Telemarketing Guidelines

QUESTION 

We just acquired a telemarketing company. First of all, we do not know anything about telemarketing. And, in my opinion, the telemarketing company doesn’t know anything about telemarketing laws. 

My company is a mortgage lender, and I am on its Board. I was against this purchase, but I was outvoted. Not only do the telemarketing people not know about telemarketing laws, but our own compliance department knows nothing about these laws. Now, they’re scrambling to understand our compliance risk exposure. 

I was told recently that Lenders Compliance Group is a highly respected compliance firm with a broad knowledge of mortgage banking. So, I’m writing you for assistance. I will ask senior management to get in touch with you, too. We will need help getting our compliance department a checklist, policies, procedures, and other guidance to monitor the telemarketing activities. My regret is that I did not contact you sooner. 

I would like you to publish my question in your FAQ newsletter because I want others to know some of the basics of telemarketing laws, in particular, a list of guidelines. 

What are some compliance guidelines for telemarketing? 

ANSWER 

Thank you for contacting us. Ask your senior management to postpone launching the new telemarketing activities until you have ratified and implemented compliance procedures. We’ll work directly with your compliance personnel to provide the appropriate policies and procedures. If you or anyone else wants to contact me to discuss this area of compliance, please get in touch with me here. 

The foundational requirements for telemarketing is the Telemarketing Sales Rule (TSR, hereinafter “Rule”).[i] The Federal Trade Commission (FTC) and state attorneys general have enforcement tools to combat telemarketing fraud. 

A quick outline of the Rule’s purview[ii] would 

·     require disclosures of specific information, 

·     prohibit misrepresentations, 

·     limit when telemarketers may call consumers, 

·     mandate transmission of Caller ID information, 

·     prohibit abandoned outbound calls, subject to a safe harbor, 

·     prohibit unauthorized billing, 

·     apply to all upsells, even in unsolicited calls from a consumer, 

·     set payment restrictions for the sale of certain goods and services, 

·     require that specific business records be kept for two years, 

·     address the use of prerecorded messages, 

·     prohibit deceptive and abusive practices associated with debt relief services, and 

·     prohibit using remotely created payment orders and checks, cash-to-money transfers, and cash reload mechanisms in outbound and inbound telemarketing. 

If your telemarketing campaigns involve any calls across state lines, like many mortgage-related originations and servicing – and whether you make outbound calls or receive calls in response to advertising – you’re likely subject to the Rule’s provisions. 

The Federal Communications Commission (FCC) enforces telephonic communications pursuant to the Telephone Consumer Protection Act (TCPA), which also regulates telemarketing. 

The very act of contact with the public by means of telemarketing sets in motion a vast range of regulatory compliance requirements and multiple regulatory frameworks. Just considering a generic description of telemarketing should give you an idea of the risk exposure. The Rule describes telemarketing as “a plan, program, or campaign . . . to induce the purchase of goods or services or a charitable contribution” involving more than one interstate telephone call.[iii] With some important exceptions, any businesses or individuals participating in “telemarketing” must comply with the Rule. 

This is true whether, as “telemarketers,” they initiate or receive phone calls to or from consumers, or as “sellers,” they provide, offer to provide or arrange to provide goods or services to consumers in exchange for payment. Whether a company makes or receives calls using low-tech equipment or the newest technology makes no difference. Those making the calls, unless otherwise exempt,[iv] must comply with the Rule’s provisions. If the calls are made to induce the purchase of goods, services, or a charitable contribution, the company is engaging in “telemarketing.” 

Indeed, certain sections of the Rule apply to individuals or companies other than “sellers” or “telemarketers” if these individuals or companies provide substantial assistance or support to sellers or telemarketers. The Rule also applies to individuals or companies that help telemarketers gain unauthorized access to the credit card system by using another merchant’s account to charge consumers, a practice known as credit card laundering. 

There is considerable litigation in telemarketing violations. The FTC, states, and private citizens may bring civil actions in federal district courts to enforce the Rule. State attorneys general or any other officer authorized by the state to bring actions on behalf of its residents may bring actions by the states. Private citizens may bring an action to enforce the Rule if they have suffered $50,000 or more in actual damages. 

