FCC Considers Whether to Let Banks Send Customers Automated Anti-Fraud Alerts

The Telecommunications Law Resource Center is the most comprehensive reference and news platform for communications law, covering broadcasting, cable, broadband, telephony and wireless;...

By Brandon Ross

Nov. 7 — The Federal Communications Commission is seeking comment on whether it should grant banks an exemption from a requirement in the Telephone Consumer Protection Act that they obtain written consent from customers before sending them text messages and automated calls aiming to ward off identity theft and other fraud.

In addition to the exemption consideration, the Federal Communications Commission asked in a Nov. 6 public notice whether it needs to consider further methods of preventing such fraud and whether it should explore ways to protect consumers from unwanted communications

The agency was responding to a petition from the American Bankers Association. In October, the ABA requested the exemption for time-sensitive calls and text messages to customers' mobile devices containing information aimed at preventing or minimizing the impacts of identify theft and personal-data security breaches, as well as for remedial steps associated with such fraud.

“According to the Association, if exempted, these automated calls and text message alerts would be without charge to the recipient and would be subject to certain conditions proposed in the Petition, such as, among others, not including any solicitation, telemarketing, or advertising information,” the FCC public notice said.

In the notice, the FCC said its rules, which it made to help implement the mandates of the TCPA, forbid the use of automated phone systems from contacting wireless numbers without prior consent from users, except in the cases of emergencies.

In the notice, the FCC asked if the requested exemptions: “allow the financial services industry to reduce privacy and security risks proactively so that fraud, data security breaches, and identity theft are less likely to occur in the first place.”

Interested parties have until Dec. 8 to comment and until Dec. 22 to file reply comments.

ABA: Rules Outdated

ABA President and Chief Operating Officer Frank Keating took to the organization's website in mid-October to stress the need for the FCC exemption.

“Effective fraud prevention requires the earliest possible contact with the customer,” he wrote. “With about 40 percent of the nation’s households now ‘wireless only,’ the ability to send these automated notifications to mobile phones is critical.

“Nearly 60 percent of consumers prefer to be contacted on their mobile phones concerning potentially fraudulent activity, and more than one-in-three prefer text notifications,” he added.

Keating made a number of statements that said the FCC's rules were a product of a different time.

“The rules were designed for a time when nearly everyone had a landline,” Keating said.

As it stands now, banks can be sued for contacting mobile customers via automated systems with messages alerting the customers to potential fraud. Some banks have stopped the notifications after facing a litany of class actions on the matter, the ABA filing said.

“Even when a customer has furnished a mobile telephone number to the institution making the automated call, plaintiffs’ attorneys may assert that the consumer providing the number did not specifically consent to receive fraud and identity theft alerts,” the October ABA filing to the FCC said.

To contact the reporter on this story: Brandon Ross in Washington at bross@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com