Banks Seek FCC Clearance to Send Mass Texts Amid Coronavirus

Banks are pushing the Federal Communications Commission for permission to send unsolicited mass texts and calls during the coronavirus pandemic without violating a federal anti-robocall law.

The banks want to send alerts about issues such as scams, branch closings and how customers can delay mortgage and loan payments. They’re asking the commission to clarify that such messages tied to the coronavirus are legal under the Telephone Consumer Protection Act.

“Now is the time to be encouraging everybody to reach out to consumers about the options that are available,” said Justin Wiseman, managing regulatory counsel at the Mortgage Bankers Association. His is one of seven financial trade groups petitioning the FCC.

Banks are trying to avoid lawsuits under the 1991 law that bars companies from sending automated calls and texts without consumer permission or risk fines of $500 or more per contact. Wells Fargo & Co. agreed to pay nearly $18 million in a settlement approved last year over alleged unsolicited texts and calls.

An FCC spokesperson didn’t respond to a request for comment. The FCC is taking comment on the request through May 21.

The FCC on March 20 clarified that health providers and governments can make automated calls tied to the coronavirus without consumer permission. The notice said nothing about banks, who seek “expedited” action on their petition.

“Everything is time sensitive right now,” said Ann Kossachev, director of regulatory affairs at the National Association of Federally-Insured Credit Unions. “You’ve got record unemployment filings in back-to-back weeks, and individuals and families are struggling.”

Legal Risks

An exception under the 1991 law allows companies to make unsolicited calls and texts that are needed for the health and safety of consumers. Companies, however, have struggled to interpret when such mass calls and texts are legal.

“There is definitely ambiguity now, which is why we are seeing groups seek clarification from the FCC,” said Troy Lieberman, a Nixon Peabody LLP attorney who represents clients in cases involving the law.

Companies are “torn” between reaching out to customers on pandemic matters and facing litigation risk, the U.S. Chamber of Commerce told the FCC in a letter supporting the banks’ request.

The penalty for violators can be severe. A U.S. district court in 2017 hit satellite TV provider Dish Network LLC with a $280 million penalty for allegedly violating a telemarketing sales rule under the 1991 statute and related state laws. A federal appeals court remanded the size of the fine to the district court, where it is pending.

One court last year held that grocery retailer Kroger’s messages to warn consumers about possible salmonella-tainted beef fell within the law’s exception because of the health risk. Other courts ruled that pharmacy reminders to renew prescriptions, in particular contexts, were also acceptable.

Businesses that utilize the exception must ensure their messaging is clear and specific to the impact of the coronavirus without starting to “drift off into other areas” such as marketing, said David Carter, a partner at Womble Bond Dickinson who focuses on the telephone consumer protection law.

Emergency Exception

The banks and other financial services providers are working to dispense financial aid to consumers and small businesses as part of the $2 trillion economic stimulus enacted March 27. Major U.S. banks such as Bank of America Corp. and Wells Fargo are offering payment and fee deferrals to customers who have trouble paying on a case-by-case basis.

Before the pandemic, three large banks chose not to send unsolicited “informational” texts and calls to tens of millions of customers because of the threat of class-action lawsuits and the lack of legal clarity from the FCC and courts, according to data from the American Bankers Association cited in the March 30 petition.

The risk of lawsuits “may lead financial institutions to limit the communications they send to assist consumers on matters related to the pandemic,” the groups said. They want the FCC to decide how long the waiver should last.

The non-profit National Consumer Law Center, which often opposes banks in proceedings before regulators, supports the FCC exemption on calls related to financial assistance, said Margot Saunders, the group’s senior counsel.

If “you’re trying to figure out what bills to pay with the little bit of savings that you have, hearing from your bank that they would allow you to postpone for three months your car payments would be extraordinarily helpful,” she said.