Contacting Borrowers via Cell Phone for Debt Collection Micheal Kahler Windham Professionals, Inc.
Our Discussion Today • Communication Laws • Telephone Consumer Protection Act • What is Creating Our Problem Today • The Affect on the Student Loan Collection Industry • What We Can Do • Cell Phone Use Statistics
Laws Affecting Communication • Communication Act of 1934 • Establishes the Federal Communications Commission (FCC) • Regulates interstate, international, and maritime communications including radio, television, wire, satellite, and cable. • Jurisdiction covers all 50 States, the District of Columbia, and U.S. possessions.
Laws Affecting Communication • Telephone Consumer Protection Act of 1991 • Restricts the use of automated dialing systems, artificial or prerecorded voice messages, SMS text messages received by cell phones, and the use of fax machines to send unsolicited advertisements. • Specifies technical requirements for fax machines, autodialers, and voice messaging systems – principally with provisions requiring identification and contact information of the entity using the device to be contained in the message.
Laws Affecting Communication • Telephone Consumer Protection Act of 1991 • General provisions • Unless the recipient has given prior express consent, the TCPA and the FCC rules under the TCPA generally require: • Solicitors may not call residence before 8am or after 9pm local time • The solicitor must maintain a “Do Not Call “ (DNC) list, which must be honored for 5 years • Solicitors must provide their name, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which that person may be contacted. • Solicitation calls cannot be made to residences with artificial voices or recordings
Laws Affecting Communication • TCPA • General Provisions continued: • Calls cannot be made with artificial voices or recordings to cell phones or to any service in which the recipient is charged for the call. • Prerecorded or autodialed calls cannot engage two or more lines of a multi-line business or to any emergency number. • In a related section, unsolicited advertising faxes are also prohibited. • In the event of a violation of the TCPA, individuals are entitled to collect damages directly from a solicitor for $500 to $1,500 for each violation, or recover actual monetary loss, whichever is higher.
Laws Affecting Communication • TCPA Limitations • Ineffective at proactively stopping unsolicited calls in that the consumer had to request of each telemarketer to be put onto that telemarketer’s do-not-call list • This changed as a result of the Do-Not-Call Implementation Act’s establishment of the Do Not Call Registry and adoption of the National D0-Not-Call list by the FCC in 2003
Laws Affecting Communication • The CAN-SPAM Act made a minor amendment to the TCPA to explicitly apply the TCPA to calls and faxes from outside the US. • Portions of the TCPA related to unsolicited advertising faxes were amended by the Junk Fax Prevention Act of 2005
Problem Areas • Section 227(1)(A)(iii), the TCPA prohibits using any automatedtelephone dialing system or an artificial or prerecorded voice to call “any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service […] or any other service for which the called party is charged for the call.”
How Does This Affect The Student Loan Collection Industry • FCC first recognized telephone calls on behalf of creditors to recover payments for goods and services are not telemarketing. • In 2003, the FCC changed its interpretation of the definition of the term “autodialer” in order to limit the telemarketers’ use of the technology. • Original intent of the TCPA and FCC regulation did not include credit grantors and debt collectors – change drew the industry into the ban intended for telemarketers.
How Does This Affect The Student Loan Collection Industry • 1992 FCC rules that “calls delivering artificial or prerecorded messages to residences were prohibited, absent the express consent of the called party.” In the 1992 TCPA Order, the FCC concluded that an express exemption for debt collection calls to residences was unnecessary as such calls fall within the exemptions adopted for commercial calls which do not transmit an unsolicited advertisement and for established business relationships.
How Does This Affect The Student Loan Collection Industry • 1995 FCC clarified that: - prerecorded debt collection calls are exempted from Section 227(b)(1)(B) of TCPA prohibiting prerecorded or artificial voice messages to residences -debt collection calls not directed randomly or sequentially generated telephone numbers do not require and identification message
How Does This Affect The Student Loan Collection Industry • 2003, FCC affirmed that it unlawful “to make any call using an automatic telephone dialing system or an artificial or prerecorded message to any wireless telephone number” but agreed that debt collection calls could be made with the following provisions: • In the 1992 Order the FCC determined that “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.” • “To insure that creditors and debt collectors call only those consumers who have consented to receive autodialed and prerecorded message calls, we (the FCC) conclude that the creditor should be responsible for demonstrating that the consumer provided prior express consent.
