A proposed amendment to the Telecommunications Act included in the budget deal now before Congress would allow mortgage servicers to send robocalls to borrowers' cell phones – but only if the loan is backed by the federal government.
If the provision tucked into the budget bill sees approval, a key section of the Telecommunications Act prohibiting mortgage servicers from making automated calls to delinquent borrowers on their cell phones would be amended to allow such calls only if ‘such call is made solely to collect a debt owed to or guaranteed by the United States.’
The Obama administration is reportedly pushing for the measure so that government student loan servicers can reach delinquent borrowers on their cell phones using auto-dialers. However, it would apply to borrowers of all government-backed loans, including mortgages, as well as citizens who owe back taxes.
Consumer advocates worry that the measure, if approved, could lead to excessive calls to delinquent borrowers and taxpayers. Government officials, meanwhile, point out that Americans are increasingly ditching their landlines in favor of cell phones, making it more difficult for debt collectors to directly contact delinquent borrowers.
Interestingly, the measure would carve out a major exception to laws Congress passed in recent years that prohibit debt collectors from making robocalls to borrowers' cell phones. In 1991, Congress passed the Telephone Consumer Protection Act (TCPA), which prohibited telemarketers and debt collectors from using automated dialing systems to contact consumers. Several years ago, the TCPA was amended to prohibit the use of auto-dialers and prerecorded messages to contact consumers on their cell phones – unless the party contacting the consumer has express written consent from the consumer to do so. The measure saw strong pushback from debt collection agencies and student loan servicers, which lobbied the Federal Communications Commission to get federal student loans exempted.
In addition, the Fair Debt Collection Practices Act, which has been amended several times since its introduction in 1977 (but arguably needs further updating), helps protect consumers from widespread harassment and debt collector abuses. Although it doesn't directly address the issue of robocalls to cell phones, it does prohibit certain types of ‘abusive and deceptive’ conduct when attempting to collect debts, including ‘causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse or harass any person at the called number.’
This latest proposal would remove the requirement that a caller must have the consent of the called party before making auto-dialed or prerecorded calls or texts for the collection of debts owed or guaranteed by the federal government.
The U.S. Education Department is apparently in favor of the provision because it would give student loan servicers a better chance of contacting delinquent borrowers in order to help them avoid more serious action.
‘Many student loan borrowers, especially those that may just be graduating, move frequently in addition to no longer having landline phone numbers,’ Education Department officials wrote in a report issued to the White House earlier this month. ‘It can be difficult for [student loan] servicers to find a borrower except by using a cell phone number.
‘Congress should change the law to ensure that servicers can contact borrowers using modern technology and help them get into the right repayment plan and avoid the consequences of default or resolve their default,’ the report states.
Currently, it is unclear whether the provision has a chance to pass in either the House or the Senate.
For more, check out this article in the Washington Post.