A recent federal appeals court decision to ease restrictions on robo-calling highlights the divide between banks and their account holders over where customer service ends and nuisance begins.

The banking industry argues that last week’s ruling by the D.C. Circuit Court will make it easier for banks and credit unions to use automated calls to communicate important information to customers, such as warning them that loans are on the verge of becoming delinquent or that accounts have been exposed to fraud.

But consumer groups say that the decision gives financial firms license to more aggressively market their products and services and could lead to more harassing phone calls over unpaid debts.

The ruling, handed down on Friday, struck down some interpretations of the Telephone Consumer Protection Act (TCPA) made in 2015 by the Federal Communications Commission.

The FCC’s guidance was designed to protect consumers from unwanted calls, but the debt collection industry, with support from banks and credit unions, filed suit, arguing that it allowed telephone service providers to block far too many legitimate calls.

The federal appellate court’s ruling could provide relief for financial firms on two fronts.

One concerned the type of equipment used by banks to make robo-calls. Nearly any device, from smartphones to web browsing software, was deemed automated dialing equipment and thus violated the TCPA. The court said the FCC’s interpretation was too broad and essentially threw out the rules on the types of equipment companies can use to initiate robocalls.

Donald Maurice, a Flemington, N.J., attorney who advises banks on the TCPA and debt-collection issues, said that the FCC’s 2015 guidance “made it very difficult for any business to send any kind of message to a customer. A sub shop couldn’t send a text message to their customers.”

Richard Hunt, the chief executive of the Consumer Bankers Association, agreed.

“For too long, access to critical and time-sensitive financial information, such as low balance notifications, fee avoidance alerts, and due date reminders, has been restricted,” Hunt said. “Federal policy must reflect the need for businesses to communicate with their customers through 21st-century communication channels, such as smartphones.”

The court also threw out the FCC’s guidance related to misplaced calls. Banks were given only one attempt to place an automated call to a number and reach the intended person. If a bank called the same mistaken number twice, it violated the FCC’s standard.

That was a nearly impossible standard to meet, Maurice said. One reason is that huge numbers of U.S. consumers have adopted wireless devices and dropped landline phones. The number of adults living in a home with only wireless phone service rose from less than 5% in 2003 to 52% in 2017, according to the Centers for Disease Control and Prevention.

Many millions of cell phone numbers are changed each year, making it tough to ascertain the correct number of any individual consumer, banks argue. Now banks have more breathing room.

“If you have no basis for knowing a call has been reassigned, you can provide yourself with a pretty good legal defense,” Thomas Good, an attorney at Barron & Newburger who advises banks, said during a Monday conference call.

Banking industry representatives say the court’s ruling won’t lead to increase in robo-calls made to consumers. Instead, banks will simply be smarter about making those calls, and they’ll upgrade their software and employee training because now they know what the rules require, Maurice said.

“Banks that have invested or will invest in a robust compliance system will reap some benefit,” Maurice said.

Consumer advocates disagree. The court’s ruling instead will remove the tough consumer protections that the FCC’s earlier guidance provided.

“Consumers, already inundated by robocalls, will be hit with even more unwanted calls,” said Maureen Mahoney, a policy analyst for Consumers Union.

The ruling won’t impact some recent legal settlements that consumers won. In February, JPMorgan Chase agreed to pay $2.25 million to settle a case where consumers said the bank called their mobile phones even after asking them to stop.

The settlement agreement will remain in place, despite the court’s ruling, because it has already been signed and finalized, said Abbas Kazerounian, a Costa Mesa, Calif., attorney who represented the plaintiffs.

Consumers will continue to sue banks for unwanted robo-calls because the appellate court’s ruling left many questions unanswered, Kazerounian said.

“The ruling leaves a lot of ambiguity about what is considered an autodialer,” Kazerounian said. “Judges are going to have more discretion until the FCC comes out with new a definition.”

Even attorneys who represent banks agreed that the ruling won’t end banks’ need for a strong legal defense against robo-calling suits.

“The profit motive is still very strong for plantiff’s lawyers in bringing TCPA actions,” Scott Wortman, an attorney at Blank Rome who advises banks on consumer financial services litigation, said during a Monday conference call to discuss the ruling.

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