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Opinion

The risk of TCPA litigation for mortgage lenders is increasing

Every time you call a consumer you are likely putting your business at risk of severe legal and financial damage. Even scarier, the officers of your company are not shielded from the risk and can be held personally liable even if they attempt, but fail, to comply with the law.

That's right, the Telephone Consumer Protection Act is not one to be ignored by anyone who dials consumers.

And recently Congress passed legislation that will increase mortgage lenders' compliance risk.

TCPA litigation in the mortgage industry has increased every year and the losses are only getting larger. In recent years, TCPA class action lawsuits against banks have resulted in settlements of judgments of $32 million, $17 million, and $3 million (to name just a few), and there are also a substantial number of examples that have affected smaller lenders. Regardless of your company size, understanding how to protect yourself from TCPA violations could save you millions.

What is the TCPA?

The act requires businesses to obtain prior express written consent before dialing or texting a consumer using automatic dialing telephone systems. The penalties for violations can be up to $1,500 per incident.

Not only has TCPA litigation grown more than 1,200% since 2010, but it has spawned an entire industry of lawyers and serial plaintiffs who actively seek out companies who are not or unable to prove compliance, and attempt to sue. It's easier than ever for consumers to sue businesses for TCPA violations. What's more, the burden of proof is on the defending party to prove compliance.

The risk of noncompliance with TCPA is particularly high in the mortgage industry as there are multiple websites where consumers provide their contact information in order to get competing quotes from multiple lenders, Lenders may be unable to prove the consumer provided their written consent and that the disclosures were clear and conspicuous at the time the consumer completed the form request. Ensuring the proper disclosures have been appropriately shown and consent given can be extremely difficult unless you are using a third-party service to monitor and flag your inbound leads for TCPA compliance.

Ensuring compliance

This leads to the first excuse commonly given regarding active TCPA compliance monitoring. "We periodically review all of our websites for compliance." This isn't sufficient. Serial plaintiffs and their lawyers easily poke holes in that argument as businesses are unable to prove the consumer (or class of consumers) provided expressed written consent at the time they filled out the form. If you had to prove the lead you received four months ago saw the TCPA disclosures and consented, could you?

Another popular excuse is "My vendors will indemnify me for TCPA compliance." That sounds great. Seems like a simple solution, right? Except it’s not legally viable. If a lender responds to a lead that has not given it consent to call or text, regardless of where the lead was generated, it is liable. In 2015, Dish Network lost a bid to overturn a $61 million TCPA judgment against them by arguing that the company they were using to generate leads had indemnified them. The courts rejected that argument and forced Dish to pay.

Finally, it's important to note that not only do all levels of the industry need to mitigate TCPA compliance risk, but they also need to demonstrate persuasive proof of consent when challenged by a litigant. Having the vendor provide website screenshots and IP addresses is not enough. Being able to provide witnessed consent of the specific lead event by the complaining consumer (or class of consumers) from a neutral third party frequently defeats an attorney demand letter before litigation even begins.

The TRACED Act

As of this writing, the House of Representatives and Senate passed, with clear bipartisan support, the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act, otherwise referred to as the "Pallone-Thune TRACED Act." If signed by the president, it would mean a lot of changes to the TCPA landscape. Aside from increasing the potential penalties to businesses and individuals, it would allow the FCC rulemaking authority which would likely create a changing environment that would lead to more TCPA-related lawsuits. A recommended source of TCPA updates is www.TCPAworld.com where thought leadership, case decisions, and rulemaking news on all-things TCPA related are continuously posted.


To ensure TCPA compliance, organizations should invest in a solution to document proof of that consent. Solutions should allow lenders to confirm clear and conspicuous consent in real time, while ensuring compliance with evolving consumer privacy regulations.

Ask these questions to assist in TCPA compliance:

● Do you know definitively that the consumer consented to be called and/or texted using automated dialing technologies and have persuasive proof the appropriate consent took place?

● Do you have this proof of consent stored in a location that can be retrieved for years in the future in case of a lawsuit?

● If you work with third-party lead generation marketing firms, do you clearly understand how those firms are driving consumers and are you able to prove they obtained proper TCPA consent using a neutral third party, such as Jornaya?

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