On May 4, 2016, the FCC Commissioners voted to commence a rulemaking proceeding pursuant to an amendment to the Telephone Consumer Protection Act that created a carve-out for calls made in connection with "a debt owed to or guaranteed by the United States" from the TCPA's general prohibition against automated calls. This amendment, which Congress included in the Bipartisan Budget Act of 2015 (Budget Act) last summer, directs the FCC to adopt regulations for the exemption and, in its discretion, to "restrict or limit the number and duration" of permissible government-backed debt collection calls. The following is a summary of the FCC's Notice of Proposed Rulemaking (NPRM) that was published on May 6, the full text of which is available here.
Types of Calls Covered. The FCC proposes to limit the exemption to calls made for the purpose of obtaining payment after the borrower is delinquent or for "debt servicing." The FCC recognizes that debt servicing calls may provide debtors with a valuable service by offering information about options and programs to avoid defaulting or becoming delinquent. As such, the NPRM seeks comment on this proposal. The FCC also seeks comment on whether the exemption should be limited to calls made after the debtor is in default rather than when the debtor becomes delinquent.
Defining Eligible Debts. In addition to debts owed to or guaranteed by the U.S. government, the FCC seeks comments on whether the exemption should (i) also cover debts insured by the United States, (ii) apply if the debt is transferred to a person other than the U.S. government or if the collection agency remits only a percentage of the funds collected, and (iii) cover other types of loans, such as federal student loans, small business loans and federal guaranteed mortgages.
What Parties Are Covered by the Exemption? The FCC proposes that the exemption would exempt calls made by creditors of the owed debts and their agents. The NPRM seeks comment on whether it should adopt this approach or consider a narrower or broader interpretation under the Budget Act exemption.
Who Can Be Called? The FCC proposes to limit the exemption to calls made to the person or persons obligated to pay the debt at issue. As such, calls made to the debtor's family, friends, and neighbors would not be subject to the carve-out. Consistent with the FCC's July 2015 ruling that calls made to wrong or reassigned mobile numbers violate the TCPA (subject to the "one call" safe harbor), the NPRM does not extend the Budget Act exemption to these calls.
Limits on Calls. As noted above, the Budget Act empowers the FCC to place restrictions on calls covered by the exemption, including the frequency and duration of the calls. The FCC proposes to limit the exemption for autodialed calls with a prerecorded message to three calls per account delinquency, regardless of whether the call was actually answered. The NPRM also seeks comment on whether live-agent calls are preferable to and should be treated differently than prerecorded messages. Additionally, the NPRM seeks comments on whether placing a limit on the duration of an exempt call is appropriate.
Interaction with Other Laws. The FCC seeks comments on how and whether the exemption impacts federal and state debt collection laws, such as the Fair Debt Collection Practices Act.
Stopping Calls. The FCC proposes to allow debtors the right to stop receiving covered calls at any time and for callers to inform them of this right. The FCC also proposes to extend a stop request made for one collection attempt to all subsequent efforts, even if the debt was transferred to a new collector.
Comments are due to the FCC by June 6, 2016.