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To Call or Not to Call: the NPRM's Proposed Call Frequency and Time/Place Limitations

In this article, we attempt to dissect and explore the Consumer Financial Protection Bureau's proposed call frequency and time/place limitations in the recently-released debt collection NPRM.

Proposed Call Frequency Limitations

First, let's tackle the CFPB's proposed call frequency limitations. Section 1006.14(b)(2) prohibits attempting to call (note the use of the word "call," as opposed to "communicate with") a consumer about a debt more than seven times within seven consecutive days. Note that this portion of the proposed rule addresses only call attempts – successful communications will be discussed next.

The proposed call attempt limitation would apply on a per debt basis. This means that if a consumer has three separate debts, the proposed rule would permit up to a total of 21 call attempts—seven per debt—within a consecutive seven day period, according to the commentary to Section 1006.14(b). However, in the context of a consumer from whom a collector is attempting to collect multiple debts, accounting for call attempts per debt can become a bit muddled. The commentary suggests that if a collector intends to discuss (or would intend to discuss) multiple debts in the event that the consumer responds to a call attempt on any one account, the collector would need to count those attempts across all of the accounts that would or could be discussed by the collector. So, if a collector wishes to be able to place up to seven call attempts on each account, it will need to develop ways to demonstrate that its agents would not discuss any other debts in the event the consumer answered the call. From a practical perspective, perhaps that could be accomplished without too much fuss if a collectors assigns different debts to entirely different collection teams but, in reality, I suspect that if a consumer wants to discuss paying other debts during a call that was not placed on those accounts initially, a collector is likely to engage in that discussion and attempt to resolve as many debts as possible. As a result, the de facto impact of the proposed call attempt limits may end up functioning on a per consumer basis in some instances.

However, it is important to note that the proposed call attempt limitation changes significantly when student loans are involved. Rather than applying the call attempt limit on a per debt basis when attempting to collect a student debt, the Bureau proposes that the call attempt limit apply to all debts that were serviced under a single account number at the time they were placed with the collector. This means that if the student had three loans, but they all were serviced using the same account number, then the collector is limited to seven call attempts total on the combined group of accounts. This is an important distinction, and it is important that student lending participants take it into account to avoid potential violations.

It also bears noting that while the proposed call attempt limitation does include limited content messages (i.e., messages that the NPRM states would presumptively not constitute collection communications under the FDCPA – which we will cover in more detail in future blog posts), the proposed rule excludes from its counts any communication made by text or email, call attempts that do not actually connect to the dialed number (i.e., a busy signal or reached a disconnected line), and call attempts to a number that a collector subsequently learns does not actually belong to the consumer it was trying to reach.

Thereafter, once a collector successfully contacts the consumer, there is an additional, mandatory seven-day waiting period before the collector can resume any further call attempts. The date of the successful communication serves as the first day of the seven-day waiting period. The proposed rule states that a "successful contact" includes both actually speaking to the consumer and leaving a message (other than a limited content message) for the consumer. The Bureau further cautions that collectors should remain mindful that a location call or call attempt that does not immediately reach the consumer can become a successful contact if the end result is that contact is made with the consumer.

Finally, the Bureau remarks that calls placed in response to consumer requests for information or a return call are not subject to the call frequency limitations described above, as a consumer can consent to additional calls.

Our read of this NPRM provision suggests that the Bureau is working to transition collection efforts away from relying on outbound calls to consumers, and is instead encouraging consumer contact through other, less intrusive channels. The Bureau makes a number of statements expressing concern that consumer phones may ring repeatedly, day after day, and indicating that it wants to avoid that type of disturbance. However, a number of industry participants already have expressed concern that the Bureau's one-size-fits-all approach to limiting call attempts will not work well across all debt types and consumer profiles. Some industry groups already have announced plans to provide the Bureau with additional data to support industry claims that this approach will cause disproportionate impacts on certain areas of debt collection.

It also is curious that under the NPRM, ringless voicemails that result in a collections message being left for the consumer also are deemed to be successful communications that trigger the seven-day waiting period. This seems somewhat out of place, given the goals of this portion of the NPRM (which appear aimed at reducing intrusive telephone calls that ring a consumer's phone). In that regard, a ringless voicemail seems more akin to the types of communications that the Bureau proposes to exclude from the contact frequency limitations (i.e., email and text) because a consumer can retrieve and review a ringless voicemail at a time of the consumer's choosing, using their phone, without hearing an intrusive ring when the message is transmitted.

In sum, we anticipate that the Bureau's proposed contact frequency limitations will generate a great deal of additional commentary and, hopefully, discussion with the Bureau to determine if there is a more appropriate way to achieve the dual goals of protecting consumers from abuse and effectively assisting consumers in resolving their debts.

Proposed Time and Place Restrictions

Second, let's look at the NPRM's proposed time and place restrictions that are broadly applicable to all forms of communication – calls, messages, texts, and emails. For example, Section 1006.6(b) of the proposed rule prohibits collectors from contacting consumers at unusual or inconvenient times or places. The proposed rule then provides that attempting to contact a consumer at the consumer's work phone number or work email is presumptively inconvenient. (Future blog posts will explore the narrow circumstances when such numbers can be contacted.)