Furthermore, anyone who violates the Rule is subject to civil penalties of up to $50,120 for each violation. In addition, violators may be subject to nationwide injunctions prohibiting certain conduct and may be required to pay redress to injured consumers. 

Certain guidelines should be part of every telemarketing program. Telemarketing platforms and programs should be tested and monitored continuously, with reports provided monthly to the Senior Management and the Board. Here’s a brief list of policy statements that must be elaborated on procedurally. The list is not comprehensive; however, it may help you develop a sensitivity to the overall demands of telemarketing compliance.[v] Each item on the list should have a procedural element subject to testing and monitoring. 

Partial List of Telemarketing Procedural Requirements 

Permissible hours 

Procedure: Do not make telephone calls to consumers before 8 A.M. or after 9 P.M. local time at the call’s destination unless the person being called has specifically agreed to a call at another time. 

Do-Not-Call Lists 

Procedure: Maintain a list of consumers who ask not to receive telemarketing solicitations and those whose names appear on the national do-not-call list.

• Honor the requests of consumers who ask not to receive telemarketing solicitations.
• Maintain a process to prevent telephone solicitations to any telephone number on the do-not-call list or the national do-not-call list.
• Maintain appropriate procedures and written policies to comply with the national do-not-call rules.
• Regularly conduct employee compliance training.
• Implement a version of the national do-not-call registry obtained from the administrator of the registry no more than three months prior to the date any call is made and maintain records documenting this process.
• Use a process to not sell, rent, lease, purchase, or use the national do-not-call database or any part of it for any purpose except compliance with the rules and to prevent telephone solicitations to telephone numbers registered on the national database. 

Oral Disclosures for Outbound Telephone Calls 

Procedure: Disclose the following information truthfully, promptly, clearly, and conspicuously in any outbound telephone call to a potential new customer:

• Institution’s identity.
• The purpose of the call is to sell loans.
• That the caller makes mortgage loans. 

Artificial or Prerecorded Voice Calls 

Procedure:

• Do not use an artificial or prerecorded voice call to a consumer’s home unless there is an existing business relationship with the person being called (in which case, identify as such).
• Any artificial or prerecorded voice message releases the line of the person being called within five seconds of notice that the called party has hung up.
• The beginning of any prerecorded message clearly states the caller's identity.
• During or after any prerecorded message, state the caller’s telephone number. 

Call Abandonment

Procedure:

• Do not abandon more than 3 percent of calls answered by a person.
• Deliver a prerecorded identification message when abandoning a call. 

Caller Identification 

Procedure:

• Transmit caller identification (caller ID) information when available, and do not block this information. 

Facsimile Machines 

Procedures:

• Do not send unsolicited advertisements to facsimile machines.
• On any fax, identify the sender.

Credit Repair Services – Cautioning the Consumer

QUESTION 

Our CEO has notified our loan officers that she will not accept any applications where credit repair has taken place. Some of our loan officers now threaten to leave the company because they view credit repair as a legitimate business. 

Maybe it is and maybe it isn’t. I am not in a position to know. But I do know that the CFPB has been very litigious against credit repair companies for all sorts of violations. And the CFPB has been getting some hefty settlements. 

We have been tasked with drafting a pamphlet to give applicants about the hazards involving credit repair. We are supposed to say that our company will not process applications if a credit repair company is used. 

Since you have written about the scams to consumers and challenges to lenders from credit repair companies, I hope you can provide a brief outline for our pamphlet. 

What should our pamphlet say about the scams and dangers of credit repair? 

ANSWER 

I think there is a tendency to take the whole credit repair industry to task because of the frauds perpetrated by several of its members, large and small. It is better to educate consumers about the risks than to tar all credit repair services with the nefarious actions of bad counselors. Many credit repair companies make a positive contribution to consumers’ financial welfare. 

Generally, credit repair organizations[i] sell, provide, or perform any service in return for the payment of money or other valuable consideration for the express (or implied) purpose of improving a consumer’s credit record, credit history, or credit rating or providing advice or assistance to a consumer with respect to any such activity or service.[ii] 

You are correct in stating that there have been substantial settlements involving credit repair companies, two of the largest being CreditRepair.com and Lexington Law. The settlement was reached in litigation with the Consumer Financial Protection Bureau (CFPB). Both companies are now bankrupt, each owned by PGX Holdings, Inc., which is reorganizing in bankruptcy.[iii] The settlement, among other things, states that the companies collected illegal advance fees for credit repair services through telemarketing in violation of federal law.[iv] 

The stipulated judgment will impose more than $64 million in civil monetary penalties and a $2.7 billion judgment for redress. Plus, it will require notices about the settlement to be sent to enrolled consumers, including information about canceling the service. Finally, for ten years, the settlement bars these companies from doing business with certain marketing affiliates and bans them from telemarketing any credit repair services or others marketed through telemarketing. 

