The Collections Quandary: Tripped by a Cell Phone No More

Americans are unplugging from their land-based telephones in increasing numbers – and, with do-not-call regulations, it’s raising concerns for collections professionals.

According to a recent report from the Center for Disease Control’s National Health Interview Survey (July-December 2008), 20.2% of US households are considered wireless-only, and another 14.5% of American homes have landlines, but use cell and mobile phones almost exclusively.  Wireless numbers always have been a concern for creditors and collection professionals, but now it’s getting even more complicated.

A number in a database, which might have been indicated as a residential home number, or even previously recorded as a landline, indeed may have changed to a cell phone.  It is no longer sufficient to screen for wireless-only exchange blocking, but to supplement such screens with those that have “ported” from landline to cell. An available commercial file of such numbers now tallies more than 2.6 million lines in the U.S. alone (disclosure, IMS offers such a file with a date stamp which can be helpful, and also offers wireless identification blocks), a number that grows daily (and updated in the IMS database file by 500 daily).

Certainly, as millions of individuals abandon their residential landlines by porting them to wireless service, the ability to call such numbers for debt collection purposes has become a dicey situation.  In the U.S., collectors — both in creditor organization and employed by third party agencies acting on their behalf — are already subject to the requirements of Fair Debt Collection Practices Act (FDCPA), which prevent harassment and abuse, false representations and unfair means of collecting debts from individuals.  But they are also subject to the Telephone Consumer Protection Act (TCPA), and this is where additional challenges arise.

Though the TCPA exempts calls that inform consumers when a bill is overdue and when prompt payment is required, the law does have restrictions on such activities that, too, are enforced when it comes to specific types of telephone-dialing equipment.  The law specifically prohibits using predictive dialers, auto-dialers and pre-recorded message players when contacting cell phones of individuals responsible for payment, when the call is paid for by the recipient, and when no “prior express consent” (permission) is granted by the called individual.

FCC ruling in 2008 meant to clarify regulations…

A January 2008 ruling by the Federal Communications Commission shed further light on such restrictions, but not without controversy which I’ll elaborate on in a moment.  In the ruling, the FCC stated that auto-dialed and pre-recorded calls to wireless numbers are permissible when there is “prior express consent” of the called party – but just how is such prior consent obtained?

Such consent was said to exist only when the consumer, who is the debtor, voluntarily provides his or her cell phone number to the creditor during the course of a transaction which results in the specific debt in question.  The consent could be verbal, written, and provided on an application for credit, with each and every instance of consent documented for potential future retrieval.

Further, consent does not include numbers “captured” by automatic number identification or caller identification, numbers recorded by third parties who received permission from the consumer to call for another creditor, and – of course – any wireless number where an individual has expressed a request not to receive any calls at that number.