How Does This Affect The Student Loan Collection Industry • December 2007 the FCC clarified “that autodialed and prerecorded message calls to wireless numbers that are provided by the called party to a creditor in connection with an existing debt are permissible as calls made with the ‘prior express consent’ of the called party.”
How Does This Affect The Student Loan Collection Industry • Without written “prior express consent” from the debtor there is potential for violation of the law • Cell phone numbers obtained during the collection process cannot be dialed with a dialer • The TCPA does not apply to land lines. Autodialers may be used. • Cell phone numbers may be called if dialed individually – the old fashioned way.
How Does This Affect The Student Loan Collection Industry • ACA Petition to the FCC • “Collectors, face potential injury from this uncertainty, including the risk of civil litigation and the risk of government enforcement by the Commission. • ACA Petition to the FCC • Limited amendment to the TCPA to preserve the use of autodialers to call consumers’ cell phones to recover payments for goods and services. • Clarification of the Act is needed to indicate that application of the TCPA regarding use of autodialers by creditors and collectors has not changed and is needed to prevent legal action • Further clarification of “expressed prior consent” is needed
How Does This Affect The Student Loan Collection Industry – Other Laws • Fair Debt Collection Privacy Act (FDCPA) • Privacy Protection for Consumers • Section 808(6) Prohibits a debt collector from causing charges to be made to a person for any communication (including cell phone) if the collector conceals the true purpose of the communication. See U.S.C. Section 1692f(6).
How Does This Affect The Student Loan Collection Industry-Other Laws • Fair Debt Collection Privacy Act (FDCPA) • Privacy Protection for Consumers (cont) • Section 805(a) Prohibits a debt collector from communicating with a consumer in connection with the collection of any debt at any unusual time or place or at a time or place known or which should be known to be inconvenient to the consumer. The consumer can inform the collector that contacting the cell phone is inconvenient and the collector must cease any further communication with the debtor by way of the cell phone.
How Does This Affect The Student Loan Collection Industry-Other Laws • Fair Debt Collection Privacy Act (FDCPA) • Privacy Protection for Consumers (cont) • Section 805(c) prohibits a debt collector from engaging in any further communication with a consumer, including cell phone communication, if the consumer notifies the collector in writing that the consumer refuses to pay a debt or that a consumer wishes the collector to cease further communication with the consumer.
How Does This Affect The Student Loan Collection Industry-Other Laws • Fair Debt Collection Privacy Act (FDCPA) • Privacy Protection for Consumers (cont) • Section 806(5) prohibits a debt collector from causing a telephone to ring or from engaging any person in telephone conversations repeatedly or continuously with the intent to annoy, abuse, or harass any person at the called number. The section applies to cell phone calls as well as calls made to a land line.
What do We Do • For the time being, focus on the idea of “prior express permission” or required authorization (CA) • Obtain permission to use cell phones for contact purposes. • Make sure to be complete in the verbiage of the statement that you are requesting the student to sign. • Make sure that this happens in the admissions or registration process. • Make sure that there are statements in printed materials indicating that you will use the number provided to make contact with the student. • Work hard to accompany all receivables with a promissory note and written authorization
Cell Phone Use The following are statistics from the Center for Disease Control and Prevention that are of interest to what we have discussed
Telephone Statistics Preliminary results from the January-June 2008 National Health Interview Survey (NHIS) indicate that the number of American homes with only wireless telephones continues to grow. Some estimates of the student loan industry place cell phone use at 50%-60% of the portfolio or higher
Telephone Statistics • More than one out of every six American homes (17.5%) had only wireless telephones during the first half of 2008, an increase of 1.7 percentage points since the second half of 2007. • In addition, more than one out of every eight American homes (13.3%) received all or almost all calls on wireless telephones despite having a landline telephone in the home.
