At first blush, credit card holders and other debtors might not respond sympathetically, but debt collectors say that a proposed federal regulation could substantially curtail their activities — and, in the end, hurt consumers.
At issue: A proposed rule by the Federal Communications Commission to tighten the use by telemarketers of prerecorded, automatically dialed “robocalls.” For the first time, debt collectors and others could be prohibited or substantially restricted from using autodialers to contact credit card holders and other consumers through their cell phones.
Hey, you might say. Who cares? I don’t want those people contacting me by cell phone, landline, e-mail, Pony Express, whatever.
Well, yes, actually you do, say representatives of debt collectors, who really would prefer to be called “account receivable management professionals.” If you are in arrears or there’s a problem with your credit card or account and you can’t be reached, bad things will happen to you sooner than they otherwise might.
Now, as many consumers surrender their land lines and rely exclusively on cell phones, contacting those consumers in real time when an issue arises could become a major problem.
“First of all, consumers are using their cell phones more and more, and most want to know if there’s a problem or if their account is overdue,” said Mark Schiffman, executive director of the ACA International Education Foundation, a group that represents and serves credit and collection professionals. “If a debt collector calls and it’s legitimate, and they can’t get a hold of you, there could be a negative impact on your credit rating, you might go into default, and so on.”
Consumer advocates’ grudging agreement
Many consumer advocates tend to agree.
“It is true that more and more consumers are moving away from land lines and depending only on their cell phones,” said David Jones, president of the Association of Independent Consumer Credit Counseling Agencies. “Therefore, the collectors have a point.”
At the same time, Jones and others note that consumers can’t be blamed for being leery of any development that would give debt collectors a new way to bother them.
Every year, the Federal Trade Commission assembles a list of top consumer complaints and debt collectors nearly always come in at No. 2 on the hit parade, right behind those who commit identity theft. Debt collectors were responsible for 119,549 complaints in 2009, according to the FTC.
In February 2011, Consumers Union and the East Bay Community Law Center reported that debt collectors were pestering a rising number of consumers about unsubstantiated debts. The groups urged federal and state regulators and lawmakers to find ways to better protect consumers.
“The fly in that ointment is the poor reputation that collectors have — in many cases, well-deserved,” Jones said. “That is one reason why the FCC wants to restrict their access. However, creditors have every right to contact debtors who are delinquent, and delinquent debtors should expect to be so reminded.”
So, with Americans owing about $800 billion in credit card debt alone, this is the bottom line, according to Schiffman: “We have to be able to reach the consumer to have that conversation.”
The proposed FCC action, technically a revision to its rules under the 1991 Telephone Consumer Protection Act (TCPA), is intended to align its robocall regulations with those issued separately by the Federal Trade Commission.
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“Because of recent rule changes by the FTC, businesses now operate under different robocall requirements depending on whether they are subject to both the FTC’s and the FCC’s rules, or only to the FCC’s,” FCC Chairman Julius Genachowski said when his agency’s revisions were proposed in January 2010. “For consumers, this may be confusing.”
It certainly has been confusing for debt collection firms and other businesses. Until now, they say, robocall regulations issued by both agencies have been inconsistent, incomplete, opaque and difficult to interpret. As a result, some insurance companies are dropping coverage for TCPA-related violations by debt collection agencies.
Consumers must opt in to collection calls
Under the proposed alignment, both the FCC and the FTC would prohibit robocalls by telemarketers to land lines and cell phones, even when the caller has an established business relationship with the consumer, unless that consumer specifically agrees in writing to receive such calls. In addition, the regulation would make it easier for consumers to opt out of future robocalls. Certain exemptions would remain, including those for tax-exempt charities, health care organizations, political campaigns, etc.
Turning specifically to cell phones, robocalls by true telemarketers already are prohibited under nearly all circumstances.
But, until now, debt collectors were allowed to make robocalls to cell phones, according to Schiffman, so long as they had written permission from the consumer. This part, however, was key: The requirement of written permission was considered met if the debtor merely had disclosed the cell phone number on his or her credit application, contact information or any other document related to the account, according to Schiffman.
Under the FCC’s proposed rule, that no longer would be the case. If the regulation is adopted, debtors would have to specifically and separately provide written permission before they could be contacted by auto-dialers through their cell phone. The debt collection industry considers this a nearly insurmountable hurdle.
“The difference is the problem,” Schiffman said. “What works today will be more restrictive and time consuming tomorrow.”
Industry’s issues: manual dialing, list scrubbing
For one thing, making calls manually (to cell phones or land lines) would be prohibitively expensive, the industry says. In addition, scrubbing contact lists of cell phone numbers also is expensive and the result is uncertain because you can never be certain that you found all the cell numbers.
As we all know, there are plenty of cell numbers out there, and more and more people are relying almost exclusively on them.
More than one of every four American homes (26.6 percent) had only cell phones during the first half of 2010, according to the federal government’s National Health Interview Survey. In addition, nearly one of every six American homes received all or almost all calls on cell phones even if a land line was present.
Moreover, a survey conducted last summer for ACA International found that 40 percent of respondents who reported having both a land line and a cell phone considered the cell phone as their primary telephone. At the same time, more than half of all respondents who use their cell phones to talk with companies believe that businesses should be able to contact them by cell phone. (The survey involved 1,200 randomly selected adults and had a margin of error of plus/minus 3 percent.)
In view of all of this, 11 members of the House Energy and Commerce Committee (seven Republicans, four Democrats) urged the FCC in December to clearly and unequivocally allow the use — by debt collectors and others not involved in telemarketing — of auto dialers and pre-recorded calls to cell phones without prior written consent.
“Such a requirement would make it more difficult for consumers to receive critical information in a timely matter, even if consumers have provided their mobile phone numbers as the primary means of communications,” the group wrote in a letter to the FCC.
The FCC has taken all of this under consideration and it is not known when it will decide on a course of action. But business interests and consumer advocates are hoping that sensible decisions will be made that balance the reality of an increasingly wireless society with the essential need for swift contact between creditors and credit card holders and other debtors.
Some of these rules have gotten a little goofy. We could be in a situation where, if the consumer does not grant permission, this is an important communication vehicle that gets eliminated when trying to collect on a debt that is legitimately owed.
|— Mark Schiffman |
ACA International Education Foundation
“Some of these rules have gotten a little goofy,” Schiffman said. “We could be in a situation where, if the consumer does not grant permission, this is an important communication vehicle that gets eliminated when trying to collect on a debt that is legitimately owed.”
Jones, of the Association of Independent Consumer Credit Counseling Agencies, agrees that common sense should prevail.
“Obviously, the use of automatic dialers is a reality and expecting that collection calls would be hand-dialed is unrealistic,” he said. “In the final estimation, informing consumers of collections activity by automatically calling their cell phones is in the best interests of consumers, but I believe that the FCC and FTC must continue to ensure that the rules are followed and that rogue collectors who prey on consumers are punished.”
He also reminded credit card holders and all consumers to remain alert and proactive, especially when it comes to fishing expeditions by true telemarketers.
“Consumers need to be vigilant about putting their cell numbers on [the FTC’s] do-not-call lists,” Jones said.