FCC Releases Rules Limiting Federal Government Debt Collection Calls

Yesterday the Federal Communications Commission (FCC) released its Final Rules (Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278) to implement an amendment passed by Congress in the Bipartisan Budget Act of 2015. That 2015 Act exempted autodialed calls “made solely to collect a debt owed to or guaranteed by the United States” from the Telephone Consumer Protection Act’s prior express consent requirement and directed the FCC to issue a regulation to implement the amendments to the TCPA within nine months of enactment.

insideARM has written extensively about this issue, most recently in a July 25, 2016 blog. But see also our November 5, 2015 story and our June 21, 2016 story.

The rules apply to calls initiated through an automatic telephone dialing system (ATDS) for the purpose of collecting debts owed to the federal government without the consumer’s prior express consent. The rules are effective 60 days after the FCC publishes notice in the Federal Register.

insideARM will be providing more extensive analysis of the Rules in the coming weeks. However, for this Breaking News story we will discuss a few of the highlights included in FCC Chairman Tom Wheeler’s Statement that was published in connection with the rule.

1. The rules limit the number of calls to a cellphone, including text messages, to three per month.
2. The rules also only allow calls concerning debts that are delinquent or at imminent risk of delinquency, unless there is prior express consent otherwise.
3. The rules require that, absent consent, callers only call the individual who owes the debt, not his or her family or friends.
4. The rules limit the number of calls allowed to reassigned numbers, consistent with last year’s July, 10, 2015 TCPA Omnibus Declaratory Ruling and Order (Adopted on June 18^th, released on July 10^th).
5. The rules reiterate that consumers have the right to stop calls they do not want at any point they wish, and require callers to inform consumers of that right.
6. The rules apply to each caller, rather than each debt.  Otherwise, consumers who have multiple loans with a single owner of the debt, as many do, could be receiving an excessive number of calls per month to their cell phones.  This limitation prevents that from occurring.
7. The rules limit the time of day when calls can take place, requiring that no calls can be made before 8 a.m. and after 9 p.m. local time at the called party’s location.

FCC Commissioner Michael O’Rielly issued a very strong Dissenting Statement. O’Rielly wrote, in part (emphasis added by insideARM),

“When Congress enacted the Bipartisan Budget Act of 2015 (Budget Act), which included certain relief from the Telephone Consumer Protection Act (TCPA), the intent seemed clear.  Faced with the alarming prospect that the FCC’s misguided interpretations of the TCPA, culminating in the order last June, might prevent the United States from collecting its debts, Congress stepped in to exempt calls regarding such debts from the TCPA’s prior express consent requirements.  In other words, out of all of the legitimate entities that have valid reasons to autodial consumers, the federal government, along with companies servicing loans or collecting debts on behalf of the federal government, were moved to the front of the line and granted significant relief from the FCC’s wrongheaded rules.

Against this backdrop, and without knowing how the FCC would ultimately decide pending petitions about whether federal agencies and their contractors were subject to the TCPA, Congress enacted the Budget Act exemption to ensure that, at a minimum, federal agencies and their contractors are protected when calling to collect debts owed to or guaranteed by the U.S. government. Just two months ago, however, a near unanimous Commission provided further clarification, determining that all federal agencies and their contractors performing any legitimate, government authorized functions are exempt from the TCPA.  That’s because the Commission determined, consistent with Supreme Court precedent, that the federal government and its agents are not “persons” under the TCPA.

Therefore, it is beyond disappointing that the order decides that the federal government and its contractors will face more restrictions when making calls to collect debts than for any other type of call they make.  That’s the exact opposite of what the Budget Act exemption was designed to accomplish. Clearly, no good law goes unabused in this Commission.

The order further restricts the exemption to three call attempts per month.  While the law gives the Commission the authority to limit the number of calls, this is far too narrow.  The Commission is counting calls that never even go through.  How is that supposed to help borrowers get the relief they might need or want?  Multiple commenters noted that it can take dozens of call attempts just to reach a borrower, much less help them navigate their loan options.  Counting call attempts as calls, therefore, will only hurt the people that the Budget Act exemption is trying to help.

Moreover, there is absolutely no justification for the number three other than the fact that some particular commenters liked it.  These commenters, however, did not provide any explanation or data to support a three call limit.  The Commission can’t make policies based on the number of likes it gets or emojis.  It is required to have a rational basis for its decisions, and that is utterly lacking here. 

The Commission’s laziness stands in sharp contrast to the comments of parties that could actually be impacted by the rules, who provided plenty of reasons and data for choosing a higher number.  Chief amongst these is that fact that some are required by federal laws and rules to place more than three calls per month.”

These rules are published two weeks after the Consumer Financial Protection Bureau (CFPB) published its Outline of Proposed Rules governing debt collection, and present the possibility that rules on calls to collect government debt could be more restrictive than calls to collect all other types of debt.