A Michigan mortgage company is facing a class action lawsuit for allegedly using AI-generated artificial voice cold calls to sell refinances without consent.
A Michigan-based mortgage company is facing a class action lawsuit alleging it used artificial voice cold calls to pitch refinance offers to consumers without their consent. If found guilty, the allegations could result in significant fines under federal telemarketing laws.
The lawsuit, filed on February 24 in the U.S. District Court for the Eastern District of Michigan, accuses Mortgage One Funding LLC of making unsolicited calls to consumers’ cell phones using synthetic or prerecorded voices, in violation of the Telephone Consumer Protection Act (TCPA).
The complaint alleges that the calls were made either directly by the lender or by third-party telemarketers acting on its behalf.
Artificial voice calls at the center of litigation
According to the complaint, consumers received unsolicited phone calls featuring artificial or prerecorded voices advertising mortgage refinancing services. The complaint alleges that the calls were made without the recipient’s prior express written consent, which is required under the TCPA for telemarketing calls made to cell phones using artificial or prerecorded voices.
Plaintiffs allege that the calls were directed to the cell phones of consumers, including individuals who had not consented to receive such outreach. The proposed class would include U.S. consumers who received similar synthetic voice calls from Mortgage One Funding LLC or an entity acting on its behalf within the applicable statutory period.
Under the TCPA, statutory damages typically start at $500 per violation and can increase to $1,500 per violation if the violation is determined to be willful. The lawsuit alleges that total damages could exceed $5 million.
Mortgage One Funding has not yet filed a formal response to the allegations.
Exploring AI based on 30-year-old law
The case highlights the growing legal questions facing mortgage and real estate marketers about how AI-powered outreach tools fit into the federal telemarketing framework, which was created decades before modern AI voice agents existed.
Enacted in 1991, the TCPA restricts certain telephone calls made using automatic telephone dialing systems and artificial or prerecorded voices. For telemarketing calls made to cell phones using artificial or prerecorded voices, the law generally requires the recipient’s prior express written consent.
Courts in recent years have considered how new AI-based voice technologies and automated outreach systems fall under these legal definitions.
For lenders, compliance risks can be significant.
Because TCPA lawsuits are often filed as class actions and statutory damages are assessed on a call-by-call basis, even relatively small advocacy efforts can incur significant financial losses if found to be in violation.
Expanding Outreach and Expanding Risk
Mortgage companies typically use outbound phone calls and text messages to obtain refinance and purchase leads, especially when competition increases due to changing interest rates or market downturns.
At the same time, the TCPA lawsuit continues to target Mortgage Assistance, alleging calls and texts to numbers on the National Do Not Call Registry or contact without proper consent documentation.
As lenders experiment with automated outreach, plaintiffs argue that AI-generated voice calls fall under the TCPA’s limitations on artificial or prerecorded voices, an interpretation the FCC supported in recent guidance.
Industry lawyers also caution that the use of third-party marketing vendors does not automatically relieve lenders of liability when telemarketers act on behalf of sellers.
The lawsuit against Mortgage One is still in its early stages, and the plaintiffs are requesting a jury trial.
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