BLOG VIEW: The Federal Communications Commission's (FCC) recent release of new rules clarifying provisions of the Telephone Consumer Protection Act (TCPA) has sent shockwaves through the mortgage servicing industry. With potential penalties of up to $1,500 per infraction and no caps, running afoul of the new provisions could be a costly exercise, and trial attorneys are already sniffing out opportunities for class-action suits. Keeping this in mind, it is imperative that mortgage servicers take steps to ensure compliance and protect against the risks that TCPA presents.
The TCPA severely limits the ability of debt collectors to call their customers' cell phones. Borrowers must provide ‘express consent’ for servicers to call or text them on their cell phones, and under the new rules, borrowers may retract their consent ‘in any reasonable way at any time.’
Although the rules are intended to apply to calls made through autodialers, the FCC has expanded the definition of ‘autodialer’ to include any phone with the potential to automatically dial random or sequential numbers (even if it's not actually used that way). Dissenting FCC Commissioner Michael O'Reilly has warned that this expanded definition means that even a smartphone could be defined as an autodialer. Thus, essentially any call a servicer makes to a borrower's cell phone appears to be covered in the scope of this revised definition.
What Is Express Consent?
The FCC has ruled that debt collectors bear the burden of proof to show that prior express consent was secured before calls were made to borrowers' cell phones. But what constitutes ‘express consent,’ and how can servicers mitigate the risks?
Servicers must ensure that they track consent within their system of record, ensuring, at a minimum, that the phone number, the date of consent and the method of consent are documented. Methods for securing consent may include the following:
1. Loan applications. In August, the Sixth Circuit Court of Appeals (Hill v. Homeward Residential, Inc.) affirmed that a borrower grants consent to the creditor to call his cell phone, including the use of automated calls, when the borrower provides his cell number in writing with a loan application.
2. Agent authorization. Borrowers, who call their servicers, may be asked by call center agents for consent to call their cell phones. Generally, agents should seek permission if the borrower's phone number data has not recently been updated or if express consent has not previously been given. The system of record should be updated to reflect the date consent was provided. It would also be wise to archive the recording of the interaction.
3. Web-based consent. Borrowers using their servicers' Web portals may be asked to verify or update their contact information for purposes of future contact.Â
4. Interactive voice response (IVR)-based consent. Creative IVR applications can capture a caller's phone number (Caller ID) and see if that number is already in the system of record. If not, the IVR application could ask if the caller would like to update his contact information with this phone number. The application can ask the caller if the phone number is a cell phone, verify consent using speech recognition, ‘May we call you at this number in the future related to your loan? Please say 'yes' or 'no,'’ and record the borrower's consent. The IVR application should then update the system of record. To ensure that customer satisfaction is not jeopardized by asking for consent each time the borrower calls, care should be taken to ensure that consent is only sought in this way when appropriate.
What Comes Next?
Can servicers hope for relief from the onerous provision of TCPA at some point down the road? One glimmer of hope came when Congress passed the Budget Act of 2015. Tucked away in the act was a provision modifying TCPA to exempt autodialed calls ‘made solely to collect a debt owed to or guaranteed by the United States.’ So, at least for now, it appears that servicers of government-backed mortgages will be able to call borrowers' cell phones without the threat of TCPA penalties.
However, this relief may be short-lived. Days after the president signed the new budget bill into law, Sen. Ed Markey, D-Mass., introduced the Help Americans Never Get Unwanted Phone Calls Act (more well known as the HANGUP Act) to reinstate the TCPA restrictions on government-backed loans. Consumer groups have committed to apply pressure for passage of Markey's bill.
In light of the ongoing risks, servicers would be wise to take every reasonable step to ensure they are in compliance with TCPA, knowing that in a legal challenge, they will bear the burden of proof.
Barry Hays is co-founder and senior vice president of TeleVoice, a provider of contact center technology to the financial services industry.
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