TCPA Compliance in the Account Receivables Management (ARM) Industry

The Telephone Consumer Protection Act of 1991 (TCPA) 47 U.S.C. 227 amended the Communications Act of 1934. The U.S. Congress passed the act primarily to restrict telemarketing (telephone solicitation by telemarketers) and the use of auto dialers or ‘robocalling’. The act addresses the use of automated telephone dialing systems (ATDS), artificial or pre-recorded messaging, SMS text messaging and fax machine messages as well as the provisions in communication with the use of such equipment. Though the TCPA was designed with telemarketing communication in mind, as the communications intended for collections are “commercial” in nature, the TCPA has implications for debt collectors too.

In the past few years, there has been a dramatic increase in the number of TCPA claims filed in relation to TCPA violations by debt collectors and creditors as a result of conflicting interpretation of the TCPA within the ARM industry and the legal framework. The FCC is tasked with the responsibility to implement the regulations within the TCPA and provide guidance. The FCC’s 2015 Declaratory Ruling has indeed clarified certain issues relating to consent, the use of ATDS and the definition of “capacity” as it relates to ATDS.

Consent:

The FCC issued a Declaratory Ruling in 2008 clarifying that a consumer provides prior express consent to be called at her wireless number via an ATDS or prerecorded message if she knowingly releases her wireless telephone number to the party making the call during the transaction giving rise to the debt[i]. The ruling also clarified that a consumer who gives prior express consent to the creditor in this manner similarly gives such consent to the debt collector calling on behalf of the creditor. In the wireless number context, the consent required to call can be oral or written. The burden to prove consent lies with the “caller”.

In the FCC’s 2015 Declaratory Ruling clarification was made that consumers have the right to revoke consent, either orally or in writing, at any time and in any reasonable manner[ii]. The FCC’s 2015 ruling also clarified that a) consent to call a wireless phone must be from the current subscriber or customary user of the number, such consent does not transfer when a wireless number is reassigned to a new consumer because the new subscriber never provided consent; b) consent continues to be valid for residential lines that have been ported to a wireless service; and c) callers using an ATDS will have a one call (attempt) “safe harbor” for a single call or text to a ported number where they do not have prior express consent or a reassigned number to determine the number’s reassignment[iii].

Definition of an ATDS or autodialer:

The TCPA defines an “automatic telephone dialing system” as equipment which has the capacity to: (1) store or produce telephone numbers to be called, using a random or sequential number generator; and (2) to dial such numbers[iv]. The expansive definition of an ATDS implies that no modern technology can be excluded from being categorized as an ATDS under the “theoretic potential” capacity[v] clarification by the FCC in the 2015 ruling.

In the 2015 ruling, the FCC referring to earlier TCPA rulings, also stated that it had already “affirmed that a predictive dialer constitutes an automatic telephone dialing system” because “the hardware, when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers.[vi]

Recommendations to demonstrate adherence to TCPA regulations:

1.      Obtaining and documenting consent on ALL unconsented phone numbers (residential or wireless) is a best practice that must immediately be followed by every debt collector, if not already doing so

2.      The debt collector must as frequently as possible, run the entire inventory of phone numbers through a “cell scrub” service as more than 60% -70% of phone numbers in use today are wireless and the number is growing rapidly

3.      The use of virtually any technology other than a hard-phone, that is not connected to any dialing system other than a PBX being used to manually dial a customer’s cell phone number can be argued to be the use of an ATDS

4.      The attempts to adhere to the TCPA does not preclude the caller from complying to other regulations such as FDCPA which are typically fail safes built into the dialer software (for e.g. calling customers only between 8:00 am and 9:00 pm local time-zone) that can no longer be used in ANY mode to call wireless numbers 

***This compliance information is considered accurate, but is provided for information purposes only and does not constitute legal advice***

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[i] In the matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Declaratory Ruling, 23 FCC Rcd. 559, 564-565 (Jan. 4, 2008). 

[ii] In the matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, American Association of Healthcare Administrative Management Petition for Expedited Declaratory Ruling and Exemption; et al, CG Docket No. 02-278, beginning at para. 125, 2015 WL 4387780 (Jun. 18, 2015). 

[iii] In the matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, American Association of Healthcare Administrative Management Petition for Expedited Declaratory Ruling and Exemption; et al, CG Docket No. 02-278, para. 72, 2015 WL 4387780 (Jun. 18, 2015). 

[iv] 47 U.S.C. § 227(a)(1) (2012); 47 C.F.R. § 64.1200(f)(2) (2014). 

[v] In the matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, American Association of Healthcare Administrative Management Petition for Expedited Declaratory Ruling and Exemption; et al, CG Docket No. 02-278, para. 13-16, 2015 WL 4387780 (Jun. 18, 2015). 

[vi] In the matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, American Association of Healthcare Administrative Management Petition for Expedited Declaratory Ruling and Exemption; et al, CG Docket No. 02-278, para. 18, 2015 WL 4387780 (Jun. 18, 2015)