FCC robocall ruling a setback for banks, debt collectors

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The financial services industry often scores victories when it lobbies on issues that are far removed from the daily lives of most Americans. But on Thursday, in objecting to an idea that resonates deeply with the public, the industry found itself on the losing side in Washington.

The Federal Communications Commission voted to allow cellphone companies to implement technology that will block robocalls to their customers, as long as consumers have the ability to opt out of the call-blocking service.

The new rules threaten to impede some of the industry’s efforts to communicate with customers in the mobile phone era. Banks and credit unions use robocalls to alert consumers about data breaches and potential fraud, for example. Debt collectors use them to contact borrowers whose loans are overdue.

But automated phone calls are deeply unpopular. The FCC, which received 232,000 complaints about unwanted calls last year, up from 172,000 in 2015, has declared that stopping illegal robocalls is its top consumer protection priority.

“There is one thing in our country today that unites Republicans and Democrats, liberals and conservatives,” FCC Chairman Ajit Pai said during the commission’s meeting Thursday. “It is that they are sick and tired of being bombarded by unwanted robocalls.”

The commission made clear that call-blocking technology, which has previously been offered by cellphone companies on an opt-in basis, can be implemented unless the customer objects. Mobile phone carriers may have a financial incentive to use the technology broadly because of the costs associated with handling customer complaints over unwanted calls.

The FCC also ruled that cellphone companies can allow customers to opt in to services that block all calls from phone numbers that are not in their list of contacts.

The FCC did offer a concession to banks and other companies that had objected to its original proposal, which was published last month. Language added prior to Thursday’s vote encourages cellphone companies to devise mechanisms for addressing complaints made by legitimate companies, including banks, whose calls are being blocked.

Following the commission’s vote, financial industry trade groups said that while they share the goal of eliminating illegal calls, they are concerned about the impact the FCC’s action will have on legal calls.

“We continue to believe that callers should be notified when their calls are erroneously blocked, so consumers can continue to receive the fraud notifications, low-balance alerts and other valuable bank information they want and need,” Virginia O’Neill, an executive vice president at the American Bankers Association, said in a written statement.

The National Association of Federally Insured Credit Unions also encouraged policymakers to distinguish between illegal robocalls and legitimate communications.

“In the event of fraud or a data breach, consumers could be left in the dark for days, exposing their financial accounts to increased risks and theft,” Carrie Hunt, vice president of government affairs at the credit union trade group, said in a press release.

Perhaps the most conciliatory industry statement came from the Consumer Bankers Association, which expressed appreciation that FCC took its concerns into account by at least giving banks the opportunity to contest whether certain calls should be blocked.

“Ensuring legitimate callers have recourse if their calls are flagged as spam or blocked outright is vital to ensuring customers receive the communications they want and need,” the trade group’s president and CEO, Richard Hunt, said in a written statement.

One question in the wake of Thursday’s vote is how the FCC’s ruling will impact proposed rules on debt collection from the Consumer Financial Protection Bureau.

The CFPB’s proposal would limit phone-based collection attempts to seven calls per week. But that provision would become irrelevant in situations where call-blocking technology is being used, said Joann Needleman, a lawyer who frequently represents creditors.

“If they don’t recognize the number, it’s over,” she said.

Needleman noted that the CFPB is accepting comments on its proposed rule this summer. She expects the FCC’s ruling to be discussed in many of those comments.

The concerns expressed by banks and other companies that use automated calls seemed to carry little weight at Thursday’s hearing, which focused on the impact that the calls have on aggrieved consumers.

At the start of the Trump administration, Americans were receiving roughly 2 billion robocalls per month, a number that has since climbed to approximately 5 billion per month, according to Commissioner Jessica Rosenworcel.

“That is insane,” she said.

Rosenworcel, a Democrat, objected only to the fact that the FCC’s ruling does not require cellphone companies to provide call-blocking services for free.

Pai, a Republican, later told reporters that he expects wireless carriers to offer the services free of charge. But if phone companies do charge for call blocking, Pai indicated that he would support a rule requiring that the service be offered for free.

The FCC’s vote came two weeks after the U.S. Senate voted 97-1 to approve a bill known as the Traced Act, which is aimed at deterring criminal robocalls. Consumer advocates are calling for additional action by lawmakers and regulators.

“We recognize the FCC’s actions today as a meaningful step toward ridding consumers of unwanted and harassing robocalls, but it’s not a magic bullet,” Margot Saunders, a senior attorney at the National Consumer Law Center, said in a press release Thursday.

“Consumers must insist that Congress and the FCC go further towards restoring their use of their cellphones and restoring their faith in the modern communications infrastructure.”

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Debt collection TCPA Fraud detection Cyber security FCC American Bankers Association Consumer Bankers Association NAFCU