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FCC 'Do Not Fax' Rule Hurts Mortgage, Auto Lending

August 28, 2003

The Consumer Bankers Association is requesting that the Federal Communications Commission issue a permanent exemption from 'do not fax' rules that would interfere with critical fax communications necessary for businesses, including auto and mortgage lending, according to the CBA.

The FCC recently suspended until Jan. 1, 2005, its 'do not fax' rule that would eliminate the exception for "established business relationship" under the Telephone Consumer Protection Act. The rule would require that the receiver of a fax provide signed permission before a business can send them a fax that includes advertising.

That rule was postponed following substantial protests from businesses and associations, including CBA.

"The Commission's new position has far-reaching unintended consequences," according to CBA.

CBA and a coalition of financial services trade groups say they have filed a petition asking the FCC to reinstate the exception for "established business relationship," and to reconsider and clarify language on 'express consent.'

Because the Commission has reversed its longstanding prior position that an "established business relationship" ("EBR") between the sender and recipient provide the requisite express permission to send a facsimile, a person or business must have express written permission to send an unsolicited facsimile advertisement even where the recipient is engaged in an ongoing business relationship with the sender.

According to CBA, "Financial institutions also use facsimiles when communicating with automobile dealers, including sending dealer rate sheets and dealer specials. The lending, insurance, broker and intermediary communities require clarification that rate sheets are not unsolicited advertisements under the TCPA in order to continue to do business in the present rapidly changing economic environment without the fear that a court will inappropriately hold that these communications are unsolicited advertisements."

According to the coalition, "Without such clarification, lending and insurance markets will be disrupted. Consumer and small business needs will be unmet if lenders or insurers feel compelled to wait for written permission before they can facsimile rate sheets to brokers and intermediaries."

The petition notes that "One heavy use of facsimiles in the mortgage industry is between wholesale mortgage lenders…and their delivery channels, namely mortgage brokers and correspondents." Further, "If mortgage brokers and correspondents are faced with impediments to obtaining mortgage product and pricing information from investors, consumers will have fewer choices of mortgage products and rates and may risk losing valuable rate-lock opportunities"

Furthermore, CBA says "Consumers will find it cumbersome to provide a written consent when shopping for mortgage products, but more importantly, requiring consents will delay initiation of the loan transaction and the borrower's ability to lock-in a favorable rate."

CBA and the coalition are asking the FCC to scrap its new definition of EBR, which includes a time limitation "on the basis of the subscriber's purchase or transaction within the entity within the eighteen (18) months immediately preceding the date of the telephone call or on the basis of the subscriber's inquiry or application regarding products or services offered by the entity within the three (3) months immediately preceding the date of the call.…"

The petition notes, "Whole sale lenders, for example, will be unable or unwilling to track whether the last transaction consummated with the broker or last inquiry made by a correspondent complied with the timelines."

The petition asks that the new EBR definition apply to consumer transactions but not to business-to-business communication.

The petition also asks for reconsideration and clarification on what constitutes 'express consent' by consumers. Rather than requiring written permission, the petition urges that verbal consent be authorized, as well as consent through Internet sites, email or other technologies such as fax-on-demand.

Further, consent should not be limited to a specified phone number, but should attach to the individual or business, the coalition urged.

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