The Bipartisan Budget Act of 2015 (Act) amended the Telephone Consumer Protection Act (TCPA) to remove the prior express consent requirement for calls ''made solely to collect a debt owed to or guaranteed by the United States.'' The Act mandated that the Federal Communications Commission (FCC) consult with the Department of Treasury and prescribe regulations implementing that amendment. The Act further provided the FCC with authority to limit the number and duration of these calls when made to cellular numbers.

Late on May 6, 2016, the FCC released a Notice of Proposed Rulemaking (NPRM) describing the FCC's proposed implementing regulations and requesting comment on its proposal and a wide range of implementation issues and general questions. The FCC's proposed regulations so undermine the exception for debts owed to or guaranteed by the United States that FCC Commissioner Michael O'Rielly referred to the NPRM as "contravening both the spirit and text of the law" and expressed concern that the NPRM "will further damage the agency's credibility, if that is even possible."

The NPRM includes the following proposed limits on the exception for calls to cellular numbers ''made solely to collect a debt owed to or guaranteed by the United States'' (referred to as Covered Calls):

  • Although there is no such limitation in the Act, the FCC proposes that the exception would only apply to "calls made to obtain payment after the borrower is delinquent on a payment." While the FCC proposes to include "servicing calls" in Covered Calls, it suggests that, under the final rule, servicing calls might similarly only be exempt when they are made after the borrower is delinquent, meaning non-delinquent servicing calls made on debts owed to or guaranteed by the United States would remain subject to the TCPA.

  • Although the statutory language as amended clearly permits calls to the "called party" that are autodialed or that use a prerecorded voice message, a phrase that the FCC has explained is not limited to the intended recipient of the call, in the proposal the FCC seeks to limit the exception to calls received by the intended recipient. As a result, callers would be exposed to TCPA liability for reassigned numbers or calls received by anyone other than the intended recipient.

  • Although the exception removes the consent requirement, and makes no mention of revocation, the FCC nonetheless proposes to limit the exception to calls made to the specific cellular number provided by the debtor to the creditor, which the FCC has recently explained constitutes consent, and allow consumers to stop calls—or revoke consent—and require callers to inform debtors of their right to stop calls.

  • The FCC proposes to limit the number of post-delinquency calls to three per month per delinquency. The three-call limit would apply to all initiated calls, even if unanswered, and for autodialed calls, would apply whether the caller uses a prerecorded or artificial voice or attempts to connect the debtor with a live agent. The FCC also asks whether it should go even further and limit the exception to live agent calls.

  • The FCC seeks comment on whether there should be a maximum duration of a voice call, including live agent calls, and whether there should be a limit on the length of text messages. The FCC also seeks comment on whether it should look to limits on debt collection in federal and state laws, such as the Fair Debt Collection Practices Act limits on the hours during which debt collection calls can be made.

  • Apparently seeking to limit the obligations that could give rise to Covered Calls, the FCC seeks comment on the meaning of "a debt owed to or guaranteed by the United States." The FCC asks about the specific types of debts covered by the phrase (e.g. federal student loans and federally guaranteed mortgages). It invites commenters to argue that there should be a distinction between debts that are guaranteed by the United States and debts that are insured by the United States, between debts that are currently owned by the United States and debts that have been transferred in whole or part to someone other than the United States, and between debts collected solely by employees of the United States and debts collected by a collection agency that remits a percentage of the amount collected to the United States.

Implementing regulations are meant to implement the law, not eviscerate it. Comments in response to the NPRM are due by June 4, 2016. Given the short comment period and the severe limitations the proposed regulations place upon the exception created by the Act, industry members involved in the collection of federal debts need to submit comment letters to address the many shortcomings in the FCC's proposals.

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 commenting on regulatory proposals and 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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