On August 11, the Federal Communications Commission (“FCC”) issued a Report and Order (“R&O”) adopting rules to implement provisions of the Bipartisan Budget Act of 2015, which amended the Telephone Consumer Protection Act (“TCPA”) to allow autodialed and pre-recorded calls and texts to collect on debts owed to or guaranteed by the United States (“federal debts”) in certain situations. Specifically, the new rules now permit the federal government, creditors of debts guaranteed by the federal government, and their contractors to make autodialed and pre-recorded calls and texts to a consumer’s cellphone for federal debt collection purposes – i.e., where a loan is in delinquency, in default, or 30 days before a specific, time-sensitive event affecting the amount or timing of a payment due.
The rules implement a statutory change that allows the calls to be placed without obtaining prior consent from the call recipient otherwise required by the TCPA, but the allowance comes with conditions. Companies authorized to transmit federal debt collection calls and texts should review the R&O and be aware of the restrictions that accompany the FCC’s new rules. Here are some of the R&O’s major points:
Under What Conditions do the FCC’s Federal Debt Collection Rules Allow Autodialed or Pre-Recorded Calls to Consumers?
Under the R&O, owners of federal debts (namely, the federal government and the owners of debts guaranteed by the federal government) and their contractors can place federal debt collection calls or texts using autodialers or pre-recorded voice messages to a cellphone. Importantly, the FCC determined that, given exceptions already in the rules governing non-telemarketing pre-recorded calls to residential lines, the Budget Act and the R&O’s rules implementing the Budget Act’s TCPA amendments essentially apply only to cellphone lines.
The R&O now allows such autodialed and/or prerecorded calls/texts to collect federal debts even when the debtor did not provide his or her cellphone number during the transaction that created the debt, but only in limited instances. A federal debt owner or its contractor may contact a cellphone number subsequently supplied by the debtor after the debt was created, or which the debt owner or its contractor obtained from an independent source so long as the number actually belongs to the debtor. Federal debt collection calls/texts can also be made where a debtor provided his or her cellphone number during the transaction creating the debt, as the FCC has previously deemed that the debtor gave prior express consent to receive autodialed and/or prerecorded debt collection calls/texts under such circumstances, although while this ruling will continue to apply to calls for debt owed to or guaranteed by the federal government, such calls/texts will need to start complying with the rules adopted in the new R&O.
These new rules limit who owners of federal debts and their contractors can contact when trying to collect such debts. The rules stipulate that federal debt collection calls or texts can be made only to the “debtor,” which includes the person who incurred the debt as well as persons or entities legally responsible for paying the underlying debt, including co-signers. Autodialed and/or prerecorded calls/texts to other persons on the debt paperwork, such as references or witnesses, are not allowed under the rules.
Companies transmitting federal debt collection calls/texts should also note that the R&O only allows federal debt collection calls and texts where the U.S. is the owner or guarantor at the time the call or text goes out, and excludes debts where the U.S. is only the insurer. Additionally, calls can be made for federal debt collection purposes only and cannot include marketing statements or other unrelated information – including “reminders” about upcoming but not-yet-delinquent payments.
Such companies should also be aware that consumers have a right to opt-out from receiving federal debt collection calls and texts at any time and using any reasonable means, including verbally, in writing, and in text. A federal debt collection call or text must disclose the consumer’s right to opt-out, and all pre-recorded calls must include an automated opt-out mechanism. Since a consumer’s opt-out supersedes any previously obtained express consent, an Authorized Caller must cease all calls immediately when a consumer exercises his or her right to opt-out.
The FCC’s rules further limit the timing and number of federal debt collection calls and texts as follows:
No more than three federal debt collection calls can be made to a cell phone number in a given 30-day period (and a call is “made” if it is dialed, even if not completed);
Pre-recorded federal debt collection calls can be made between 8am to 9pm at the called party’s location, and are limited to 60 seconds in duration (not including required disclosures);
Federal debt collection texts are limited to one text message, e., 160 characters (though opt-out disclosure can be in a subsequent text sent immediately after, with the content limited to that disclosure).
Finally, companies contacting debtors about federal debts under the R&O must still adhere to all other provisions of the TCPA and the FCC’s implementing rules applicable to autodialed and pre-recorded calls. This includes the same wrong-number and reassigned-number qualifications adopted by the FCC in its 2015 Omnibus Order, such as the “one free call” allowance for reassigned numbers.