Federal Regulators Consider Action to Reduce Collectors’ Chances to Call Debtors’ Cell Phones
Repossession agencies and other debt collectors could be affected by a proposed rule working its way through the Federal Communications Commission.
Federal regulators are prepared to tighten the use of prerecorded, automatically dialed “robocalls” to contact contract holders through their cell phones. Collection organizations are concerned because more consumers appear to be abandoning land lines to use cell phones exclusively.
“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,” Schiffman continued in an article published by CreditCard.com.
Consumer advocates appear to be pushing for this regulation. They pointed to annual complaints reported to the Federal Trade Commission. They say debt collectors were responsible for 119,549 complaints in 2009.
Last month, Consumers Union and the East Bay Community Law Center reported that debt collectors were what the organizations described as 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.
“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 stated when his agency’s revisions were proposed in January.
“For consumers, this may be confusing,” Genachowski added.
Under the proposed alignment, both the FCC and FTC could 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, officials explained the regulation could make it easier for consumers to opt out of future robocalls. They added certain exemptions would remain, including those for tax-exempt charities, health care organizations and political campaigns.
Turning specifically to cell phones, Schiffman pointed out robocalls by true telemarketers already are prohibited under nearly all circumstances. But until now, Schiffman said debt collectors were allowed to make robocalls to cell phones so long as they had written permission from the consumer.
“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,” Schiffman explained.
Under the FCC’s proposed rule, Schiffman believes that no longer would be the case. If the regulation is adopted, the ACA International executive thinks 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 declared to CreditCard.com. “What works today will be more restrictive and time consuming tomorrow.”
David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, also conceded in the online report that “It is true that more and more consumers are moving away from land lines and depending only on their cell phones. Therefore, the collectors have a point.
“The fly in that ointment is the poor reputation that collectors have — in many cases, well-deserved,” Jones interjected. “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.”