Telephone Statistics • In the first 6 months of 2008, more than one out of every six households (17.5%) did not have a landline telephone, but did have at least one wireless telephone • Approximately 16.1% of all adults--more than 36 million adults--lived in households with only wireless telephones • 17.0% of all children--more than 12 million children--lived in households with only wireless telephones.
Telephone Statistics • As noted, during the first 6 months of 2008, nearly one out of every six adults lived in wireless-only households. One year before that (that is, during the first 6 months of 2007), one out of every eight adults lived in wireless-only households. And 2 years before that (that is, during the first 6 months of 2005), only 1 out of every 15 adults lived in wireless-only households
Demographic Differences • Nearly two-thirds of all adults living only with unrelated adult roommates (63.1%) were in households with only wireless telephones. This is the highest prevalence rate among the population subgroups examined. • One-third of adults renting their home (33.6%) had only wireless telephones. Adults renting their home were more likely than adults owning their home (9.0%) to be living in households with only wireless telephones.
Demographic Differences • More than one in three adults aged 25-29 years (35.7%) lived in households with only wireless telephones. Approximately 31% of adults aged 18-24 years lived in households with only wireless telephones. • As age increased from 30 years, the percentage of adults living in households with only wireless telephones decreased: 19.1% for adults aged 30-44 years; 9.2% for adults aged 45-64 years; and 2.8% for adults aged 65 years and over.
Demographics • Men (18.0%) were more likely than women (14.4%) to be living in households with only wireless telephones. • Adults living in poverty (26.0%) and adults living near poverty (22.6%) were more likely than higher income adults (14.2%) to be living in households with only wireless telephones.
Demographics • Adults living in the South (19.6%) and Midwest (17.8%) were more likely than adults living in the Northeast (9.8%) or West (13.7%) to be living in households with only wireless telephones. • Non-Hispanic white adults (14.6%) were less likely than Hispanic adults (21.6%) or non-Hispanic black adults (18.5%) to be living in households with only wireless telephones.
Wireless-Mostly Households • Among households with both landline and cellular telephones, 22.7% received all or almost all calls on the cellular telephones, based on data for the period January through June 2008. These wireless-mostly households make up 13.3% of all households
Wireless-Mostly Households • Approximately 32 million adults (14.4%) lived in wireless-mostly households during the first 6 months of 2008. • Adults with college degrees (17.1%) were more likely to be living in wireless-mostly households than were high school graduates (12.5%) or adults with less education (10.0%).
Wireless-Mostly Households • Adults living with children (18.1%) were more likely than adults living alone (10.1%) or with only adult relatives (12.8%) to be living in wireless-mostly households. • Adults living in poverty (10.8%) and adults living near poverty (10.3%) were less likely than higher income adults (17.1%) to be living in wireless-mostly households.
Wireless-Mostly Households • Adults living in metropolitan areas (15.0%) were more likely to be living in wireless-mostly households than were adults living in more rural areas (12.1%). • Information taken from • Blumberg SJ, Luke JV. Wireless substitution: Early release of estimates from the National Health Interview Survey, January-June 2008. National Center for Health Statistics. Available from: http://www.cdc.gov/nchs/nhis.htm. December 17, 2008.
Information Sources • Telephone Consumer Protection Act of 1991 www.law.cornell.edu/html/uscode/html/uscode47/usc_sec_47_00000227----000-. • ACA International – www.acainternational.com • Center for Disease Control and Prevention www.cdc.gov/nchs/data/nhis/earlyrelease/wireless200812 • Federal Trade Commission (FCC) www.fcc.gov • FCC Consumer Facts www.fcc.gov/cgb/consumerfacts/tcpa
Information Sources • National Council of Higher Education Loan Programs (NCHELP) www.nchelp.org • US Department of Education www.ed.gov
Questions Micheal Kahler Windham Professionals, Inc. www.windhampros.com email@example.com 888-747-0919 314-420-4876