Supreme Court Rules on Federal Debt Collectors and TCPA

What many were hoping to be a bombshell Telephone Consumer Protection Act (TCPA) case came and went without much more than a pop and a fizzle. In Barr v. American Association of Political Consultants, petitioners argued that the government debt collection exemption to the TCPA’s Automatic Telephone Dialing System (ATDS) provision violated the First Amendment by impermissibly favoring government speech.

Why Was this Potentially a Big Deal?

Not only did the petitioners argue that the exemption should be removed from the law, but that the ATDS provision, and even the entire TCPA, should be struck down. While the majority of the Court was persuaded by the argument that the federal debt collection exemption violated the First Amendment, they did not go so far as to invalidate other provisions of the law. In essence, it is as though the Supreme Court opened a bottle of white-out and erased the exception leaving the rest of the law intact.

What has changed?

Companies collecting Federally-backed debts are now subject to the TCPA. For all other companies, the status quo remains. Companies who collect such debts, in addition to portfolios of private debt, may simply add their federal debt collection activities into existing TCPA compliance regimes. Alternatively, for companies who collect federally-backed debts but do not currently have a TCPA program, now is the time to begin implementing policies, procedures, and compliance oversight activities.

Here are some key TCPA compliance considerations for Federal debt collectors following Barr:  

• Evaluate whether you are calling with an ATDS. Under the TCPA, the definition of an ATDS is “equipment which has the capacity: (A) to store or produce numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” Currently, there is significant disagreement among jurisdictions about what constitutes an ATDS. Therefore, a thorough and well-documented dialer analysis should be performed and maintained. The analysis should be reevaluated each time a change in the platform is made or in response to a change in the law.

• Ensure you have the appropriate level of consent prior to calling cellphones. Prior express consent must be obtained before calling debtors on their cellphones with an ATDS. Prior express consent can be obtained when the debtor provides their number to the creditor in the ordinary course of business. Note, if the creditor obtained express consent to call the debtor, this consent is typically transferrable to the debt collector.

• Proceed with caution when utilizing skip tracing to track down alternative phone numbers. As stated above, consent is key when calling with an ATDS. Cellphones may not be called with automated technology unless the consumer has consented to receive the call. Therefore, if you use skip tracing to find debtor numbers, be careful. Although landlines may be called using an ATDS without consent, cellphones may not.

Remember, the TCPA is a heavily litigated consumer protection act. The number of TCPA cases filed over the past decade has increased 10-fold, and the average TCPA class action settlement is $6.6 million. Debt collection calls continue to be at the top of complaint types made to the FTC and attorneys know consumers don’t want such calls (and are happy to help them get money).

Following the Barr case, the Supreme Court agreed to hear Facebook v. Duguid in their next session. This case asks the Court to settle the difference of opinion among jurisdictions about what constitutes an ATDS.

Please reach out to us at connect@compliancepoint.com if you have any questions about this topic or how CompliancePoint can assist your organization with managing your marketing compliance.