I won’t second-guess the reasons why your CEO has decided not to take a loan application if the applicant used a credit repair company, but considering the case of CreditRepair.com and Lexington Law, and the CFPB’s far-reaching the CFPB’s examination and enforcement authorities, she may be mindful of the legal, regulatory, and operational risks. 

Providing a pamphlet about credit repair to the applicant is a good idea. It is proactive. If you offer a pamphlet but do not accept loan applications from people who use or plan to use credit repair, it would be helpful to state the company’s position in the pamphlet and appropriate disclosures. But this is not just a business decision. 

Suppose you take the application but discover that the applicant used a credit repair service, and you have a blanket policy that rejects such applications. In that case, you may need to reject the application, possibly based on an inability to verify credit eligibility. That decision would cause the issuance of Regulation B disclosure (i.e., Adverse Action), which requires you to disclose why you rejected the application. The Equal Credit Opportunity Act (ECOA)[v] and Fair Credit Reporting Act (FCRA)[vi] would likely apply. In fact, there are several moving parts, regulatory, legal, credit underwriting, and operational, to the decision not to accept applications where credit repair is used. The decision to implement a blanket policy to ban all applications where consumers have used credit repair or credit relief guidance is fraught with risk. Before implementing these plans, I suggest you discuss them with competent counsel or compliance professionals. 

However, in general, issuing a pamphlet to applicants is worthwhile. You don’t have to discourage an applicant from using credit repair services if you offer the pamphlet to warn applicants about potential scams, frauds, ripoffs, shams, deceptions, swindles, and telemarketing crimes. The warning may be enough! 

Legitimate credit repair services follow numerous federal laws, including the Credit Repair Organizations Act[vii] and, as applicable, the Telemarketing Sales Rule,[viii] both of which forbid credit repair organizations from using deceptive practices and accepting up-front fees. 

The CFPB has provided substantial guidance to consumers. Several years ago, the CFPB issued a Consumer Advisory called Don’t Be Misled By Companies Offering Paid Credit Repair Services.[ix] The Bureau also published an article on How To Avoid Credit Repair Service Scams, which is easy to adapt to a pamphlet format.[x] A fine pamphlet on credit repair fraud, entitled Consumer Pamphlet: Credit Repair Fraud, is provided as a public service for consumers by The Florida Bar.[xi] In drafting your pamphlet, consider including these publications in your review. 

It would help if you listed some caveats in the pamphlet that can assist consumers in evaluating credit counselors. A well-known resource for finding a credit counselor is the National Foundation for Credit Counseling. Contact information about it can be offered in the pamphlet.[xii] 

Whatever caveats you choose, such a list should at least include these five Red Flags:[xiii] 

1.     They demand payment upfront. 

The company wants you to pay before it provides any services. Under the Credit Repair Organizations Act, credit repair companies can’t request or receive payment until they’ve completed the services they’ve promised. Some companies will structure monthly payment plans to avoid this requirement, and you should know that no form of upfront payment is legal. 

A simple rule to follow is “Don’t pay upfront.” If the company uses telemarketing such that the Telemarketing Sales Rule applies, the company may not request or receive fees until it has provided you with a credit report generated more than six months after the promised results that shows the results. 

2.     It sounds too good to be true. 

The company tells you it can get rid of the negative credit information in your credit report in a short period, even if that information is accurate and current. Also, if they promise a specific increase in your credit score or guarantee a certain result. 

No one can guarantee this. It simply takes time to repair your credit file. 

3.     They can’t answer questions.

The company representative can’t explain the specifics of the services they are offering you or the total cost for those services. 

Asking a few simple questions can help you determine if you are dealing with a reputable organization. 

