Maryland Legal Alert for Financial Services
Court Addresses Fraud Alert Exemption in Case Regarding Misaddressed Bank Calls
In Brooks v. Lone Star Credit Union, the court examined the scope of the financial institution fraud exemption under the Telephone Consumer Protection Act (TCPA). This exemption allows financial institutions to make calls or send text messages to customers' mobile phones without prior consent in situations where the financial institution suspects fraud—provided that the financial institution adheres to strict conditions. In Lone Star, the plaintiff sued after alleging receiving fraud alerts intended for someone else, including a prerecorded message and a live agent call. The plaintiff also alleged she never consented to being contacted and informed the financial institution that she did not know the person for which the messages were intended.
The financial institution moved to dismiss the claim asserting the financial institution fraud exemption. The court denied the motion, citing missing facts in the plaintiff’s complaint regarding whether the plaintiff was charged for the call and if the financial institution offered an opt-out mechanism. The court allowed for limited discovery to address these two issues and also requested that plaintiff clarify which specific calls were the basis of her lawsuit. The ruling is notable for addressing the financial institution fraud exemption at the pleadings stage and signals the need for financial institutions to ensure strict compliance with the exemption.
Practice Pointer: Financial institutions should take proactive steps to ensure that they are fully compliant with all TCPA requirements, including verifying that calls and texts are sent only to numbers provided by the actual customer, ensuring clear and effective opt-out mechanisms and maintaining documentation that calls did not result in charges to the customer.
For more information, contact Tamia J. Morris.