A recent letter from Federal Communications Commission (FCC) Chairman Tom Wheeler describes the regulations being considered by the FCC for implementing new Telephone Consumer Protection Act (TCPA) exemptions for calls made to collect federal debts. The exemptions were created by the Bipartisan Budget Act of 2015 (Act), signed into law by President Obama and effective as of November 2, 2015. Chairman Wheeler's letter was sent in response to a November 2015 letter from several Democratic senators and House members urging the FCC to include various consumer protection limits in the implementing regulations.

Prior to the amendment, these collection calls, if made to a cellular number using an automatic telephone dialing system or artificial or prerecorded voice message, were prohibited by the TCPA absent the recipient's prior express consent. If such calls were made to a residential line using an artificial or prerecorded voice prior to the amendment, the TCPA also required the caller to have obtained the called party's prior express consent. (However, even prior to the Act's enactment, these residential calls were likely exempt from the TCPA's prior express consent requirement pursuant to FCC regulations.) The Act removed the TCPA's prior express consent requirement for calls to cellular and residential telephone numbers if ''made solely pursuant to the collection of a debt owed to or guaranteed by the United States.''

The Act requires the FCC, in consultation with the Department of Treasury, to prescribe regulations implementing the exemptions within nine months from the date of Act's enactment. While the Act permits the FCC to restrict or limit the number and duration of the exempt calls when made to cellular numbers, it does not provide such authority for residential calls.

In their letter, the Democratic lawmakers urged the FCC to not allow calls using the exemptions until its regulations are finalized, only allow the exemptions to be used for calls to debtors, limit calls to reassigned numbers, limit the number and duration of calls, and require calls to cease upon the called party's request. 

In his letter, Chairman Wheeler agreed that the limitations urged by the lawmakers are "key issues" for the FCC to consider and stated that, in February, he circulated a draft Notice of Proposed Rulemaking (NPRM) "that seeks comment on these and other issues and presents proposals that remain faithful to Congress's mandate while shielding consumers from unwanted robocalls." He observed that the draft NPRM "includes clear, pro-consumer restrictions on the type and number of calls a federal creditor may place to recover a delinquent debt, even when those calls go unanswered." He also observed that the draft NPRM "makes clear that the new rules will not open a door for telemarketing calls." 

According to Chairman Wheeler, the draft NRPM would:

  • Only allow the exemptions to be used for calls made after a debtor becomes delinquent
  • Limit use of the exemptions to calls made by creditors and "those calling on their behalf, including debt servicers"
  • Only allow the exemptions to be used for calls to the debtor "so as to prevent unwanted robocalls to relatives, friends, and other acquaintances of debtors"
  • Limit the number of exempt calls to "three per month per delinquency"
  • Give consumers the right "to stop calls from a federal creditor at any time and to require callers to inform debtors of this right"

Other Democratic lawmakers are urging the FCC to use its regulatory authority to impose further restrictions on calls made using the exemption. Senator Sherrod Brown, Ranking Member of the Committee on Banking, Housing, and Urban Affairs, sent a letter to Chairman Wheeler earlier this month urging the FCC to consider various limits including not allowing the exemptions to be used for calls from servicers of federal debt or debt that is no longer owned by the federal government. He also urged the FCC to work in coordination with the Consumer Financial Protection Bureau (CFPB), which is considering debt collection regulations, "to ensure that your approaches to supervising debt collectors and debt collection are consistent." (Senator Brown also wants the FCC to coordinate with the CFPB and the Internal Revenue Service to draft rules that maintain TCPA consumer protections for the federal government's new authority to use private collection contractors to collect inactive tax receivables.)

Ballard Spahr's TCPA Task Force assists clients in navigating the complex and challenging issues that arise under the TCPA. The Task Force, which comprises regulatory attorneys and litigators, provides counsel on TCPA compliance and avoiding TCPA liability, including reviewing policies and practices and helping to design mobile text message and prerecorded and autodialed call campaigns. It also assists clients in handling scrutiny from regulators, including preparing for examinations, responding to investigations, and defending against enforcement actions. Task Force members also defend clients against TCPA class or individual actions.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).


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