4.     They hold back or provide misinformation. 

The company doesn’t inform you of your rights, including your right to obtain a written contract outlining the details of your arrangement, as well as having the ability to cancel your contract with the company within three business days. The company does not disclose the full cost of its services, and/or the company suggests that you should not (or cannot) contact any of the nationwide credit reporting companies directly (you can). 

5.     They ask you to misrepresent information. 

The company suggests that you try to invent a “new” credit identity – resulting in a new credit report – by applying for an Employer Identification Number instead of your Social Security Number. 

 

Jonathan Foxx, Ph.D., MBA

Chairman & Managing Director

Lenders Compliance Group

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[i] See §1679a(3)(A)(i)-(ii), 15 USC Chapter 41, Subchapter II-A: Credit Repair Organizations, From Title 15: Commerce and Trade, Chapter 41—Consumer Credit Protection

[ii] Ibid. §1679a(3)(A), Credit repair organizations include entities that can or will sell, provide, or perform credit repairs.

[iii] Credit repairer PGX begins bankruptcy with $12 million loan, Knauth, Dietrich, June 6, 2023, Reuters. PGX also owns Credit.com.

[iv] CFPB Reaches Multibillion Dollar Settlement with Credit Repair Conglomerate, Press Release, August 28, 2023, Consumer Financial Protection Bureau; Bureau of Consumer Financial Protection v Progrexion Marketing, Inc.

[v] Equal Credit Opportunity Act

[vi] Fair Credit Reporting Act

[vii] 15 USC §§ 1679-1679j, FTC; Title IV of the Consumer Credit Protection Act, prohibits untrue or misleading representations and requires certain affirmative disclosures in the offering or sale of "credit repair" services. The Act bars companies offering credit repair services from demanding advance payment, requires that credit repair contracts be in writing, and gives consumers certain contract cancellation rights.

[viii] 16 CFR 310, FTC; The Telemarketing Sales Rule requires telemarketers to make specific disclosures of material information; prohibits misrepresentations; sets limits on the times telemarketers may call consumers; prohibits calls to a consumer who has asked not to be called again; and sets payment restrictions for the sale of certain goods and services.

[ix] Don’t Be Misled By Companies Offering Paid Credit Repair Services, Consumer Advisory, Consumer Financial Protection Bureau, issued September 20, 2016, updated December 3, 2019.

[x] How To Avoid Credit Repair Service Scams, Brown, Desmond, September 23, 2016, updated July 30, 2019, Blog, Consumer Financial Protection Bureau

[xi] Consumer Pamphlet: Credit Repair Fraud, The Florida Bar, updated June 2023, https://www.floridabar.org/public/consumer/tip005/. Note, the article appears to be copyrighted, so contact the organization for permission to publish it in whole or in part.   

[xii] The nonprofit National Foundation for Credit Counseling has a website at https://www.nfcc.org. Its telephone is 800-388-2227.

[xiii] Op. cit. x

Collection Calls and Portfolio Retention

QUESTION

We service loans on our own portfolio and want to expand. Our Collection Department needs advice regarding collection call restrictions. When borrower’s do not have “optimal” loans, we are concerned they may seek better refinancing elsewhere. We want to keep these customers in-house, so we leave auto-dialer collection messages when loans are 15-45 days past due, offering potentially better refinancing.

We have been advised we cannot leave such information on an answering machine because of 3^rd party disclosure. So, we changed the recording to “…. we have important business to discuss, including potential refinance.”

But now we have been advised that we should not use collection call recordings for this information.

We think our borrowers may respond quicker if they receive this information early on and will possibly refinance past due loans if they can qualify. 

Can you provide guidance on the regulatory compliance requirements?

Also, what are some restrictions?

ANSWER

Direct answer: No. The company may not leave prerecorded messages that offer potential refinances during a collection call attempt.

Although other regulations are applicable within your stated scenario, this particular issue is regulated under the Telephone Consumer Protection Act (“TCPA”). This Act governs telemarketing calls, auto-dialed calls, prerecorded call, text messages, unsolicited faxes and the National Do-Not-Call-List. The Federal Communications Commission (“FCC”), its parallel, Federal Trade Commission (“FTC”) and other multi-state laws have a complex set of compliance regulations that covers this broad area. These rules result in steep penalties imposed on a “per violation” basis, even if there is no actual injury to a consumer.

