Bank of America has agreed to pay $32-million (U.S.) to settle charges that it made harassing debt collection calls to customers’ cellphones, in what is believed to be the largest cash payout ever under a 1991 law meant to protect consumers from unwanted calls.
The settlement will resolve multiple proposed class action lawsuits filed on behalf of 7.7 million of the bank’s credit card and mortgage loan customers, according to court documents.
“We’re pleased to resolve this matter,” Bank of America Corp. spokeswoman Betty Riess said in an e-mailed statement on Monday. “Bank of America denies the allegations, but agreed to settle the claims to avoid further legal costs.”
The bank is the latest of numerous U.S. companies targeted in lawsuits over automatically dialed “robo-calls.” The volume of these calls has reached record levels now that technology makes it cheap for companies to send out thousands of calls per minute, said the Federal Trade Commission’s website.
Making auto-dialed calls to cellphones without the customer’s consent is illegal under the 1991 Telephone Consumer Protection Act, passed to combat harassing phone calls.
The Federal Communications Commission’s “do-not-call” registry, set up to block unwanted telemarketing calls, also originated from that act.
Debt collection calls “can be particularly harassing and traumatic,” said Jonathan Selbin, a partner at law firm Lieff Cabraser, who represents the plaintiffs. “There are legal ways for banks and other companies to collect on those debts.”
The settlement, subject to court approval, calls for Bank of America to stop calling cellphones unless a customer has given permission. A motion by plaintiffs seeking preliminary approval of the agreement was filed on Friday in U.S. District Court in northern California.
“The core relief in the settlement is that they’re changing their practices,” Selbin said. “We’ve talked to lots of class members about this, and people say, ‘I just want the phone calls to stop.’”
The lawsuits accused the bank of repeatedly making calls to cellphones at all hours of the day. Many of the calls were prerecorded, leaving customers no way to ask for them to stop or voice complaints to a real person, the lawsuits said.
Sandra Ramirez, a California resident who filed one of the lawsuits, said Bank of America began a “campaign of harassment by telephone” after she fell behind on her mortgage payments.
In court documents, Ramirez said she asked the bank’s debt collection agents to stop calling her cellphone but was told it was impossible for them to remove her number from the computer system.
Ramirez said she got 54 calls from Bank of America to her cellphone, many of them using an artificial or pre-recorded voice.
Fines can hit $1,500 per call
The Telephone Consumer Protection Act has become a favourite tool of plaintiffs’ lawyers, as companies face penalties of $500 per illegal call, or $1,500 for willfully violating the law.
Bank of America still faces a proposed class action in Florida accusing it of making repeated robo-calls to mortgage borrowers who had asked not to be called. In court documents, the bank denied violating the Telephone Consumer Protection Act or any other law in that case.
Companies including computer maker Dell Inc., Coca-Cola Co., and SLM Corp., or Sallie Mae, have been sued over sending unsolicited robo-calls or text messages.
Sallie Mae paid $24-million last year to settle its lawsuit, previously the record payout under the Telephone Consumer Protection Act, according to legal experts.