How the FCC Misinterpreted Congress’ Mandate for the TCPA Debt Collection Exemption

Last year, the TCPA statute was amended allowing an exemption for calls made solely to collect a debt owed to, or guaranteed by, the United States (“covered calls”).  The amendment also directed the FCC to develop rules within nine months that “may restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service….”[1]

The FCC has interpreted the phrase “duration of calls” to mean that Congress intended the FCC to define a time limit for a given voice call.  Thus, in a recent FCC Notice of Proposed Rulemaking (“NPRM”) regarding regulations on such covered calls, the FCC asked about how long such a call may last.[2]

While this may be one interpretation of the “duration of calls”, there is another, more likely interpretation.  First of all, recall the NPRM asked when such covered calls may begin.  Do such covered calls begin when the debtor is delinquent? When the debtor is in default?  Perhaps earlier, such as when the loan is obtained?   Regardless of what triggers when the covered calls may begin, there is obviously a beginning point in time when they are allowed.  There is a glaring omission in the FCC’s NPRM because it did not ask the obvious follow up question:  When do such covered calls end?  Does the exemption end when the loan is no longer in default? Or, when the loan is fully paid?  Perhaps it extends beyond the life of the loan?  Obviously, the time when covered calls end needs to be defined as well.

So there you have it.  The time period between when the covered calls begin and when the covered calls end is the “duration of calls” that Congress wanted the FCC to define.  That’s seems perfectly plausible, since debt servicers need to know the time period when the exemption applies.

The FCC either did not elect this interpretation “duration of calls” or did not recognize it existed.  The FCC, instead, interpreted it to mean that each voice call is time-limited.  The FCC is suggesting that a phone call between two willing parties, such as a debtor and loan servicer working out a payment arrangement, cannot last over an arbitrary time limit.  Seriously.

Lawyers know that the first amendment right of free speech can be abridged by the government only if it is necessary to “promote a compelling interest.”  What compelling interest is served by limiting the time that two willing individuals may speak regarding servicing a debt owed to the government?  The restriction is not that the debt servicer cannot initiate a conversation over the telephone, but the restriction is once the conversation is started then the parties cannot talk over a defined time period.   This is where the interpretation leads us into an absurd analysis.  Perhaps the compelling interest is to protect those debtors talking with a debt servicer who are unable to hang up the telephone after that defined time period?

This becomes even more absurd when you consider that manually dialed calls are not covered by the exemption.  Thus, a debt servicer may manually dial a telephone call to  the debtor and speak to them as long as they are willing to talk, without being restricted to any “duration” limitation.  Apparently, a debtor doesn’t need protection from a long phone call when the call is manually initiated, but does require protection from a long phone call when the call is initiated by an autodialer!  Perhaps this is why Commissioner Michael O’Rielly stated that the “[t]he NPRM reaches the height of absurdity when it asks when there should be a maximum duration for a voice call, including autodialed calls with a live caller.”[3]

There is a long standing statutory interpretation doctrine called “‘constitutional doubt’ [that] requires courts to construe statutes, ‘if fairly possible, so as to avoid not only the conclusion that it is unconstitutional but also grave doubts upon that score.’”[4]  In other words, given two interpretations of a statute, where one raises constitutional issues and the other does not, the latter is preferred.

Here, the FCC has selected an interpretation of “duration of calls” that raises serious constitutional issues regarding free speech rights.  The alternative interpretation of “duration” is that Congress intended the FCC to define when the exemption begins and ends.  This latter interpretation by itself does not raise any obvious constitutional questions.  Furthermore, this latter interpretation answers the question that is inherently raised when specifying when covered calls begin, namely when do covered calls end?

Let’s hope that the FCC recognizes the obvious error in their interpretation of the statute, and admits that: “Oh, so that is what Congress meant!”

Karl Koster is the Chief Intellectual Property and Regulatory Counsel for Noble Systems Corporation.  The comments herein are those of Mr. Koster and not necessarily those of Noble Systems Corporation. He can be reached at (404) 851-1331 (x1397) or at kkoster@noblesystems.com