FTC and CFPB Comment on FCC's Request for Input on TCPA Rules; A Missed Opportunity

Both the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) filed comments to the May 6, 2016 Federal Communications Commission (FCC) Notice of Proposed Rulemaking (NPRM) related to the Telephone Consumer Protection (TCPA), FCC 16-57, CG Docket No. 02.278.

The FCC had issued the NPRM seeking comments on the implementation of a provision of the Bipartisan Budget Act of 2015 (The Budget Act) that excepts certain “robocalls” that are “made solely to collect a debt owed to or guaranteed by the United States” from the TCPA’s consent requirement. Comments were due on or before June 6, 2016.

The FTC Comments

The complete FTC comments can be found here.

(Editor’s note: Emphasis added in bold throughout this article by insideARM)

In the introductory paragraphs, the FTC writes:

“The FTC’s experience shows that debt collection calls and robocalls raise significant consumer protection concerns and are often vehicles for abusive, deceptive, and unfair business practices. FTC staff recommends that the FCC proceed with caution, and only incrementally, with any expansion of permissible robocalling. We also recommend that the FCC attempt to harmonize its rules as much as possible with existing laws governing debt collection and telemarketing.

In particular, these laws provide many crucial protections for consumers against unfair, deceptive, and abusive collection and telemarketing practices, prohibiting many specific practices, mandating disclosure of critical information, and granting important rights that consumers can use to protect themselves. Indeed, there is extensive law under the FDCPA and Section 5 of the FTC Act governing when and how debt collectors can call consumers to collect debts. Similarly, there is significant law governing telemarketing practices under the Telemarketing Sales Rule (TSR), including the use of robocalls. To the extent possible, the FCC should create standards for the collection of government debt that are consistent with these existing laws.”

The FTC commented on their experience with robocalls and debt collections:

Although the FTC believes that debt collectors generally should be allowed to use new and emerging technologies to contact consumers, these concerns should be considered as the FCC crafts its final rule.

For example, in its public report on debt collection technologies, the FTC noted that an inevitable side effect of using autodialers to contact consumers is that a dialer will sometimes reach more consumers than can be connected to available collectors. In these situations, a predictive dialer either disconnects the call (resulting in a “hang-up” call) or keeps the consumer connected with no one on the other end of the line in case a collector becomes available (resulting in “dead air”). The “hang-ups” or “dead air” that can result from calls made using predictive dialer technology may violate Section 806 of the FDCPA, which broadly prohibits “any conduct the natural consequence of which is to harass, oppress, or abuse any person. . . .” Indeed, Section 806(5) specifically prohibits debt collectors from “causing a telephone to ring . . . repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

The FTC then made specific comments on the FCC proposals in the NPRM.

First, the agency suggested that the FCC focus on limiting the proposed exemption to the following four conditions:

1. “Default” should be used as the threshold for covered calls because default, rather than “delinquency,” is the touchstone for coverage under the FDCPA.
2. Covered calls should be limited to calls directed at the person or persons obligated to pay the debt.
3. The content of covered robocalls should be limited to collection of debts owed to or guaranteed by the United States (i.e., debts covered by the Budget Act amendments), and only those such debts the caller is authorized to collect.
4. Should the FCC choose to allow “debt servicing” robocalls, the FCC should limit the definition of “debt servicing” to exclude calls that solicit any fees or consideration for the goods or services offered and limit the definition to government debts.

Second, the FTC suggested that the FCC should consider restrictions on the treatment of information obtained from consumers in the course of a covered robocalls in two areas:

1. Require covered callers to maintain reasonable security over the data they collect during covered calls, much of which may be highly personal and sensitive.
2. Emphasize that the information obtained during a covered call should be used solely for purposes of collecting debts on behalf of the government and for no other purpose.

Finally, the FTC also supports the FCC’s proposal to allow consumers to stop robocalls at any time, and to require that consumers be informed of their proposed right to opt out of these calls. FTC staff recommends that the FCC adopt regulations that clearly inform consumers of their right to stop covered robocalls at any time and require covered debt collection callers to transmit Caller ID information that includes a caller number that connects to a live agent representing the debt collector.

The CFPB Comments

The complete CFPB comments can be found here.

The Bureau’s discussion on the scope of the exception differed from the FTC’s. The CFPB commented:

Section 301 of The Budget Act defines neither the term “collect” nor the term “collection.” The FCC NPR proposes to interpret these terms broadly enough to cover both the servicing and collection of debts. As the FCC notes in its NPR, “debt servicing calls may provide a valuable service by offering information about options and programs designed to keep at-risk debtors from defaulting or becoming delinquent on their loans. Helping a debtor avoid delinquency or default can preserve the person’s payment history and credit rating, and help maintain eligibility for future loans.”

Based on its experience and expertise in servicing, the Bureau agrees that servicing calls can be beneficial to consumers, so long as those calls are otherwise in compliance with applicable consumer protection laws. Because of the overlap between the TCPA and the statutes and regulations for which the Bureau is responsible, the Bureau recommends that the FCC explicitly clarify that its definition of “collect” and “collection” under the TCPA are not designed to conform to the meaning of these terms in other statutes and regulations or bear on the interpretation of other statutes or regulations.

When commenting on the content of the covered calls the CFPB suggests expanding the content. They wrote:

The CFPB believes that the express language of Section 301 indicates the content of the call should be limited to collecting on the debt at issue and that callers generally should not include any other content in such calls, including content related to debts not owed to or guaranteed by the federal government.

