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This week, the topic of using a local number on your caller ID for consumers in states where you are not physically located came up during our weekly Research Assistant Peer call. This practice has both advantages and disadvantages. 

The Debate: Pros and Cons 

Cons: One major con is the potential for this practice to be considered deceptive or misleading. The concept of UDAAP (Unfair, Deceptive, or Abusive Acts or Practices) comes into play here. Using a local number that does not correspond to the debt collector’s actual location could be seen as a deceptive act. Additionally, state laws may have specific requirements regarding local numbers. For instance, Colorado mandates providing a local number in letters to consumers. Could using an out-of-state phone number on your caller ID lead to legal issues? It’s possible. 

State Legislation: 

• Tennessee HB2504: Effective July 1, 2024, this law states that it is an offense “for a person, on behalf of a debt collector, to knowingly cause a caller identification service to transmit misleading or inaccurate caller identification information to a subscriber with the intent to defraud or cause harm to another person or to wrongfully obtain anything of value, rather than with the intent to induce the subscriber to answer.” This could potentially be used against agencies showing a local number that isn’t theirs.
   

• Wisconsin SB 531: Signed into law in March 2024, this legislation prohibits “knowingly transmitting misleading or inaccurate caller identification records” when making telephone solicitations. There is an exception if the number has the correct company name and can be called during business hours to request a “do not call” status. However, this could still be a contentious point. 

Federal Regulation:  

The Truth in Caller ID Act, enforced by the FCC, prohibits transmitting misleading or inaccurate caller ID information with the intent to defraud, cause harm, or wrongfully obtain anything of value. Although spoofing is not always illegal, it can be argued as deceptive if the consumer feels misled. 

Pros: On the other hand, using a local number can significantly increase the likelihood of a callback from a consumer. Consumers are more inclined to respond to a local number than an out-of-state one. 

Best Practices:  

If you choose to use a local number, follow these best practices: 

• Ownership: Ensure the local number you use is owned by your company, so no one else can use it. 

• Responsiveness: Make sure calls to that number are answered by your company. 

Given the increasing scrutiny from various states, it is crucial to proactively protect your company from potential lawsuits related to caller ID practices. Even if your intention is merely to facilitate contact with consumers, it’s essential to avoid any appearance of deception. 

As you make decisions regarding the use of local numbers on your caller ID, keep these considerations in mind to safeguard your company against legal risks.

Documents and Crowdsourced Materials: 

• Member Questions: Voicemail Vendor, Licensing Branch Offices, and a CFPB Final Rule  

Top Reads: 

• CFPB Proposes to Ban Medical Bills from Credit Reports 

• CFPB Issues Final Rule on Nonbank Registration of Enforcement Orders 

• CFPB Issues UDAAP Guidance On Contracts for Consumer Financial Products and Services 

Upcoming Webinars/ Other Announcements: 

• Have topics you want to discuss during the peer call? Please send them to: Sara_Consultant@roundtables.us and/or Missy Meggison, mmeggison@roundtables.us by Thursday to ensure it makes it on our agenda!