The Telephone Consumer Protection Act (TCPA) is one of the most talked-about and amended pieces of consumer protection legislation in the United States. Enacted in 1991, the TCPA, at its core, restricts the making of telemarketing calls and the use of automatic telephone dialing systems (ATDS) and artificial or prerecorded voice messages.
But understanding why it was enacted, who it targets, and how it impacts the receivables management industry is vital for every collection agency and organization operating in the accounts receivable management (ARM) field.
A Brief History Of The TCPA
The TCPA is an amendment of the Communications Act of 1934, which created the Federal Communications Commission (FCC). The TCPA has been amended nearly three dozen times since it was approved by Congress and President George H. W. Bush. The TCPA now covers unapproved SMS texts and faxes.
While collection agencies were not initially held to TCPA regulations, further amendments and court rulings of the bill have made it clear that all organizations must obtain written consent to contact consumers, regardless of industry. Collection agencies, however, have a unique way around “prior express consent,” as various rulings have indicated that collection agencies have gained consent if the consumer gave his or her telephone number to their original creditor.
This major TCPA “loophole” has been challenged in court numerous times and has even drawn the eyes of the Consumer Financial Protection Bureau’s (CFPB) enforcement of the Fair Debt Collection Practices Act (FDCPA). While there has been no official ruling suggesting that collections do not have consent in this manner, the TCPA has been amended to allow any consumer to opt-out of all calls, texts, or faxes regardless of prior consent.
In general, the TCPA does the following:
- Prohibits organizations from calling residences before 8 a.m. or after 9 pm, local time.
- Requires organizations maintain a company-specific “do-not-call” (DNC) list and must honor the list for 5 years.
- Requires organizations honor the National Do Not Call Registry, enacted in 2013.
- Requires organizations 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 or entity may be contacted.
- Prohibits unwanted communications to residences that use an artificial voice or a recording.
- Prohibits autodialed calls to those who have not given consent.
Should these be broken, a consumer may sue the organization for $500 or to recover any financial loss—whichever is greater—and may sue up to $1,500 should the TCPA be broken multiple times.
The TCPA and The Receivables Industry
The major turning point of the TCPA for the receivables industry was a July 2015 FCC order. As the CFPB amends the FDCPA, the FCC has altered the TCPA to be a more general unwanted communications ban, rather than have a telephone focus.
In 2015, the FCC changed two key pieces of the TCPA that impacted the ARM industry:
- The FCC included text messages to fall under the TCPA’s definition of “calls.” This change allowed for more regulatory oversight over text messaging in the ARM industry and opened the doors for the CFPB to alter the FDCPA under Regulation F in late 2021.
- Allowed consumers to “revoke the right of consent” to receive calls and text messages at any time, regardless of accepted prior consent. Instead of being granted overall consent due to the nature of their unpaid accounts, consumers since 2015 may opt out of all texts and calls with a letter or by placing themselves on the Do Not Call national registry.
With these two changes and updates to the FDCPA, ARM industry agencies are blocked from most unapproved communications with consumers. Collection agencies are still allowed to contact consumers with live representatives under the TCPA but run into restrictions on when, where, and how they can contact them under the FDCPA.
Landlines may be called using an ATDS without ‘express prior consent’ in a handful of cases, but cell phones may not. Under the TCPA, cell phones are always prohibited from all unapproved communications.
After the 2015 ruling, collection agencies operating on behalf of federally-backed debts, like student loans, were not subject to TCPA regulations. In 2020, the Supreme Court of the United States struck down that extended provision.
While the TCPA is a straightforward piece of legislation that blocks unapproved communications from ATDS and prerecorded systems, ensuring your organization is operating compliantly while also acknowledging other ARM industry regulations like the FDCPA can be confusing. It is recommended that every receivables organization have a compliance director or officer to ensure the organization is operating within the confines of all ARM industry regulations.
To learn more about TCPA rules and procedures, visit the FCC’s website. For more information on the rules and regulations surrounding the ARM industry, visit Receivables Info. Want to learn more about financial literacy? View RI’s Money Chat series.
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The information contained in this article is meant to serve as general guidance for entry-level to mid-level ARM industry professionals and is not meant to serve as comprehensive business, legal, or financial advice.