All posts in Banks/Finance

Joseph Heller does not get enough credit for coining the term "Catch 22". How many authors can claim a phrase that conveys so much meaning in two little words, immediately understood as a shorter yet more eloquent version of "between a rock and a hard place"?

In the book by the same name, Catch 22 was a military rule that said the only way to get out of a dangerous mission was to prove you were insane, but that if you wanted to get out of such a mission, it proved you were sane so you had to go.

While Heller's setting was World War II, he could easily have placed his characters in a more modern setting. Instead of focusing on a military bureaucracy intent on keeping soldiers in perpetual service, he could have written of government regulations that force American businesses to choose between keeping their customers satisfied or breaking the law.

Consider an airline. They are required by the Department of Transportation (DOT-OST-2010-0140) to promptly notify passengers of flight delays at the airport, on their website and on their telephone reservation system. Some airlines try to go the extra mile by proactively notifying passengers using interactive voice messages. But if a passenger provides their cell phone number as their point of contact, the airline would be violating the FCC's rules implementing the Telephone Consumer Protection Act (TCPA) if they send such a message to a passenger without their prior "express consent". Sounds easy if the ticket is booked on the airline's own website - just add a click box for consent to the check-out process. However, getting consent is not so easy if the flight is booked by an independent travel agent over the phone. Catch 22.

And what about a mortgage servicer? Under Fannie Mae's servicing guidelines, they are required to attempt phone contact with delinquent borrowers every three days. Fannie wants servicers to make every possible effort to assist borrowers in avoiding foreclosure by communicating all the loan modification programs the government has made available. But if the borrower has provided a mobile number (and for 30% of American households, that is the only number they have), in most cases the servicer would be at legal risk if they used automatic dialing technology to make these calls. That's because the original lender failed to obtain the necessary consent when the loan was issued. Catch 22.

I could go on. Prescription refill reminders, credit card fraud alerts, COD package delivery notifications - all good for the consumer, but risky for the business under the current TCPA. That's why a coalition of sixteen business associations ranging from the American Bankers to the U.S. Chamber of Commerce came together to draft an amendment to the TCPA that has now been sponsored as a bill by a bi-partisan group of congressional representatives.

This week I went to Washington, D.C., to lobby for this bill, HR 3035 "The Mobile Informational Call Act of 2011", the primary intent of which is to remove the distinctions made in the TCPA between landline and mobile service when using "assistive technlogy" (dialers and recorded messages) to communicate with customers for informational, not marketing, purposes.

We may not be flying dangerous missions over well-defended enemy territory when we try to do the right thing by contacting customers with information they need, but we would still have to be insane to keep doing it in the face of our own Catch 22. The only sane thing to do is change the rules.