calls. Luckily, there are laws designed to prohibit abusive telemarketing practices.

Are There Telemarketing Regulations?

Several laws prohibit the use of harassing telemarketing practices – the chief of which is the federal Telephone Consumer Protection Act (TCPA). The TCPA was passed in response to growing complaints of harassing calls and faxes from telemarketing companies. The law limits the way that companies can send telemarketing calls, texts, and faxes.

The TCPA has been updated several times since it was initially passed in 1991. In 2003, the Federal Communications Commission established the Do Not Call Registry in partnership with the Federal Trade Commission. This registry allows consumers to register their numbers on a nationwide list which informs telemarketers that they do not want to be contacted.

In 2012, TCPA regulations got another upgrade when the FCC revised the rules to exclude the use of an “established business relationship” to circumvent regulations. Under the upgraded rules, businesses are required to get express written consent before robocalling them. The new rules also require telemarketers to include an opt out mechanism with their robocalls and spam texts.

What Do Financial Institution Regulations Say About Telemarketing?

There are several exemptions allowed under TCPA, most notably those available for non-profit organizations. During the COVID-19 pandemic, these exemptions have been confirmed to include pandemic-related communications from hospitals, healthcare providers, health officials, and government agencies.

According to the FTC, banks, federal credit unions, and federal savings or loan companies are not subject to the agency’s financial institution regulations. However, the FTC notes that these companies still must comply with telemarketing laws such as TCPA – especially if the company contracts another provider for telemarketing services. For example, a telemarketing company must follow TCPA regulations even if they are making calls on behalf of a bank or credit union.

Although some communications from banks, credit unions, and other financial institutions may be permitted under financial institution rankings, blatant telemarketing laws may be illegal under TCPA. Specifically, the following calls may be illegal:

• Soliciting business.
• Offering refinancing.
• Missed mortgage payment alerts.

Can I File A TCPA Lawsuit Against My Bank?

Individuals who received calls from their bank, credit union, or vendor in violation of TCPA may be able to take legal action. Several lawsuits have already been filed against banks and settlements have been reached.

In 2018, Synchrony Bank – a popular lender – was hit with a TCPA lawsuit from a North Carolina woman who allegedly received numerous robocalls from the bank in 2017. The plaintiff contends that these robocalls were placed through an automatic dialing system without her consent.

More recently in 2019, J.P. Morgan Chase Bank was hit with a TCPA class action lawsuit from several plaintiffs. These consumers claimed that the bank violated financial institution regulations surrounding robocalls by sending an excessive number of robocalls. One plaintiff allegedly received over 40 calls even after she asked the bank to stop contacting her.

Some of these and other cases have resulted in significant settlements for consumers. In a TCPA settlement, Class Members may not recover the maximum $1,500 in damages per violation allowed under the law but can still walk away with significant cash payments to compensate them for robocalls and spam texts.

In 2016, Bank of America – one of America’s most popular financial institutions – agreed to pay $1 million to resolve allegations that they violated TCPA with spam texts and robocalls. The plaintiff in the case allegedly received over 20 calls from Bank of America in connection with a debt. However, this debt allegedly belonged to someone else entirely.

The Synchrony Robocalls Lawsuit is Case No. 2:18-cv-00322-DAK-BCW, in the U.S. District Court for the District of Utah. The J.P. Morgan TCPA Class Action Lawsuit is Miramontes, et al., v. J.P. Morgan Chase Bank, N.A., Case No. 5:19-cv-002221, in the U.S. District Court for the Central District of California. The Bank of America TCPA Settlement is Richard Swift v. Bank of America Corporation, et al., Case No. 3:14-cv-1539-HES-PDB, in the U.S. District Court for the Middle District of Florida.