Restrictions apply to collection calls that may include no overt telemarketing. This scenario appears to be a combination of both a collection call and a telemarketing call. To combine calls with these two purposes is prohibited by law.

"Direct Drop” Voicemails and the TCPA

QUESTION

We are interested in rolling out “direct drop” voicemails to people who have already called us and have expressed an interest in getting approved. We would like to do the same for our previous clients. None of the clients are on the “Do Not Call” list nor are any the target of debt collection. All intended recipients are past leads and clients. What guidance can you provide for this initiative?

ANSWER

A very interesting scenario! And one for which, unless you are lending in the Western District of Michigan, there is no clear-cut answer.

“Direct drop” voicemail is a method by which a third-party vendor utilizes technology to reach the consumer’s voicemail through a “back door”. Essentially, the technology allows a company to deliver a prerecorded message to a consumer’s voicemail without actually calling the consumer’s phone number.  Whether “direct drop” voicemail is subject to the Telephone Consumer Protection Act (TCPA) has been an issue for years. In 2014 and 2017, companies petitioned the Federal Communications Commission (FCC) for guidance on this issue; however, the FCC has yet to provide same.

Until this past year, we had very little guidance on this issue. In July, 2018, the District Court for the Western District of Michigan issued a seminal opinion on the issue finding that a company’s use of “direct drop” voicemail constituted calls under the TCPA, thus requiring the called party’s consent. [Saunders v. Dyck O’Neal, Inc., 319 F. Supp. 3d 907 (W.D. Mich., July 16, 2018)]  As to the binding effect of the opinion, note that a Federal District Court opinion does not serve as binding precedent on other District Courts, and, arguably, does not even serve as binding precedent in that District (although it is considered “persuasive”).

Under the TCPA, it is unlawful to “initiate any telephone call to any residential line using an artificial or prerecorded voice to deliver a message without the express prior consent of the called party unless . . . exempted by rule or order of the Commission under paragraph 2(B)”. [47 U.S.C.  s. 227(b)(1)(B)] There is no exception for “established business relationships” nor is the restriction limited to debt collection efforts. 

The ­Saunders case involved the use of direct drop voicemail in connection with debt collection. The key issue in the case was whether the company needed the consumer’s “prior express consent” to utilize the direct drop voicemail system. In order to address this issue, the Court needed to determine if the direct drop voicemail constituted a “telephone call” as defined under the TCPA.

Relying upon prior decisions in which the courts have found that voicemail and text messages are subject to the same TCPA restrictions as traditional telephone calls, the Court found that the term “call” includes direct drop voicemail. The Court stated that “the statue itself casts a broad net – it regulates any call, and a “call” includes communication, or an attempt to communicate, via telephone. Both the FCC and the courts have recognized that the scope of the TCPA naturally evolves in parallel with telecommunications technology as it evolves . . . “ [Saunders at 911] The Court further noted that “voicemails are arguably more of a nuisance of consumers than text messages” and that limiting the TCPA to instances wherein a company specifically dialed the consumer’s number and then left a voicemail but to exclude a company’s “back door” ability to reach the consumer’s voice mailbox would be an “absurd result”, as the TCPA “was created to limit the harassment and nuisance that automated calls and messages place on consumers . .. “. [Saunders at 911]

Thus, if you contemplate using direct drop voicemail to reach consumers in the Western District of Michigan, you should obtain the consumer’s prior consent. Outside of the District, it is still a grey area. However, there is no doubt that other Districts will consider the Saunders opinion in addressing the issued. 

Joyce Wilkins Pollison, Esq.
Executive Director &
Director/Legal & Regulatory Compliance

Leaving “Direct-to-Voicemail” Messages

QUESTION

I am the compliance officer of a bank. Our servicing department recently came across a way to leave so-called “back-door” voicemails. I had never heard of this term and and my research turned up very little to go on. Apparently, it has something to do with being able to leave voicemails without ringing the consumer’s phone. It seems deceptive to me. What is “back-door” voicemail” and is it covered by a regulatory rule?

