Senators Suggest Abuses Pending Implementation of the Federal Debt Collector Exception to the TCPA

Senators Edward J. Markey (D-Mass.) and Michael S. Lee (R-Utah) are taking yet another stab at invoking the Telephone Consumer Protection Act (TCPA) against federal debt collectors, even though the Federal Communications Commission (FCC) has made clear that the TCPA does not apply to these entities.

In a letter to the Chairman of the FCC last month, Senators Markey and Lee urged the FCC to “take appropriate actions” against federal debt collectors, whom they suggested may be making unsolicited calls to borrowers in violation of the TCPA. The Senators argued that “until the new exception in the TCPA” takes effect—referring to the 2015 exception Congress added to the TCPA that would exempt federal debt collectors from the TCPA’s consent requirements—“federal debt collectors are not permitted to bypass any of the TCPA’s protections.” These include forbidding debt collectors from auto-dialing, auto-texting or sending a pre-recorded voice message to a mobile number or landline phone without obtaining prior express consent.

When Congress passed the 2015 amendment exempting debt collectors from the TCPA’s consent requirements when collecting “a debt owed to or guaranteed by the United States,” it charged the FCC with drafting the corresponding implementing regulations. The FCC issued those regulations in August 2016, and included consumer safeguards such as (i) limiting the number of calls a collection company may make to a borrower to three times per 30-day cycle; (ii) requiring that debt collectors disclose to borrowers their right to opt out of future calls and texts; (iii) requiring that calls or texts may only be made to the debtor or people legally responsible for paying the debt; and (iv) requiring that calls and texts be stopped immediately upon the borrower’s request. The FCC’s regulations are currently awaiting formal approval by the Office of Management and Budget (OMB).

An obvious flaw in the Senators’ position is that it ignores the fact that the FCC—the very agency tasked with implementing the TCPA since 1982—unequivocally stated in a 2016 declaratory ruling that the “TCPA does not apply to calls made by or on behalf of the federal government in the conduct of official government business, except when a call made by a contractor does not comply with the government’s instructions.” Consequently, the TCPA is inapplicable to federal debt collectors—whether or not the new exception takes effect.

Another issue that becomes apparent upon review of the Senators’ letter is its failure to substantiate any of its allegations of recent misconduct by federal debt collectors, other than to reference a petition recently submitted to the FCC that warns of abuses. Thus, while misconduct by some federal debt collectors cannot be ruled out, the scope of the problem, if it exists, is unclear. In terms of the practical operation of the TCPA, what is perhaps most noteworthy about the letter is that it further highlights the irreconcilable positions taken by the FCC and Congress with respect to the basic applicability of the TCPA to federal debt collectors. This inconsistency has only added to the challenges already facing the debt-servicing industry as it seeks to comply with the TCPA in the face of an ever-changing regulatory and legal landscape, and it is an issue that needs to be addressed sooner rather than later.

Dorsey & Whitney

Dorsey is a business law firm, applying a business perspective to clients' needs. We make it our first priority to know the context in which you do business - your market, your competitors, your industry.

Michelle Ng

An attorney in Dorsey’s U.S.-China group, Michelle’s practice focuses on banking regulatory and compliance matters involving the bank secrecy act and related anti-money laundering regulations.

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