TCPA changes a win-win for consumers and innovative lenders

If you’ve been taking cues from aggregators, you’ll want to pay close attention because the FCC is tightening its claws.

In January, the committee supported Telephone Consumer Protection Act (TCPA) and final rule This closes the so-called “lead generation loophole” of telemarketing calls and text messages. This is a big change for all types of lenders who consider buying leads as part of their business model. Under the new rules, consumers must provide “one-to-one” consent each time they are contacted by a single lender. This means that consumers must knowingly grant permission to receive solicitations to a specific lender, and these permissions cannot move laterally between lenders without the consumer’s express approval. The changes give consumers the ability to decide whether they can make calls and when to consent to prerecorded calls, autodialed calls and text messages.

The main terms take effect on March 26, and the requirement to collect written one-to-one consent from each consumer takes effect on January 27, 2025.

For many lenders who previously relied on aggregators to deliver thousands or tens of thousands of leads each month, the changes are dramatic and disruptive—even though the likelihood of those leads converting into a loan application may be less than 1%. People who may simply be curious about homes for sale or rent in their area and sell them to a lender without the explicit one-on-one consent of the consumer could soon be deemed illegal. Additionally, the law could prevent lenders from re-selling the home to themselves. past customers, unless they happened to collect and record the customer’s express written consent in the highly specific manner required by the new rules.

It is not okay to not follow the rules. The law is effective, and if past cases are any indication, violators will be subject to prosecution and stiff penalties after the grace period ends. Consumers will be able to report receipt of illegal phone calls or text messages, and consumers, state governments and/or the FCC can take legal action against violators, with fines starting at $500 and up to $1,500 per violation.

In addition to paying legal fines, non-compliant lenders will also spend time and money preparing for and handling regulatory audits, even if no penalties or legal action results. Ultimately, though, examples need to be given and violators will face severe sanctions and may even lose their business license.

Let the harsh reality sink in and take action immediately if you are in violation soon. For many lenders, this will mean finding a new source of potential customers – or, better yet, an entirely new approach to customer acquisition that connects lenders with willing consumers who already understand their borrowing capacity and are ready to Good and willing to share data needed for underwriting.

Online marketplace will benefit buyers and sellers

The lending industry may take a cue from other industries where “marketplaces” like Amazon, CarMax, and Etsy have refocused their efforts by enabling consumers to shop on demand and request certain products or services within an ecosystem they trust. Shaping the end-to-end retail experience. they need.

The market is not new. Open-air markets flourished in ancient Babylonia and continue to serve as farmers’ markets or craft fairs in many communities today. If the banking industry can capitalize on the idea of ​​building secure online marketplaces where consumers can transact and browse a variety of financial services while still having complete control over who receives their information and how it is used, this will enable lenders to receive these leads and contact Qualified customers while operating well within the scope of the TCPA.

In this case, everyone brings value. Consumers will be asked to “self-assess” their financial readiness for specific products or services, such as car loans or mortgages. Their financial data and contact permissions can be securely stored in an encrypted package and accessible to the lender of their choice. Lenders will review and select the clients they intend to serve based on their business goals and requirements. Lenders will then be able to connect pre-qualified and proactive consumers with products or services ready to purchase a loan.

Online marketplaces like this one will bring together loan-ready consumers with lenders, find qualified customers, and allow lenders to connect with them one-on-one.

The entire consumer loan industry benefits

Rather than casting a wide net around shady prospects, this online marketplace will be filled with qualified buyers who have already put themselves in the market for loans. Finding leads here will save lenders time and money and increase the likelihood of leads converting into applications. Because applicants are verified, even loan underwriting and processing will be smooth, streamlining transactions and performance analysis.

This model would allow lenders to compete with each other on the things that matter—their true differentiators, like a superior customer service experience or more favorable loan terms—rather than which lender can buy the most leads or robocall the most of potential customers or broadcast the most Super Product Cup ads.

In addition to improving profitability, this online lending marketplace is inherently scalable, allowing lenders to manage the current cycle and environment without the need for widespread hiring or production fluctuations. You can connect with as many customers as your business can handle at the time to understand your pull. The pass rate will be impressive.

As an added benefit, alternative methods of calculating default risk could be built into consumer assessment models to make loan eligibility pools more inclusive. While traditional credit scores will continue to tell part of the story of consumer creditworthiness, not every marketplace visitor will have a credit score and may have a weak credit profile. The market will be a fertile environment for traditional credit scoring models to be augmented with other models such as cash flow analysis, residual income and rental payment history to assess additional dimensions regarding consumer creditworthiness, so lenders can “frame” ” provide quotes from others.

Meet the future of FCC-compliant lead acquisitions

While many lenders are understandably anxious right now as they adapt to new customer acquisition models, I applaud the FCC for taking steps to protect consumers and limit their exposure to unwanted solicitations from lenders they may have heard of but not know about and harassment. unnecessary.

A modern, streamlined, transparent, collaborative, and more inclusive loan market eliminates the need to cast a wide net for borrowers who are not ready or eligible for a loan, allowing you to focus on those borrowers who are ready or ineligible. At the same time, you can always be fully TCPA compliant.

As the internet makes it easier than ever to build meaningful connections with customers online, now is the time to adapt the financial industry’s business acquisition model to protect consumers’ privacy while also making it easier for them to do business with us . Understand lead acquisition and consumer selection practices and proactively make changes to remain fully compliant.

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