Similarly, attempting to contact the consumer before 8 a.m. or after 9 p.m. in the consumer's time zone also is presumptively inconvenient. If the consumer's time zone is unknown to the collector (perhaps because the consumer's cell phone and zip code are different), the NPRM would require the collector to only contact the consumer in a window that is simultaneously compliant in all potentially applicable time zones. Since consumers commonly retain their cell phone numbers as they move around the country, this could present challenges if it significantly decreases the windows within which collectors can contact consumers to assist those consumers to resolve their debts. A communication is deemed "sent" purposes of compliance with these time window requirements based on when the collector sends the communication to the consumer and not when it is actually received by the consumer.

In addition to these prohibitions, the proposed rule would further prohibit collectors from contacting consumers at other times or places that the collector "knows or should know" are inconvenient. The Bureau provides a number of examples in the NPRM's official commentary in an attempt to illustrate this standard and what language is "sufficient" to trigger the collector's knowledge that the contact is inconvenient.

For example, if a consumer states that he or she cannot talk "at this time of day," "during these hours," "during school hours," or "this is not a good time," at that point, the collector is deemed to know that further contacts at the location or during that window of time are inconvenient for the consumer, and therefore, prohibited. However, this standard could prove challenging because it turns on the collector's understanding of the consumer's statements during a communication and whether they "sufficiently" convey that the time or place is inconvenient. What does "during school hours" mean? How does the collector understand if that means the consumer is in school during the day, at night, only three times a week? What does "at this time of day" mean? Does it mean at the time the collector called until the top of the next hour? A three-hour window?

As we have seen in litigation involving the FDCPA, TCPA, and other similar statutes, attempting to interpret subjective consumer statements and directions in order to avoid potential liability under amorphous standards like "should know" is, at best, often challenging and inconsistent. For one, how do you calibrate everyone's interpretation of what the consumer said? What if the consumer hangs up and clarification is needed to understand what the consumer actually wanted? It is extremely difficult to implement concrete, clear training standards around these types of subjective, vague legal standards, and we anticipate comments on whether the "should know" standard is appropriate or if more definitive standards and guidelines are necessary. Indeed, offering more specific guidance could help consumers and collectors alike by allowing consumers to understand how to clearly convey their wishes while reducing potential (and costly) litigation risks for collectors.

Similarly, the proposed rule states that a collector should know that any previously identified inconvenient times or places made known to the creditor or a prior collector by the consumer are inconvenient and prohibited absent the collector receiving consent directly from the consumer to resume contacts at those previously identified inconvenient times or places. This imposes a substantial information transfer requirement as a debt is assigned or otherwise transferred throughout the collections process. As a result, increased demands for contractual representations and warranties to reduce potential risk seem likely to protect against potential errors in recording and/or transferring such data to the current collector.

Under the NPRM, consumers retain the ability to allow calls at times or places that are inconvenient with proper consent. However, the NPRM is clear that consent to receive calls at inconvenient times or places cannot be obtained by the collector in the same communication that led to the collector learning of the inconvenience.

The NPRM also suggests that collectors are barred from contacting a consumer at a work email or work telephone if the collector knows that the employer bars its employees from receiving such communications at work. As currently stated, this requirement seems to demand that collectors maintain an internal database of employers who prohibit such communications and then scrub all emails and phones numbers against that list (as well as review their entire collections file to ensure they know where the consumer works when such information was included in the file received by the collector, something the Bureau suggests would be appropriate to do). This seems to pose a daunting compliance task and may be superfluous in that the Bureau already states that contacts at work numbers and work emails are presumptively inconvenient. Or, perhaps the Bureau means exactly what it says here – that even if a consumer consents to being contacted at work, if the collector knows the consumer's employer does not allow its employees to receive such communications from other collection experiences or otherwise, the Bureau expects the collector to protect the consumer from violating the employer's prohibition. Clarification is needed on this point – do consumers have the right to consent to communications at work if that is their preference in order to resolve their debt or not?

Finally, it is not clear that Section 1006.6(c)'s statement that a consumer's cease and desist request or refusal to pay request must be submitted "in writing" is something that should be accepted at face value. On the one hand, through this statement, the Bureau likely is attempting to ensure that collectors are aware that written cease and desist requests can be delivered through available electronic channels (text and email), as well as by mail. But collectors will be hard pressed to justify disregarding a verbal request by phone for a cease and desist because not honoring such a request not only risks a violation of the FDCPA's various prohibitions against harassment and unfair treatment, but also risks TCPA and potential state law violations. Alternatively, perhaps this section supports the argument that a verbal statement that merely states "stop calling me" is not be sufficient to support an argument that the consumer requested a cease and desist, as opposed to simply a stop calling request specific to that number. This remains yet another of the many areas that are unclear and likely will fall to courts to resolve in future litigation.

We look forward to working with our clients and the collections industry to address these and many other areas in the coming months.

Copyright © by Ballard Spahr LLP

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About this Author

Stefanie Jackman, Ballard Spahr law firm, Partner, financial services institutions lawyer
Partner

Stefanie H. Jackman devotes her practice to assisting financial services institutions facing government investigations and enforcement actions, as well as defending them in individual and class action lawsuits. Ms. Jackman regularly handles matters arising under an array of federal and state consumer financial laws, including UDAP/UDAAP statutes, FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA. Ms. Jackman represents clients across the financial services industry, including banks and nonbanks, mortgage banking lenders and servicers, debt collectors and buyers, third-party...

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