What is the TCPA?

Originally passed in 1991 to regulate telemarketers, the Telephone Consumer Protection Act (TCPA), was updated by the Federal Communications Commission (FCC) in 2015 to broaden its scope.[1] The updated version prohibits companies from sending autodialed business text messages—also known as robotexts—without express consent from the recipient. In the financial services industry, many firms are unaware that these restrictions also apply to text messages sent to clients from broker-dealers or advisors. In 2016, TCPA lawsuits increased by 32 percent, indicating an escalation in risk to businesses.[2] To help mitigate this risk, firms should include a text message archiving solution in the autodial implementation plan.

What TCPA Prohibits

TCPA is broadly written, and has been interpreted to prohibit firms from sending business or marketing text messages to an individual with whom they do not have a business relationship. The Act covers any equipment, including smartphones, with the capacity to send automated text messages and phone calls.
The Act also pertains to various messaging apps, texting platforms, and internet-to-phone text messaging. If a firm’s brokers are using telephone, text, VoIP, or other messaging platforms to market their services, the firm must ensure their communications are compliant.

Achieving Compliance

To comply with TCPA, a firm must receive consent from each individual prior to texting, regardless of if it is a current customer or prospective customer.[3] When the texts comprise telemarketing or advertisements, consent must be provided in writing. However, there is no specific method required for non-telemarketing messages;[4] consent can be granted through verbal permission, checking a box on a website, or providing a phone number on a contact information request form.

It is important to note the FCC has stated that, “where a client provides their phone number to a firm related to the provision of the firm’s services, the provision of the number is considered consent with respect to the messages that relate to the services provided by the firm.”[5] In layman’s terms, this means a firm meets TCPA requirements by obtaining express consent or by ensuring all text messages related to the products or services purchased by the client.

A financial institution is exempt from TCPA if it is sending time-sensitive, pro-consumer text messages which address financial issues related to the customer’s account, such as data-breach notifications, suspected fraud, or identity theft.[6]
To prove compliance with TCPA requirements, firms must ensure they archive the client's permission to use the cell phone to receive autodialed texts. Although not required by TCPA, broker-dealers should retain client-consent communications as a best practice. In the event of a litigious or eDiscovery event, a firm must be able to prove it obtained the client’s permission to send the communications. Accessing and producing these records is an easy way to verify and provide proof of expressed consent. [7]

Finding the Right Solution

Firms should capture and retain all business-related communications between their investment advisors or broker-dealers and clients, including proof of consent.

A best-fit solution should automatically retain and index text messages, keep them in a search-ready state, and make them available for on-demand supervision/review and production.

Learn more about solutions for text message archiving.

[1] FCC Enforcement Advisory: Robotext Consumer Protection, Enforcement Advisory No. 2016-06, 2 (Nov. 18, 2016) [hereinafter FCC 2016 Enforcement Advisory].

[2] What We Learned from 5 Major TCPA Lawsuits in 2016, Contact Compliance Center, http://www.dnc.com/What-We-Learned-from-5-Major-TCPA-Lawsuits-in-2016 (Mar. 27, 2017).

[3] Sarah R. Anchors, When Can You Condition Consent to Receive Autodialed Calls/Prerecorded Messages: The Second Circuit Limits a Consumer’s Revocation of Consent, Lexology https://www.lexology.com/library/detail.aspx?g=28a50d7b-a112-4fdd-b8db-03ada293a332 (July 5, 2017).

[4] In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Declaratory Ruling, para. 19 (2016) [hereinafter FCC 2016 Declaratory Ruling].

[5] Id.

[6] FCC July 10^th Declaratory Ruling, supra note 3 at 30 FCC Rcd 8023-26, paras. 125-33.

[7] FCC 2016 Enforcement Advisory, supra note 1 at 2.