On Friday, May 6, 2016 the Federal Communications Commission (FCC) released its Notice of Proposed Rulemaking (NPR) on the use of an Automated Telephone Dialing System (ATDS) when contacting consumers via cell phone about debts owed to or guaranteed by the government – such as student loans, mortgages and taxes. A copy of the NPR can be found here.
The industry has been waiting for the proposed rules since President Obama signed the Bipartisan Budget Act of 2015 (Budget Act) into law in November last year. insideARM wrote extensively about the inclusion of the auto-dialer provision in the Budget Act. See our November 5, 2015 story.
Under the Act, autodialed calls “made solely to collect a debt owed to or guaranteed by the United States” no longer require the prior express consent of the recipient. The Act allows the FCC to limit the frequency and duration of these calls and directed the FCC, in consultation with the U.S. Department of Treasury, to issue regulations to implement the amendments to the Telephone Consumer Protection Act (TCPA) within nine months of enactment.
In the NPR, the FCC seeks comment on implementation of the Budget Act amendments.
Among other things, the FCC seeks comment on a number of implementation questions, such as which calls are covered by the phrase “solely to collect,” how should the FCC restrict the number and duration of such calls, and how to implement such restrictions.
The NPR also requests comments on a number of other matters, including the following:
1) Covered Calls
- At what point is a call to collect a debt a covered call?
- Are debt servicing calls covered?
- What is the meaning of the phrase “a debt owed to or guaranteed by the United States?”
- Whether there are any circumstances under which a party other than the federal government obtains a pecuniary interest in a debt such that the debt should no longer be considered to be “owed to . . . the United States?”
- Who can be called?
- Whether calls to persons the caller does not intend to reach, that is persons whom the caller might believe to be the debtor but is not, are covered by the exception.
- Who may call?
- Whether the Budget Act amendments imply that the federal government is a person for TCPA purposes and whether the Commission must resolve these questions in order to complete this rulemaking.
- Whether and, if so, how the Supreme Court’s recent decision in Campbell-Ewald Co. v. Gomez44 should inform our implementation of the Budget Act amendments to the TCPA.
2) Limits on Number and Duration of Covered Calls
- Need for restrictions
- If adopted, the nature of restrictions
- Should there be a maximum duration of a voice call, and whether the FCC should adopt different duration limits for prerecorded- or artificial-voice calls than for autodialed calls with a live caller?
- Should there be a limit on the length of text messages? What should that limit be?
- How to count debt servicing calls for purposes of a proposed three-call limit per month or any other limit on the number of calls?
- Should the Commission look to other standards or precedents for guidance?
- Consumer ability to stop covered calls
- When and how callers should provide notice of a consumer’s right to stop calls
3) Other Implementation Issues
- Covered Calls to Residential Lines
- Restrictions on Calls to Cellular Telephone Service
- Application of Other TCPA Restrictions to Covered Calls
Comment Date for the NPR is June 6, 2016, with a Reply Comment Date: June 21, 2016.
The proposed rules miss the mark on many fronts. The aforementioned November 5, 2015 story discussed many of the reasons why the NPR should look much different than this version. But the FCC majority ignored all of those reasons.
On March 23, 2016 insideARM wrote about the fractured and partisan process at the FCC. This NPR continues that trend.
Republican FCC Commissioners Ajit Pai and Michael O’Rielly both issued statements that accompanied the NPR.
Pai’s criticized the Obama Administration for creating this special treatment for government collectors. He commented: “Yet again, the government is using the law to benefit politically favored constituencies. “The law” in this area used to mean one set of rules that applied equally to all. Now, the game has changed; “the law” nominally restricts everyone but singles out the few, the happy few, that band of robocallers, for special treatment.”
Commissioner O’Rielly, dissented in part and approved in part.
O’Rielly’s dissent included the following commentary:
“The Commission’s recent implementation of the Telephone Consumer Protection Act (TCPA) has been nothing short of a disaster. Its sweeping interpretations contained in its June 2015 Order have unhinged implementation from both the law and reality, preventing legitimate businesses, as well as federal, state, and local government entities, from reaching Americans on their mobile phones to provide important information that consumers want or need to receive. Increasingly, upstanding companies are being forced to choose between complying with the Commission’s absurd TCPA rulings or adhering to other federal and state laws that mandate that companies contact consumers. Consumers lose out and businesses are being taken to the cleaners to settle frivolous TCPA claims.”
Mr. O’Rielly stated that he approved solely to initiate the rulemaking required by Congress:
“My vote to approve in part is on the narrowest possible grounds: solely to initiate the rulemaking required by Congress. In all other respects, I strongly dissent. The Commission should be embarrassed to issue an NPRM that flies in the face of Congress’s clear instructions, and I am concerned that it will further damage the agency’s credibility, if that is even possible.”
The most notable provision of the NPR is the proposed maximum limit of three call attempts per month. The Education Finance Counsel (EFC), The National Council of Higher Education Resources (NCHER), and The Student Loan Servicing Alliance (SLSA) have issued a joint Press Release on the NPR. A copy of the complete release can be found here. The three groups oppose that limit.
insideARM spoke with NCHER President, James Bergeron. Mr. Bergeron commented:
“The FCC’s proposed regulation is a missed opportunity to help student and parent borrowers, and is far too restrictive to meet the goals of President Obama’s Student Aid Bill of Rights – namely to ensure that ‘every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.’ We continue to believe that the unique nature of federal student loans – including multiple repayment plans that help distressed borrowers manage their debts and a generous rehabilitation program that removes loans from default – justifies a set of rules specifically for this industry. Communication is key to borrowers understanding their rights, and a 3-call-attempt-per-month restriction will all but nullify meaningful borrower contact. We urge the FCC to make a special case to help borrowers of federal student loans.”
While insideARM agrees with Mr. Bergeron, we could only hope that the FCC would understand a similar need exists for all ARM firms to speak with consumers on any type of delinquent accounts, not just government debt.