Blog sponsored by Bankrupt-Law.com


Friday August 4, 6:00 am ET

Brigitte Yuille

Have an unpaid debt? Hospitals, retail stores and financial institutions
want to talk to you about it on your cell phone and are trying to eliminate
the legal obstacles that keep them from doing so.

A trade organization made up of credit grantors and debt collectors is
asking the feds to agree to allow collectors to reach you on your wireless
phone using an automatic telephone dialing system.
Consumer advocates say that this is a violation of the law, as well as an
invasion of privacy.

Clarifying the confusion
At issue is the Federal Communication Commission's 2003 interpretation of a
rule that appears in the Telephone Consumer Protection Act.
The Telephone Consumer Protection Act was written in the early '90s to
restrict telemarketers' use of automated or prerecorded calls. Consumers
called for this law after being hounded by telemarketing calls.
In 2003, the FCC adopted a new rule to give consumers several options for
avoiding those unwanted solicitations.
The rule says no person can initiate "any telephone call (other than a call
made for emergency purposes or made with the prior express consent of the
called party) using an automatic telephone dialing system or an artificial
or prerecorded voice ... to any telephone number assigned to a paging
service, cellular telephone service, specialized mobile radio service, or
other radio common carrier service, or any service for which the called
party is charged for the call."
In updating the rules, commissioners considered the steady rise in
telemarketing calls and the growth of a new type of automatic dialer, the
predictive dialer.
Predictive dialers automatically dial numbers and then transfer the calls to
salespeople or agents if and when someone answers the phone. These are the
devices usually responsible when you get a few moments of silence after
answering the phone before a person comes on the line.
The FCC commissioners decided predictive dialers could be included in the
statutory definition of automatic telephone dialing equipment.
The commission's ruling has members of ACA, the Association of Credit and
Collection Professionals International, saying that they are confused and
fearful of potential lawsuits.
The collectors and creditors insist that the purpose of their calls is not
to advertise or solicit but only to complete a transaction. They say
Congress did not mean to prevent creditors from recovering payments with
this law, and in both 1992 and 1995 the commission stated that the rule did
not apply to calls made on behalf of creditors recovering payments.
More than half of member agencies used predictive dialers last year,
according to ACA.
ACA officials complain that the rule has been expanded and the commission's
previous statements about calls made by or on behalf of creditors have been
discarded.

Benefits of the automated dialing technology
While collectors can't use the automatic dialers to contact you on your cell
phone, they can dial your phone number manually, but they say this would
hike up business costs that would eventually be passed on to the consumer as
additional fees or limited services.
The collectors, creditors and supporters that provided written comments to
the FCC in May say automatic dialers have many benefits for the consumer, as
well as the creditor. They say the dialers protect the consumer's privacy,
inform the consumer of the status of his or her accounts and provide
creditors with an efficient way to keep consumers informed of their
accounts.
"Eleven percent of the cases from our survey were cases where the identity
fraud was discovered when a debt collector or creditor contacted the
consumer," says Rubina Johannes, research analyst for Javelin Strategy &
Research, which reported on a 2006 identity fraud survey.
These collectors and their supporters argue that the calling systems provide
benefits to both consumers and the creditors.
Calling system benefits, according to supporters
Consumer benefits of the calling system:
Eliminates dialing errors. The system maximizes customer's financial
privacy.
Meets government call times. It restricts calls to specific area codes
within the calling times.
Educates consumers. The automatic dialer allows consumers to learn about
their accounts and arrange payments.
Creditor benefits of the calling system:
Efficient and precise. The system makes good use of collection callers' time
and labor, and drops labor costs.
Controls cost of credit for all consumers.
Avoids unnecessary delinquencies and defaults by keeping consumers informed
about their accounts.
Financial institutions use predictive dialers regularly, according to the
American Bankers Association and the Consumer Bankers Association. And they
don't just use them for overdue accounts. They use predictive dialers to
contact customers who have been mailed a debit or credit card that hasn't
been activated to determine if the card was lost or stolen, or to let
customers know that money has been taken out of their checking accounts.
But more and more consumers are using cell phones as their primary or
preferred method of contact, and this has some creditors and collectors
worried. The estimated total number of current U.S. subscribers is more than
215 million, according to the Cellular Telecommunications & Internet
Association, or CTIA.
Six percent of U.S. households use only wireless phones. This trend is
creating a problem for creditors and collectors who say some consumers use
their cell phone numbers on their credit applications.
Verizon Communications' wireless phone unit is the second-largest wireless
provider in the country, with 53 million wireless customers. It supports a
limited order that calls for the commission to make it clear that customers
who give a creditor only their cell phone numbers to contact them regarding
their account have provided "prior express consent" for creditors and
collectors to use automatic dialers.

The company also believes the commission should indicate that the consumer
didn't give prior consent if a creditor or collection agency obtains a
customer's cell phone number through caller ID, a wireless directory service
or other means. This, it says, could alleviate concerns raised by opponents
about accessibility to a customer's cell number.
A disruption of service
Consumer advocates argue that missed payments often occur because of
unforeseen events, such as loss of a job, serious illness or divorce. They
also say creditors and collectors ignore some facts in their petition, such
as the increase in consumer complaints.
These advocates say consumers have complained of abuse and deception from
some collectors' call methods. Consumers had also protested the types of
automatic dialers used.
In 2003, the FCC's Report and Order, In the Matter of Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991, commissioners
noted some consumers were fearful of "dead air" and "hang-up calls" created
by predictive dialers and thought they were being stalked.
Advocates say that the industry doesn't need any more access to consumers
because of privacy, identity theft risks and the potential for other groups
to utilize automatic dialers.
In written comments to the FCC, the National Consumer Law Center gave four
reasons that the ACA's program should be denied.
Reasons that the ACA's program should be denied:
Cell phone companies haven't offered directories of cell phone numbers.

Consumers wouldn't want to be called at inconvenient places, such as
restaurants or in their cars.

Consumers wouldn't see a benefit when automatic dialers use up their
high-cost daytime minutes in areas where they can't receive calls.

Caller identification information can be faked.

The law center also says that the change in the rule would violate
provisions in the Fair Debt Collection Practices Act. The act was designed
to ban abusive practices by debt collectors.
The law center argues that cell phones aren't able to show that the call is
from a debt collector and the call could use up the consumer's daytime
minutes. This coincides with the collection law that says that causing
charges to be made to any person for communications by hiding the real
reason of the communication would violate a rule that says a debt collector
may not use unfair or dishonest methods to collect or attempt to collect any
debt.
The Privacy Rights Clearinghouse fears that allowing debt collectors to use
an automatic dialer may cause other groups to claim that they should be able
to use it, too. In its written statement, it says unwanted calls wouldn't
necessarily be from telemarketers but could come from surveys from charities
and political parties during election seasons
ACA's request for clarification is under review. The FCC hasn't set a
timetable for a decision, but when it does reach a conclusion the
information will be publicly available on its Web site.