Lenders Continue Paying Millions to Settle TCPA Lawsuits as Decades-Old Telephone Law Collides with Modern Collections

Flagship, Nissan, and a growing list of financial institutions are paying millions to settle lawsuits over automated calls, even as courts continue to narrow the law’s reach.

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For years, auto lenders have invested heavily in compliance systems designed to contact borrowers while navigating one of the most expensive legal minefields in consumer finance: the Telephone Consumer Protection Act (TCPA).

That trend continued when Flagship Credit Acceptance agreed to establish a $4 million settlement fund to resolve allegations that it violated the TCPA by placing calls to cellular telephones using an automatic telephone dialing system or prerecorded voice. Flagship denied the allegations and maintained that its dialing technology did not violate the statute. Court filings noted that, had the company ultimately lost at trial, statutory damages could have reached hundreds of millions of dollars, potentially threatening the lender’s solvency. Approximately 57,318 valid claims were submitted, with claimants expected to receive about $43.40 each.

Just days earlier, Nissan Motor Acceptance Company reached its own $2.2 million TCPA settlement involving similar allegations concerning automated calls to consumers’ cellular phones. NMAC likewise denied liability while agreeing to resolve the litigation.

The two settlements are hardly isolated incidents.

Over the past decade, virtually every major segment of consumer finance has faced TCPA litigation. Among the most notable settlements:

• Capital One and several collection vendors agreed to a record-setting $75.5 million settlement.
• Wells Fargo later reached a $95 million TCPA settlement.
• HSBC paid nearly $40 million.
• Bank of America settled for more than $32 million.
• American Express agreed to a $9.25 million settlement.
• JPMorgan Chase resolved claims through an $11.67 million agreement.

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One law firm active in TCPA litigation reports participating in settlements totaling more than $440 million across numerous cases involving lenders, financial institutions, insurers and marketers.

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A Law Written Before Smartphones

Congress enacted the Telephone Consumer Protection Act in 1991 to curb unwanted robocalls and telemarketing abuses. At the time, cellular telephones were relatively uncommon, many consumers paid by the minute for incoming calls, and today’s smartphone technology did not exist.

Modern lenders, however, primarily communicate with customers who voluntarily provided their mobile numbers during the credit application process. Today’s customer-contact systems also differ dramatically from the random-number dialing technology Congress sought to regulate more than three decades ago.

That technological evolution became central to the U.S. Supreme Court’s 2021 decision in Facebook, Inc. v. Duguid. The Court unanimously ruled that equipment generally must use a random or sequential number generator to qualify as an automatic telephone dialing system under the TCPA, significantly narrowing the statute’s application to many modern dialing platforms. Even so, litigation over prerecorded messages, consent, revocation of consent, and other TCPA provisions continues.

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Compliance Costs Continue to Grow

For auto finance companies, the financial impact extends well beyond settlement dollars. Lenders continue investing heavily in dialing technology, consent management systems, legal reviews, employee training, and compliance monitoring to reduce litigation risk.

With statutory damages reaching $500 per call, or as much as $1,500 for willful violations, the exposure in large class actions can escalate rapidly, often making settlement the most economically practical option regardless of the merits of the underlying claims.

Lenders Continue Paying Millions to Settle TCPA Lawsuits as Decades-Old Telephone Law Collides with Modern Collections – Lenders Continue Paying Millions to Settle TCPA Lawsuits as Decades-Old Telephone Law Collides with Modern Collections – Lenders Continue Paying Millions to Settle TCPA Lawsuits as Decades-Old Telephone Law Collides with Modern Collections

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