Like many other companies, Diversified Consultants has to operate despite a sometimes-onerous burden of regulation upon their business models.
In response to a public perception that so-called “robo-dialers” had gone too far in removing the human element from contacting prospective voters and debtors, in 1991 President George H.W. Bush signed the Telephone Consumer Protection Act (TCPA) into law, an amendment to the Communications Act of 1934.
The TCPA restricts solicitation via telephone and the use of automated telephone equipment— in particular the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines. Several technical requirements for fax machines, autodialers, and voice messaging systems specified by the law principally consist of provisions requiring identification and contact information of the entity using the device to be available to the consumer.
“The one thing that’s on every collection agencies mind is the TCPA,” said Michael Anna, Vice President of Operations at Diversified Consultants.
Some of the more well-known provisions of the law include the National Do Not Call Registry and the requirement that solicitors maintain a “do not call” list. The law also specifies the hours during which solicitors can make calls, and prohibits unsolicited advertisements transmitted by fax machines.
“At some point Collection Agencies were included in this law. And the law basically said you cannot call a consumer via an automatic dialer. What they define as an automatic dialer is a machine that has the capability to dial a number without a person,” explained Michael Anna. “We have over 6 million phone numbers and it just doesn’t make any sense to have 6,000 employees to penetrate that many phone numbers. All businesses in the collection industry are having to cope with a law that does not help anyone or prevent anything.”
In 2011, Congressmen Lee Terry (R-NE) and Edolphus Towns (D-NY) introduced the Mobile Informational Call Act of 2011, an effort to update the TCPA. The purpose of the bill was to exempt informational calls to wireless devices from the auto-dialer restrictions imposed in 1991.
“Modernization of the Telephone Consumer Protection Act (TCPA) is among the top priorities for ACA members,” said ACA International Chief Executive Officer Patrick J. Morris. “Given the explosive growth in consumer reliance on mobile devices as a preferred means for communication, this legislation will enact limited, common-sense revisions to facilitate the delivery of time-sensitive consumer information, while continuing to protect wireless consumers from unwanted telemarketing calls.”
Also in 2011, the case Mims v. Arrow Financial Services came before the United States Supreme Court. The point of contention before the court was text in the original 1991 law that allowed recipients of unsolicited autodialed calls to sue for $500 per violation. The figure was tripled if the caller is found to have knowingly broken the law. The text of the call specifically mentions individual’s ability to seek redress in state courts, but did not mention suits before the federal courts.
“What is the logic of your position?” Justice Sotomayor asked Gregory G. Garre, a representative of the defense in the case before the bench, as reported by The New York Times. “Why even bother passing a federal law if it was going to give states the option to protect against this kind of conduct alone?”
In an opinion penned by Justice Ruth Bader Ginsberg, the Court upheld the jurisdiction of the federal courts over violations of the TCPA.
In October 2013, new rules issued by the Federal Communications Commission took effect further limiting unwanted autodialed calls. As of October 16, 2013, other than calls that are dialed manually, unambiguous written consent is required before transmitting any telemarketing call or text message. The burden of proof under the new laws is placed upon the side of advertisers, rather than consumers.
Since last summer, complaints about debt collectors have outnumbered those regarding any other financial product governed by the Consumer Financial Protection Bureau.
“We want to hear how we can better protect consumers and bring greater accountability to this multibillion-dollar industry without hamstringing legitimate debt collection activities,” the bureau’s director, Richard Cordray, said in a call with reporters.
The bureau also announced they would be considering companies that collect debts on their own behalf, such as banks, should be subject to restrictions imposed upon the collection industry.
In drafting the rules, officials say they sought information from debt collection agencies and consumer advocates.
Debt collectors trade group ACA International tentatively supported updates to existing rules. “We agree that modernizing the nation’s consumer debt collection system is important so long as changes are based on common sense solutions that preserve balance between consumer protection and the ability of a creditor or debt collector to lawfully recover debts,” the group said in a statement.
“Instead of a misinformed trope of the predatory debt collector, we should have laws that protect the interests of both parties equally. We fully support efforts to update the TCPA to bring it up to speed with modern telecommunications technology and practices,” said Michael Anna of Diversified Consultants, the second largest collection agency in the United States.