As noted in our prior update (see prior email below), the Federal Communications Commission (FCC) issued a Notice of Proposed Rulemaking regarding recent amendments to the federal Telephone Consumer Protection Act (TCPA) that excepted calls "made solely to collect a debt owed to or guaranteed by the United States" from the TCPA's "prior express consent" requirement.
The comment period having expired, the FCC yesterday released its Report and Order (FCC 16-99).
A copy of the complete Report and Order is available at: Link to Report and Order
As one of the dissenting Commissioners points out, the FCC's Report and Order "refuses to address whether Fannie Mae and Freddie Mac loans are 'owed to or guaranteed by' the federal government."
The FCC's Report and Order addresses among other things the following:
Number of Calls Limited to 3 per 30 Days
The FCC's Report and Order limits the number of debt collection calls subject to the statutory exception to three in thirty days.
The FCC states that "these limits apply in the aggregate to all calls from a caller to a debtor, regardless of the number of debts of each type the servicer or collector holds for the debtor." In addition, "[t]his cap of three calls per thirty days is cumulative for debt servicing calls and debt collection calls." In other words, "the call limit on federal debt collection calls to wireless numbers applies for each servicer or collector."
Notwithstanding the statutory exception, and in support of its position, the FCC states "callers may make additional autodialed, artificial-voice, and prerecorded-voice calls if they obtain the prior express consent of the called party, or if they dial manually."
Called Parties May Opt Out At Any Time, For Any Reason
The FCC also states that "consumers have a right to stop the covered autodialed, artificial-voice, and prerecorded-voice servicing and collection calls to wireless numbers at any point the consumer wishes." The request to stop calling may be made "using any reasonable method, including orally or in response to a text message."
The FCC goes on to state that "zero federal debt collection calls are permitted once a debtor asks the owner of the debt or its contractor to cease federal debt collection calls. This requirement that callers immediately honor a request to stop calls applies even where the caller has previously obtained prior express consent to make federal debt collection calls."
In addition, "[t]his stop-calling request is specific to the debt and the consumer, and transfers with the debt; once the consumer has asked that the number of federal debt collection calls be reduced to zero, only the consumer can alter that number restriction. Consequently, a stop-calling request applies to a subsequent collector or servicer of the same debt."
Right to Opt Out Must Be Clearly Disclosed
The FCC's Report and Order requires callers to inform debtors of their right to make such a request. The disclosure must:
- "inform the debtor that he or she has a right to request that no further autodialed, artificial-voice, or prerecorded-voice calls be made to the debtor for the life of the debt"
- a stop-calling request "may be made by any reasonable method"
- "be made in a manner that gives debtors an effective opportunity to stop future calls"
- be made "within every completed autodialed call with a live caller, whether the caller speaks with the debtor or leaves a voicemail message"
- be included in prerecorded or artificial voice messages
- be included in text messages, or sent "in a separate text message that contains only the disclosure and is sent immediately preceding the first covered text message"
"Solely to collect a debt"
The FCC opines that the term "solely to collect a debt," as used in the TCPA amendment, means only "debts that are delinquent at the time the call is made or to debts that are at imminent risk of delinquency as a result of the terms or operation of the loan program itself."
The FCC clarifies that its definition requires that "at the time the call is made, the debt is delinquent or there is an imminent, non-speculative risk of delinquency due to a specific, time-sensitive event that affects the amount or timing of payments due, such as a deadline to recertify eligibility for an alternative repayment plan or the end of a deferment period."
The FCC also clarifies that a caller "need not wait until a debtor is delinquent to begin making certain debt servicing calls. Rather a caller may make debt servicing calls following a specific, time-sensitive event that affects the amount or timing of payments due, such as a recertification deadline or the end of a deferment period, and in the 30 days before such an event."
Stated together, exempt calls must occur: "(1) during the period of delinquency for debt collection calls; and (2) following an enumerated, specific, time-sensitive event and in the 30 days before such an event for debt servicing calls."
A call that includes "marketing, advertising, or selling products or services, and other irrelevant content is not solely for the purpose of collecting a debt owed to or guaranteed by the United States."
"Owed to or guaranteed by the United States"
The FCC states that "the debt must be currently owed to or guaranteed by the federal government at the time the call is made. Debts that have been satisfied are not among the covered debts, and debts that have been sold in their entirety by the federal government are, likewise, not covered."
Who may be called?
Because the statutory exception applies to calls made "solely to collect a debt," the FCC determined that "the covered calls may only be made to the debtor or another person or entity legally responsible for paying the debt."
Reassigned Numbers
Calls "to wrong numbers are not covered by the exception," nor are calls "to reassigned wireless numbers." The FCC determined that "the caller risks liability for the call after the first call to the number, if the number has been reassigned from the debtor to a third party."
What constitutes a "call made"?
The FCC states that a "call is any initiated call," and "[t]he call need not be completed, and need not result in a conversation or voicemail."
Duration of Calls, Size of Texts
The Report and Order states that "artificial-voice and prerecorded voice calls may not exceed 60 seconds, exclusive of any required disclosures." In addition, "[t]ext messages are generally limited to 160 characters."
Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: rwutscher@MauriceWutscher.com
Admitted to practice law in Illinois
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From: Ralph T. Wutscher <rwutscher@mauricewutscher.com>
Date: Thu, May 26, 2016 at 5:12 PM
Subject: FYI: FCC Issues NPRM as to Calls "Made Solely to Collect a Debt Owed to or Guaranteed by the United States"
To: "Ralph T. Wutscher"
Cc: Florida Office, San Francisco Office, San Diego Office, Atlanta Office, Chicago Office, Philadelphia Office, Cleveland Office, Cincinnatti Office, Indiana Office, New Jersey Office, Texas Office, New York Office, Alabama Office, Boston Office, DC Office
The Federal Communications Commission (FCC) recently issued a Notice of Proposed Rulemaking (NPRM) regarding recent amendments to the federal Telephone Consumer Protection Act (TCPA), seeking comment on among other things:
(1) which calls are covered by the phrase "solely to collect" under the amendments;
(2) the meaning of the phrase "a debt owed to or guaranteed by the United States" in the amendments;
(3) how the FCC should restrict the number and duration of covered calls;
(4) whether consumers should have a right to stop covered calls at any point the consumer wishes; and
(5) whether callers should be required to inform consumers of such a right.
A copy of FCC's NPRM is available at: Link to NPRM
As you may recall, Congress amended the TCPA in the Bipartisan Budget Act of 2015 to allow autodialed calls "made solely to collect a debt owed to or guaranteed by the United States" without the prior express consent of the called party.
The amendments also require the FCC to "prescribe regulations to implement the requirements" within nine months of enactment of the amendments (i.e., by Aug 2, 2016), and to adopt rules to "restrict or limit the number and duration" of these covered calls.
"Solely to collect a debt"
Among other things, the FCC proposes to interpret "solely to collect a debt" to mean "only those calls made to obtain payment after the borrower is delinquent on a payment." The FCC also proposes that "servicing calls" -- i.e., "calls to convey debt servicing information" -- should be included in covered calls.
The FCC seeks comment on how it should interpret the term "delinquent," or whether covered calls may "only be made after the debtor is in default," how it should define "default," and whether a distinction should be made "between default caused by non-payment and a default resulting from a different cause under the terms of the debt instrument."
The FCC also seeks comment on what types of calls should be included in "servicing calls," how to distinguish servicing calls from "marketing calls," whether covered calls should be allowed to start only after a borrower is delinquent on a payment, and whether delinquency should also be a trigger for debt servicing calls.
"Owed to or guaranteed by the United States"
The FCC also seeks comment on the meaning of the phrase "a debt owed to or guaranteed by the United States," including "whether there are any circumstances under which a party other than the federal government obtains a pecuniary interest in a debt such that the debt should no longer be considered to be 'owed to . . . the United States.'"
For example, the FCC asks for comment on "[w]hat is a debt 'owed to' the United States and a debt 'guaranteed by' the United States?," and "[d]oes the phrase 'owed to or guaranteed by' include debts insured by the United States?," and "would a debt still be 'owed to . . . the United States' if the right to repayment is transferred in whole or part to anyone other than the United States, or a collection agency collects the funds and then remits to the federal government a percentage of the amount collected?"
Who May Be Called
The FCC seeks comment on whether the phrase "solely to collect a debt" should "include only calls to the person or persons obligated to pay the debt," and whether the FCC should "limit covered calls to the cellular telephone number the debtor provided to the creditor, e.g., on a loan application."
The FCC also seeks comment on "whether calls to persons the caller does not intend to reach, that is persons whom the caller might believe to be the debtor but is not, are covered by the exception," and proposes to exclude such calls from the exception.
In addition, the FCC proposes "that calls to a wireless number a debtor provided to a creditor, but which has been reassigned unbeknownst to the caller, are not covered by the exception, but have the same one-call window the [FCC] has found to constitute a reasonable opportunity to learn of reassignment."
Who May Make Covered Calls
The FCC proposes to allow "calls made by creditors and those calling on their behalf, including their agents," but asks whether "there a limiting principle to determining who should be deemed to be acting on behalf of the creditor."
The also seeks comment on "whether and, if so, how the Supreme Court's recent decision in Campbell-Ewald Co. v. Gomez [regarding unaccepted offers of judgment, and the mootness doctrine] should inform our implementation of the Budget Act amendments to the TCPA."
Limits on Number and Duration of Covered Calls
The FCC proposes to limit the number of covered calls to three per month, per delinquency and only after delinquency. The FCC also proposes "that the limit on the number of calls should be for any initiated calls, even if unanswered by a person."
The FCC also seeks comment on "the maximum duration of a voice call, and whether [it] should adopt different duration limits for prerecorded- or artificial-voice calls than for autodialed calls with a live caller," whether the FCC should limit the length of text messages, and how to count "debt servicing calls" for purposes of the proposed three-call limit per month.
Consumer's Ability to Stop Covered Calls
The FCC proposes "that consumers should have a right to stop [covered] calls at any point the consumer wishes," and that "stop-calling requests should apply to a subsequent collector of the same debt."
The FCC also proposes "to require callers to inform debtors of their right to make such a request," and seeks comment "on when and how callers should provide such notice."
The FCC also seeks comment on whether callers making covered calls should be required "to record any request to stop calling and provide a record of such a request to subsequent callers along with other information about the debt."
Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: rwutscher@MauriceWutscher.com
Admitted to practice law in Illinois
Alabama | California | Florida | Illinois | Indiana | Maryland | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Texas | Washington, DC
NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.
Our updates and webinar presentations are available on the internet, in searchable format, at:
Financial Services Law Updates
and
The Consumer Financial Services Blog™
and
and
California Finance Law Developments
and