ANSWER

The place to start your research would be the Telephone Consumer Protection Act (TCPA), which prohibits any person within the United States from “mak[ing] any call…using any automatic telephone dialing system or an artificial or prerecorded voice…to a telephone number assigned to a paging service, cellular telephone service…or any service for which the called party is charged for the call.” [47 USC § 227(b)(1)(A)(iii)]

Your question seems to be describing “direct-to-voicemail” messages. If so, yours is a timely inquiry, since, in a case of first impression, a federal district court in Michigan recently considered whether the term “call,” as used by the TCPA, includes direct-to-voicemail messages - that is, voicemail messages delivered within the electronic space without being announced by an audible ring. [Saunders v. Dyck O’Neal, Inc., 2018 U.S. Dist., W.D. Michigan, July 16, 2018]

Briefly, the Federal Home Loan Mortgage Corporation (FHLMC) assigned Dyck O’Neal, Inc. its interest in an outstanding debt owed by Karen Saunders. Dyck O’Neal attempted to collect the debt by leaving about thirty automated voicemail messages on Saunders’ phone over a twelve-month period. Each time, Saunders received a notification on her phone that she had a new voicemail.

Dyck O’Neal had contracted with a company named VoApp, a third-party vendor, to deliver the voicemails. This vendor’s technology reaches the target’s voicemail through a so-called “back-door” in that, rather than calling the target’s phone number and waiting to leave a message on the target’s voicemail, VoApp’s technology calls a phone number assigned to the voicemail service provider’s enhanced service platform (i.e., the voicemail computer or server), not the target’s phone number. By routing the message through the server, VoApp was able to deliver a message to the server space associated with the target Ms. Saunders, and then she received a notification that she had received a new voicemail message without ever having received a traditional call.

Saunders sued, alleging violations of the TCPA. The defendant filed a motion for summary judgment, arguing that the voicemails did not violate the TCPA. But the federal district court in Michigan denied the motion for summary judgment, holding that a direct-to-voicemail message qualified as a “call” under TCPA’s section 227(b)(1)(A)(iii).

With respect to telephonic access to the consumer, the TCPA does cast a broad net in regulating any “call,” which is a term that includes any communication or attempt to communicate via telephone. It is worth noting that the Court emphasized the effect of the call, as it opined that the “effect on Saunders is the same whether her phone rang with a call before the voicemail is left or whether the voicemail is left directly in her voicemail box” – specifically, she receives a notification on her phone that she has a new voicemail.

By leaving a voicemail directly in the server space associated with Saunders’ phone, the defendant had attempted to communicate with Saunders via her phone, which is the definition applied to the TCPA’s use of the term “call.” Further, the automated message instructed Saunders to call back at a specific telephone number, inviting additional communication over the telephone. Thus, the effect on Saunders was the same whether her phone rang with a call before the voicemail was left or whether the voicemail was left directly in her voicemail box.

So, whether this technology offers “back-door” voicemails or “direct drop” voicemails (another term referring to the same kind of service), it would be smart to approach this issue with considerable care. Courts have consistently held that voicemail messages are subject to the same TCPA restrictions as traditional phone calls. By the way, the same can be said for text messages. The U.S. Supreme Court has observed that “[a] text message to a cellular phone, it is undisputed, qualified as a ‘call’ within the compass of § 227(b)(1)(A)(iii).” [Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 667 (2016)]

Jonathan Foxx

Managing Director

Lenders Compliance Group

Restricting Contact with Consumers

QUESTION

I have heard that there are only certain times of the day or evenings when a lender or servicer can contact a borrower. Additionally, I have also heard that there are certain things that must be communicated and certain things that cannot be communicated. This is confusing because I do not know what those things are and why they are necessary. Can you help me to understand this better? Also, can you tell me if this applies to anyone that is not a borrower, and who may just be loan shopping?

ANSWER

The questions posed here are directly part of multiple Consumer Protection Laws. Historically, consumers have dealt with much abuse in these areas, where some lenders and servicers have contacted them by telephone, unauthorized at times, calling at inappropriate hours, and the callers not truthfully identifying themselves, making serious threats to consumers or speaking to them in an abusive and/or profane manner. Through the years, there have been a tremendous number of lawsuits against lenders and servicers because of these abuses.

