Could the CFPB Help Stem the Tidal Wave of TCPA Lawsuits?

Patrick Lunsford

For the past month, the debt collection industry has been abuzz over the Consumer Financial Protection Bureau’s (CFPB) Advance Notice of Proposed Rulemaking (ANPR) for debt collection. While the stated purpose of new rules is to update the aging Fair Debt Collection Practices Act (FDCPA), there have been some clues that the ARM industry might find relief from a surge in lawsuits claiming violations of another law.

As we noted in the last issue of Know Your Debtor, individual and class actions brought against debt collectors under the Telephone Consumer Protection Act (TCPA) have been growing rapidly. Not only are TCPA cases more attractive to plaintiffs’ attorneys, market forces are driving actual violations of the letter of the law.

Mobile phone use in the U.S., as with the rest of the world, has exploded in the past decade. The TCPA sits at an uncomfortable intersection between a technology that is critical to consumers – cell phones – and a tool that is critical to collection operations — automatic dialers.

The TCPA is enforced by the Federal Communications Commission. So how does the CFPB fit into the equation?

In its ANPR announcement, the CFPB made a point of noting that one area of rule reform it would be exploring is technology. In fact, the Bureau’s Director, Richard Cordray, said in his press conference, “Updating the legal framework to protect today’s consumers and to allow fair and appropriate use of modern technology is a high priority for the Consumer Bureau, which motivates this Advance Notice of Proposed Rulemaking.”

Other CFPB officials went even further. On a conference call with reporters the day before the release of the ANPR, one senior CFPB official noted that there is a need to include new communication technology in debt collection rules, using cell phones as a specific example.

There have been other signals from the CFPB that the group has done its homework on the issue of using autodialer technology to contact cell phones. In a recent insideARM webinar on TCPA compliance, ARM defense attorney David Kaminski said, “In my direct communications and meetings with CFPB personnel, they understand the issue with the TCPA. They realize that companies, businesses, the debt collection industry has to use automated telephone technology in order to contact people. You can’t contact people in the volume that you need to with the old PBX phone, just by dialing ten digits.”

It remains to be seen what impact new debt collection rules would have on a law designed to protect consumers from telemarketers. There is also a question of inter-agency cooperation between the FCC and the CFPB. The FCC can issue guidance bulletins on the TCPA; indeed, debt collection industry trade group ACA International joined the U.S. Chamber of Commerce recently in directly asking for clarification on autodialer use. But how would it react if another agency passed a rule that seems to trump its authority?

When can the ARM industry expect movement on the issue? The good news here is that the CFPB has shown the capacity to move quite quickly. The comment period for the ANPR is open through mid-February 2014. After that, the CFPB is expected to start writing rules.

The first set of rules will no doubt focus on creditors’ responsibilities under the FDCPA. The CFPB has already signaled those set of rules are up first. But there could be provisions to exempt creditors from TCPA restrictions in the first wave, and those rules are sure to apply to collectors.

Regardless, the CFPB will probably move quickly on new rules. While most will focus on improved protections for consumers in the form of restrictions for collectors, one needn’t read between the lines to see that a communication technology update will be included in new rules. Collection operations are sure to welcome the updates.

This article originally appeared in the latest issue of Know Your Debtor, a free quarterly newsletter focused on the U.S. consumer environment. Make sure you’re registered to receive insideARM’s newsletters on your User Profile page.