July 30, 2013

Major American Bank Faces Debt Collection Practices Lawsuit

A major US financial institution has agreed to pay $32 million settlement for allegations it made harassing debt collection calls to consumers’ mobile phones. While denying the allegations, the agreed settlement signifies the largest cash payout ever under the Telephone Consumer Protection Act (TCPA).

The suit against this financial institution alleges it called consumers at all hours of the day and that placed prerecorded calls to mobile devices that did not offer consumers a way to opt-out of receiving such calls on their mobile phone. Auto-dialed or prerecorded calls made to mobile phones can result in fines under the TCPA ranging from $500 per call to $1,500 per call in the cases of businesses willfully violating the law.

The settlement is part of a regulatory crackdown on autodialer technology and “robocalls”, which make it cheap and easy for businesses, particularly debt collectors, to dial thousands of calls per minute. The financial institution is still facing a class-action TCPA lawsuit in Florida.

Making auto-dialed calls to mobile phones without consumer consent is illegal under the existing TCPA, and using any dialing technology with auto dialer functionality will be illegal under forthcoming updates to the TCPA, which go into effect on October 16th. Enforcement action is expected to step up as the revised TCPA regulations take effect.

Other companies facing suits alleging unsolicited robocalls or text messages include Dell, Coca-Cola, and federal student loan originator Sallie Mae, which held the previous record for settling those allegations to the tune of $24 million.

Debt collection firms continue to face particular scrutiny for using prerecorded messages and autodialer equipment for making collection calls.