Wheeler Circulates TCPA Exemption for Fed-Backed Loans

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A draft rule to exempt robocalls to collect federal debt from Telephone Consumer Protection Act (TCPA) of 1991 rules was circulated Feb. 17 to the full Federal Communications Commission, an agency spokesman confirmed to Bloomberg BNA.

The notice of proposed rulemaking (NPRM) seeks to strike a balance between consumer protections and a congressional directive to allow companies servicing federally issued student loans or mortgages to use autodialers to contact debtors without the need for consumer consent.

Companies like Nelnet Inc. and Navient Solutions, Inc., which have won several contracts with the U.S. Department of Education, could be among those that would receive the exemption if the item were ultimately approved.

It’s unclear whether private-sector holders of student and mortgage loans would receive any sort of similar TCPA exemption. Ceannate Corp., Continental Service Group Inc., and Performant Financial Corp. are also among top debt collectors, primarily for delinquent student loans, according to Bloomberg News.

Student loan debt rose to more than $1.2 trillion in the last quarter of 2015, according to the Department of Education. The Congressional Budget Office expects the figure to double by 2025.

Aug. 2 Deadline

“With these proposals, we have made every effort to remain faithful to Congress’s mandate while shielding those who find themselves delinquent on a federal debt from unnecessary abuse,” the FCC spokesman said via e-mail. The FCC must issue and implement the provision by Aug. 2.

The chairman proposed several measures to protect the right of consumers to stop unwanted calls, limit the number of calls per month, and to limit calls only for the purpose of debt collection of delinquent debts, including debt servicing calls that can help consumers avoid default, the spokesman said.

Robocalls are consumers’ primary complaint to the FCC. The commissioners voted June 18, 2015 to tighten rules on unwanted robocalls and spam texts in a controversial order that practitioners predicted would only cause the level of TCPA-related litigation to increase (2015 TLN 9, 7/1/15).

FCC Order Challenged

The order is the subject of a court case brought by the Association of Credit and Collection Professionals (ACA International), Sirius XM Radio Inc., the U.S. Chamber of Commerce and more than two dozen other amici and petitioner intervenors (ACA Int’l v. FCC, et al, D.C. Cir., No. 15-1211, petitioner reply briefs filed 2/16/16) seeking to overturn the rules, which they say vastly expanded the TCPA’s reach.

But a provision was slipped into the Bipartisan Budget Act of 2015 to amend the Communications Act of 1934 to allow federally contracted debt collectors to avoid penalties under the TCPA. It also authorized the FCC to issue regulations on the number and duration of the calls (2015 TLN 20, 12/1/15).

The FCC may face a number of hurdles in meeting the Aug. 2 deadline. The rulemaking must be done in consultation with the U.S. Department of Treasury, whose interest in reducing the deficit through the provision may prove to be a competing interest with the FCC’s responsibility to protect consumers.

“It’s going to be a challenge to meet Congress’s mandate that the FCC design implementing rules that will strike a balanced compromise between the federal government’s need for revenues and the Chairman’s obligation to protect consumers from potential harassment,” Judith L. Harris, senior counsel at Reed Smith LLP in Washington, told Bloomberg BNA.

Liberal Counter Pressure

Another wrinkle in the issue is staunch opposition from the liberal side of the Democratic members of Congress and other elected officials. The Help Americans Never Get Unwanted Phone calls (HANGUP) Act of 2015 (S. 2235), introduced Nov. 4 by Sen. Edward J. Markey (D-Mass.) would repeal the budget’s debt collection provision. The bill has garnered 15 Democratic and Independent cosponsors, including presidential candidate Sen. Bernie Sanders (I-Vt.), but is unlikely to pass.

Nevertheless, 25 state attorneys general threw their support behind the bill in a bipartisan Feb. 10 letter to the leaders of the Senate Commerce, Science and Transportation Committee and the House and Senate leadership.

Consumer complaints about unwanted telemarketing calls, particularly robocalls and debt collection calls, are the largest number of consumer complaints to the AGs’ offices, according to the letter.

“It is inappropriate to grant debt collectors the right to harass citizens simply because the debt has a nexus to the federal government when the law specifically prohibits all other private and public entities, including political callers, from doing so,” they wrote.

The broader issue of the FCC’s TCPA actions could be raised at a March 2 FCC oversight hearing before the Senate Commerce Committee.

Reproduced with permission from Privacy Law Watch, 34 [pra-bul] (Feb. 22, 2016). Copyright 2016 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>

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Posted in Accounts Receivable Management, Debt Collection, Debt Collection News, TCPA .

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