Credit and Collection News : A Division of Elsos



Compliance by John H. Bedard, Jr., Bedard Law Group, P.C.

I have heard multiple sides and views on the matter of calling cell phones. Based on current rulings, is it your opinion that it is okay to use a dialer to call cell phones if those cell phone numbers were passed to the agency from the original creditor?
The present state of the law makes calling cell phones using a dialer a very risky behavior unless the caller has the proper compliance mechanisms in place. The general rule for the collection industry is that no person may use an “automatic telephone dialing system” or pre-recorded voice to call a cell phone unless the caller has the prior express consent of the called party. The FCC has declared that if a creditor has the proper consent to call a cell phone this way, then so too does that creditor’s agents. Thus, if an agency receives the cell phone number from the creditor and the creditor has the proper kind of consent, then according to the FCC, the agent also has the proper kind of consent to call the cell phone in the very narrow way that the TCPA regulates (i.e. calls made using an automatic telephone dialing system or artificial or pre-recorded voice). That the telephone number came from the original creditor is only half the story. The original creditor must also have had the proper kind of consent. The volume of TCPA litigation is exploding around the country. In today’s environment, it is extremely important to get some good advice on TCPA compliance. It’s only a matter of time before those who stubbornly keep their “TCPA heads” in the sand find themselves suffocating.

Are more and more states going to require licensing in the future, or will this just roll-up under a federal regulatory body?
Boy, if it could answer that question correctly, my hourly rate would be much higher!! Seriously, the answer is yes to the federal regulatory body – it’s called the Consumer Financial Protection Bureau, and yes, they will be regulating certain participants in the debt collection industry. With respect to the state licensing question, I just don’t know. Many states have laws that regulate general “bad behavior” in the marketplace and attorneys general and regulators are using those laws to reach debt collectors even when their state does not have a specific licensing law for debt collectors. Whether more states will specifically require licensing of debt collectors remains an open question.

Thank you!

Where can I find a list of compliance and licensing companies that specifically provide this service to collections agencies?
I’m afraid I don’t know of a source that would provide a list of all the companies that provide assistance with debt collection licensing; however, there are some very good ones in the industry. I recommend finding one of them, then asking them who their competitors are! You should also consult your local and national trade associations which will likely be able to point you in the right direction.
Thank You

I Heard I Don’t Have To Comply With the Red Flags Rule – Is That Correct?
Not quite . . . yet. The FTC recently extended (again) the deadline for compliance with the Red Flags rule until June 1, 2010. The reason for this latest delayed enforcement date is twofold: new legislation is expected to clarify who must comply with the Red Flags Rule, and the Federal Trade Commission just lost a lawsuit filed the by American Bar Association in which the court found that attorneys are not “creditors” under the Act and therefore not subject to the Red Flags Rules. This does not mean all attorneys should ignore the rules, since certain attorneys may very well be “service providers” and still required to comply with certain Red Flags obligations. The case is not over; but in the interim, the FTC has delayed enforcement. Hopefully by June 2010 we’ll have some more clarification from Congress or the appeals court.

Was Foti Overturned? I Heard A New Case Was Decided?
No, Foti was not overturned. Yes, for the first time a case finally reached a Court of Appeals which had some interesting comments about the Foti issue. In response to the defendant debt collector’s argument that it didn’t leave the mini-miranda on the consumer’s answer machine for fear of violating the FDCPA’s prohibition on third party disclosure, the very first words of the 11th Circuit Court of Appeals opinion included an analogy to the Vietnam War:

In an oft-repeated statement from the Vietnam War, an unidentified American military office reputedly said that ‘we had to destroy the village to save it.’ That oxymoronic explanation may be apocryphal, but the debt collection agency in this case offers up much the same logic to explain why it violated the Fair Debt Collection Practices Act: it was necessary to violate the Act in order to comply with the Act.

You need not read any further into the opinion to know how the Court feels about the “catch 22” collectors have been complaining about since Foti was decided. The appeals court affirmed the district court’s summary judgment in favor of the consumer for the answering machine message which did not identify the caller as a debt collector.

The Foti ship has long since left the dock. If you’re not Foti compliant, you’re putting your company at class action risk. Don’t misunderstand me – just because you’re Foti compliant doesn’t mean you’re immune from liability. In my view, you’re just vulnerable to less liability than if you’re not Foti compliant. If your company has not taken a position on the Foti issue, call your MAP attorney and get some good advice – today!

Can a collection agency represent me in Minnesota conciliation court?
Generally, non-lawyers may not represent others in court. However, we would need a lot more information for a detailed answer. Questions that would also be needed to answered: Who are the parties to the case? Who owns the account? As Plaintiff or Defendant?

Are there any provisions for disclosing debt to military personnel commanding officers?
Yes, it's prohibited without the consent of the consumer. 15 U.S.C. 1692c(c)

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