What the TRACED Act Means for Third-Party Collectors—and 5 Tips for Protecting Your Business

Editor's Note: This article previously appeared on the Ontario Systems Blog and is republished here with permission.

During the waning hours of the first session of the 116th Congress, robocall practices were attacked with lightning speed in the form of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act. Sponsored by South Dakota Republican Senator John Thune and New Jersey Democratic Congressman Frank Pallone, this bipartisan bill was signed into law by President Trump on December 30, 2019.

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Arguably hidden behind its stated purpose, which was to modify sections of the Telephone Consumer Protection Act at 47 U.S.C. § 227 (TCPA), the TRACED Act is essentially a codified directive to the Federal Communications Commission (FCC) to enact rulemaking on a number of issues relating to robocalls. This was a very formal way for Congress to push the sticky business of reforming the TCPA to the chief regulator of the communications industry, the FCC.

For all practical purposes, the TRACED Act is a win for both consumers and the telecommunications industry. But it represents a devastating loss for third-party debt collectors.

ARM Industry Concerns Left Unaddressed

Since 2005, the accounts receivable management (ARM) industry has fervently lobbied Representatives and Senators on both sides of the aisle for amendments to the TCPA. During this time, the industry also advocated before the FCC for modifications to the agency’s 2003 TCPA regulations.

The ARM industry’s proposed changes sought clarification of the following issues:

Consent requirements to use an auto dialer, prerecorded message, or artificial voice when contacting a consumer using their cellular number;
Revocation of consent requirements to use an auto dialer, prerecorded message, or artificial voice when contacting a consumer using their cellular number;
The definition of an automatic telephone dialing system (ATDS) and its alter ego, a manual contact system; and
Transferability of consent when a carrier reassigns a mobile number from one person to another.

Unfortunately, not one of the amendments offered by the ARM industry was included in last year’s landmark legislation.

Notwithstanding this defeat, third-party debt collectors as well as organizations or businesses that call consumers need to understand the TRACED Act and how it may impact them. This is not because their calls should be placed in the same category as robocalls launched by bad actors, but because in its zeal to stomp out robocalls from the bad actors, Congress included legitimate calls in its regulatory web.

Summary of the TRACED Act’s Key Provisions

As outlined by Contact Center Compliance DNC.com, the main provisions of the TRACED Act are as follows:

Stopping Robocalls — The TRACED Act directs the FCC to take final action on its June 2019 Declaratory Ruling on Advanced Methods to Target and Eliminate Unlawful Robocalls.
SHAKEN/STIR — Service providers are required to implement SHAKEN/STIR, or Signature-based Handling of Asserted Information Using toKENs (SHAKEN) and the Secure Telephone Identity Revisited (STIR). These are authentication protocols for digitally validating a phone call as it passes through the complex web of telecom networks, allowing phone providers to verify that the call is actually coming from the party that appears to be placing the call.
Monetary Penalties — The FCC is authorized to assess penalties of up to $10,000 per call for violation with intent.
Statute of Limitations — The statute of limitations for a general violation is one year, while the statute of limitations for violation with intent is four years.
Protections from Spoofed Calls — The TRACED Act instructs the FCC to enact a rulemaking to “help protect a subscriber from receiving unwanted calls or text messages from a caller using an unauthenticated number.”
Report on Reassigned Number Database — Within a year of the date of enactment, the FCC must give a report to Congress on its progress in implementing its proposed official database of reassigned phone numbers.
Protection from One-Ring Scams — The FCC is required to “initiate a proceeding to protect called parties from one-ring scams.”

Each of these provisions requires careful analysis. The SHAKEN/STIR requirements alone present challenging call authentication protocols that will be fleshed out by the FCC over the next months and years and enacted in the form of new rules.

It would behoove members of the ARM industry to study any proposed rules published by the FCC and to file comments. For in the end, any violation of the TRACED Act could trigger a penalty as high as $10,000 per violation. Whether SHAKEN or STIRred, that’s one costly martini.

5 Things You Must Do to Mitigate Your Risks

We at Ontario Systems have closely monitored the robocall movement for several years. We’ve participated in work groups on behalf of various industries, advocated before the FCC, and monitored the TRACED Act legislation as it moved through both chambers of Congress. We’ve also conferred with our clients about their concerns with the TRACED Act.

Based on what we know, here’s what we recommend. If you communicate with consumers—whether you’re a third-party debt collector, credit issuer, healthcare provider, or Federal, State, or local government—you should seek the advice of independent legal counsel to determine exactly how the TRACED Act may impact your communications with consumers.

You should also consider the following next steps and ongoing practices:

Enhance consent and revocation of consent documentation per consumer and per number.
Establish a process to pull reports on caller ID display on all outbound calls.
Ensure outbound calls are made using numbers associated with the proper company.
Monitor and analyze fraud and scam scores assigned by carriers to your outbound calls.
Ensure all outbound calls comply with state, Federal, and client call restrictions.

For additional information about the TRACED Act and other contact/compliance management issues, visit Ontariosystems.com or reach out to me at Rozanne.andersen@ontariosystems.com.

Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies.

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