FCC Takes a Bite Out of FNB’s Apple Pay User Agreement

PhoneThe Federal Communications Commission (FCC) recently issued a citation to First National Bank Corporation (FNB) under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, for engaging in telemarketing practices with its Apple Pay and online banking services without the “express written consent” of the consumer.  As previously covered by LenderLaw Watch, the TCPA and FCC’s rules prohibit consumer finance or other companies from contacting consumers for purposes of marketing activities through autodialed telephone calls to landline or cell phones, text messages or prerecorded calls, unless the company obtains the “prior express written consent” from the consumer.  Unlike most TCPA enforcement actions and private lawsuits, the FCC’s citation to FNB is unusual because the citation does not challenge that consumers were receiving unwanted telemarketing phone calls or text messages.  Instead, the citation targets FNB conditioning consumers’ consent to receive marketing text messages as a condition of using FNB’s Apple Pay or online banking services.

FNB’s Apple Pay services user agreement allegedly allowed it to suspend or cancel the consumer’s ability to access and use the Apple Pay services if the consumer revoked consent at any time.  The FCC citation also alleges that FNB’s user agreement allegedly failed to include a disclosure informing consumers of their right to refuse consent to telemarketing calls and texts.  Under the FCC’s rules implementing the TCPA, the definition of “prior express written consent” (47 C.F.R. § 64.1200(a)(8)) precludes any writing that requires consumer consent “as a condition of purchasing any property, goods, or services.”  The citation gives FNB thirty days to respond to the citation.  Commensurate with the citation against FNB, the FCC issued a citation similar in scope against Lyft, a ride-sharing service competitor to Uber, for also allegedly requiring consent to receive telemarketing texts as a condition of service.  The citation against Lyft alleges that consumers that opted-out of such telemarketing texts or calls were barred from using Lyft’s services unless they opted back into receiving such texts or calls.

For consumer finance companies trying to precisely craft disclosure and consent agreements to avoid unwanted consumer contact—and thereby avoid the swath of recent TCPA class actions and enforcement proceedings—the FCC’s recent citations to FNB and Lyft provide further caution of the care necessary to meet the FCC’s exacting standards.  It is not enough that a user agreement disclose that the consumer is expressly providing consent to be contacted for telemarketing purposes through autodialed phone calls or text messages.  Rather, an agreement of consumer consent in a user agreement must not be a condition of entering the service agreement and must be unhinged from the user agreement or services provided.  LenderLaw Watch will continue to monitor and report on critical developments in TCPA enforcement and litigation actions.