The CFPB, however, also believes that the FCC’s regulations should clarify that calls qualify for the Section 301 exception even though collectors and servicers on these calls provide consumers with certain information that might not be considered collection content in itself but that must be provided to consumers to comply with applicable law or to assist consumers in financial distress. Specifically, the Bureau believes that collectors and servicers should be permitted to convey content that is:

1. required by a law or regulation that governs the servicing or collections; or
2. relates to an effort to engage in loss mitigation or offer the consumer an alternate repayment plan.

This would include the following examples:

• A debt collector providing the consumer with the information that Section 807(11) of the FDCPA requires be conveyed in communications regarding a debt in collection.
• A servicer or debt collector providing the consumer with certain information in an effort to put the consumer in a new repayment plan, including:
  • efforts to engage in mortgage loss mitigation, as provided in 12 CFR part 1024 (as more fully described below);
  • efforts to describe alternative repayment plans available to borrowers with federal student loans under Title IV the Higher Education Act (20 U.S.C. 1070a et seq); and
  • efforts to describe options to cure defaulted federal student loans provided for under Title IV of the Higher Education Act (20 U.S.C. 1070a et seq).
  • A servicer engaged in specific types of communications with borrowers pursuant to the requirements in the Mortgage Servicing Rules, including live contact by telephone with delinquent borrowers.

The CFPB recommends that the FCC consider such required communications to be collection-related content or otherwise permissible under its rules, because these communications are generally beneficial to consumers, they are related to the servicing or collection of loans, and they facilitate compliance with other legal requirements.

The CFPB also commented on the “identity of the party called.” The CFPB comment was similar to, but more detailed than the FTC comment on the issue. The CFPB wrote:

The FCC has proposed that calls to persons other than “the person or persons obligated to pay the debt” (e.g., third parties) will not be covered. The CFPB generally supports this approach, which in effect would mean that collectors making calls to third parties, including calls for the acquisition of location information as described in Section 804 of the FDCPA, would not be covered under the FCC’s rules implementing Section 301.The CFPB believes it would be useful to interpret the persons to whom covered calls may be placed generally to be consistent with those who are permitted to receive communications in the same manner as the alleged debtor.

For example, the CFPB recommends that the FCC consult similar provisions from the FDCPA. These sections define the consumer to mean “any natural person obligated or allegedly obligated to pay any debt,” whereas the FCC’s proposal does not appear to include those allegedly obligated on the debt. The CFPB recommends that the FCC permit covered calls to be made to the same individuals who are otherwise permitted to receive communications on behalf of the debtor.

The CFPB also offered comments on the use of an artificial or pre-recorded voice (APV). The CFPB notes that the use of an APV is appropriate for some calls, such as payment reminders, but not other calls that require a conversation with the consumer. Then if using an APV, the CFPB suggests APV calls be conditioned upon the caller providing consumers with a clear and prominent option early in the call of placing a return call to a toll-free telephone number staffed by a live customer service representative.

The CFPB also addressed the FCC’s proposed limits on exceptions. They discussed the following:

1)     Limits on Number of Calls

The CFPB supports the FCC’s proposal to set a limit on the number of such calls that can be made to consumers, but provided no guidance. The CFPB wrote:

The Bureau therefore believes that a regulatory intervention limiting the number of such calls placed to cell phones by auto-dialers would be a beneficial complement to examination and enforcement to protect consumers from excessive calls from collectors (as well as from creditors and servicers). Indeed, as part of its ongoing debt collection rulemaking proceeding, the CFPB also is considering limits on the frequency of collector communications with consumers. A careful assessment of the advantages and disadvantages of limits on such calls is needed to determine the optimal limit.

2)     Cessation of Covered Calls

The CFPB supports the FCC’s goal of preventing consumer harassment and believes that a consumer’s ability to stop unwanted calls is an important tool in achieving that goal. The CFPB suggests that the FCC clarify the scope of this right under the TCPA.

For example, if a consumer asks the caller during a covered call to stop calling, would that require the caller only to stop making covered calls to the consumer or to stop making any calls to the consumer, including calls placed using manual dialers or placed to landline telephone numbers?

The CFPB supports the FCC’s proposed requirement that servicers and collectors disclose to consumers that they have the right to stop covered calls. Requiring that servicers and collectors provide a clear and prominent disclosure to consumers that they have the right to stop covered calls would empower consumers to protect themselves in dealing with harassing servicers and collectors.

3)     Limits on Call Duration

The CFPB notes that there are no per se duration limits on debt collection communications under the FDCPA or on servicing communications under the Mortgage Servicing Rules, and the Bureau does not advocate in favor or against any particular limits.

(Editor’s note: Yesterday, insideARM published an interesting article on this issue by Karl Koster. See: How the FCC Misinterpreted Congress Mandate for the TCPA Debt Collection Exemption.)

insideARM Perspective

The two submissions are interesting, but not particularly enlightening. The FTC comments mirrored the FCC perspective of lumping all debt collection or servicing calls into the inflammatory “Robocall” umbrella. The FCC has shown that use of the terms “Robocalls” and “Robocalling” make for better headlines than “calls concerning a delinquent or defaulted account.”

insideARM was looking for more direction from the CFPB when they discussed call frequency. Instead of any real guidance, all we learned is what we already knew: “As part of its ongoing debt collection rulemaking proceeding, the CFPB also is considering limits on the frequency of collector communications with consumers.”

This “pass” on the opportunity to provide guidance will likely lead to either inconsistent rules by two separate government agencies on call frequency or a rule on call frequency by the FCC that will simply be rubber stamped in the future by the CFPB. The Bureau has been contemplating this particular issue for – literally – several years now. They have consulted consumer advocates and industry representatives on numerous occasions. The matter is not as clear cut as it may appear on the surface.

We hope the ultimate rules – from both agencies – reflect the amount of detailed discussion that has taken place on call frequency — and that clarity ultimately replaces the current state of disarray.