Many states have written laws which prohibit lenders and servicers from violating consumers in these ways. Federal laws have been written by all of the regulating entities, GSE’s and HUD to further afford protection to consumers in the areas where these abuses have taken place. Some of the regulating entities would include the Federal Reserve (FRB), Office of the Comptroller of the Currency (OCC), Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC), and the Federal Deposit Insurance Corporation (FDIC). There are other agencies who concur with protecting the consumers in this same manner, and the specific laws usually contain verbiage stating “the consumer;” therefore, this would apply to all consumers, whether or not they are your company’s borrower or a consumer who happens to be shopping for a loan.  

While an exhaustive list would be difficult to compile in its entirety, please find a short list of the highest risk areas and the most commonly cited in lawsuits and regulatory examination results. I am providing a list, not meant to be comprehensive, based on the following topics: Restrictions on Communications; Abuse/Harassment; False, Deceptive, or Misleading; and Unfair and Unconscionable Actions.       

RESTRICTIONS ON COMMUNICATIONS

• Prohibits the making of any calls being made prior to 8:00 a.m. or after 9:00 p.m. in Potential Customers Time Zone, or at other inconvenient times to a consumer;
• Prohibits repeated calls to third parties in connection to a consumer regarding any loan product;
• Prohibits repeated calls to consumers;
• Prohibits improper calls to a consumer at their place of business, if applicable;
• Prohibits revealing a consumer’s personal information to any third parties;
• Prohibits the continued calling of a consumer after receiving a “Cease Communication” Notice from Potential Customer, either verbally or in writing;
• Prohibits contacting a consumer directly if known to be represented by any Attorney in any connection with the financial institution;
• Prohibits making telemarketing calls using an artificial or prerecorded voice to residential telephones without prior express consent.
• Prohibits making any non-emergency call to a consumer, using an automatic telephone dialing system (“auto-dialer”), or an artificial or prerecorded voice to a wireless telephone number without prior express consent.  (If the call to a consumer includes or introduces an advertisement or constitutes telemarketing, consent must be in writing. If an auto-dialed or prerecorded call to a wireless number is not for such purposes, consent may be oral or written. The FCC has concluded that the Telephone Consumer Protection Act (TCPA), which restricts telephone solicitations (i.e., telemarketing) and the use of automated telephone equipment, includes protections against unwanted calls to wireless numbers, thus encompassing both voice calls and text messages, including short message service (SMS) texts, if the call is made to a telephone number assigned to such service.
• Prohibits the sending of unsolicited advertisements to telephone facsimile machines. The requirement for prior express consent and the facsimile must contain specific “opt out” instructions.

ABUSE/HARASSMENT

• Prohibits falsely threatening illegal or unintended acts to a consumer;
• Prohibits the use of any harassing, abusive and/or oppressive conduct to a consumer;
• Prohibits utilizing obscene, profane, or abusive language to a consumer;
• Prohibits any threats or violence to a consumer under any circumstance;
• Prohibits the use of any language or action that materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; and
• Prohibits the use of language or action that takes unreasonable advantage of:

• a consumer’s lack of understanding of the material risks, costs, or conditions of the product or service; 

• a consumer’s inability to protect his or her interests in selecting or using a consumer financial product or service; and 

• a consumer’s reasonable reliance on a covered person (i.e., the consumer, themselves”) to act in his or her own and best interests.

FALSE, DECEPTIVE OR MISLEADING

• Prohibits failing to Identify yourselves to a consumer as company employees;
• Prohibits misrepresentation of loan character, amount, or status to a consumer;
• Prohibits falsifying any information of any kind to a consumer;
• Prohibits the act or practice which Misleads or is likely to mislead a consumer;
• Prohibits the use of any language or action that may cause a consumer’s interpretation that is reasonable under the circumstances to become confusing and/or unclear; and
• Prohibits the use of language or action that is misleading to a consumer, and results in a practice that is material. 

UNFAIR AND UNCONSCIONABLE ACTIONS

• Prohibits any discussion involving unauthorized fees, interest and expenses to a consumer;
• Prohibits the use of any language that would pressure or steer a consumer into a loan. 
• Prohibits any unfair language or action to a consumer that causes, or is likely to cause, substantial injury to him/her;
• Prohibits any unfair language or action to a consumer that results in the Injury that is not reasonably avoidable by him/her; and
• Prohibits any unfair language or action where injury to a consumer has been sustained and is not outweighed by countervailing benefits to them.  

Michelle Leigh, CRCM, MBA

Director/Internal Audits and Controls

Executive Director/Servicers Compliance Group