CBA Letter of Support to FCC re: Alerts & Notifications Exemption for ABA

COMMENTS IN SUPPORT OF PETITION FOR EXEMPTION OF THE AMERICAN BANKERS ASSOCIATION 

I. Consumer Bankers Association Supports American Banker Association Petition for Exemption

The Consumer Bankers Association (“CBA”) offers support for the American Bankers Association’s (“ABA”) Petition for Exemption (“ABA Petition”) that asks the Federal Communications Commission (“Commission” or “FCC”) to create an exception for fraud and identity theft alerts, data breach notifications, remediation messages, and money transfer notifications on a free to end user basis. While we continue to urge the Commission to clarify that “called party” refers to the “intended recipient” for purposes of the Telephone Consumer Protection Act (“TCPA”) prior express consent requirement as outlined in our Petition for Declaratory Ruling (“CBA Petition”), we believe the ABA Petition proposes exemptions that would promote beneficial communications without compromising consumer privacy, and ultimately reduce the risk of fraud and identity theft associated with payment card transactions. 

II. Informational, Non-marketing Communications Mitigate Fraud Losses and Benefit Consumers

Financial institutions send an array of informational, non-marketing communications that benefit consumers by mitigating fraud losses and fostering money management. Beyond being beneficial, these communications are often legally mandated. As explained in the CBA Petition:

In conformance with state and federal law, our members send data security breach notifications and place verification calls, including prerecorded voice and text messages, to consumers who have requested fraud alerts on their credit reports.1 Other communications, such as outof-pattern account activity notices and transaction requests, are instrumental in our members’ efforts to combat fraud and identity theft. In an effort to maintain a high level of customer service, our members provide payment due date reminders and account balance notifications to protect customers from incurring avoidable fees, help customers manage finances, and otherwise improve the consumer experience.

These communications are especially necessary given the escalating frequency of data breaches. According to the respected Identity Theft Resource Center’s most recent report, data breaches are up 26% from this time last year, rising from 562 in 2013 to 708 in 2014. The ABA Petition notably points out that “almost half of American adults (47%) had their personal information exposed by hackers between August of 2013 and August 2014, and 41% of adults have had to replace at least one credit card for prevention reasons so far in 2014.”

 The Identity Theft Resource Center report further concludes that records breached in the financial services industry pale in comparison to other industries, representing a mere 1.5% of total compromised records as compared to almost 80% of the business/ retail sector.5 Despite the relatively minimal percentage, financial institutions spend considerable resources notifying customers when breaches occur. The ABA Petition asserts that a single financial institution may transmit 50,000 to 60,000 security breach notifications per month.6 As data breaches become a fixture of our daily news cycle, it is absolutely crucial that banks are able to freely communicate with their customers to best protect sensitive information and minimize losses.

III. Notifications Sent to Mobile Numbers are Often Unavoidable and Largely Preferred 

In the digital age, our members often have no choice, but to send notifications to a wireless number. When surveying U.S. households, CTIA – The Wireless Association® found that 39.4% are “wireless only,” and the Centers for Disease Control reported that 41% are “wireless only,” with that percentage rising to 65.7% for the 25 and 29 population. 7 Not only have customer largely abandoned landlines, they often prefer to receive communications on their mobile devices due to the efficiency and convenience. 

Speed is essential to protect consumers from losses arising from unusual account activity, further emphasizing the need for banks to be able to freely communicate with customers via their mobile device. Quickly alerting consumers about potentially suspicious activity and data security breaches is the best way to mitigate fraud losses, reduce harm, and avoid inconvenience. 

IV. Conclusion

By granting the ABA Petition, the Commission has the opportunity to help protect consumers, and reduce the risk of fraud and identity theft losses, while maintaining privacy protections. For these reasons, we support the ABA Petition.

Respectfully submitted,

_____________________

Kate Larson Regulatory Counsel

Consumer Bankers Association

1225 Eye Street NW, Suite 550

Washington, D.C. 20005

202.552.6366

December 8, 2014