Scrambled Signals

Collector, Sep 2008 by Adams, Kristine

A recent court ruling challenges the FCC's declaration regarding prior consent and cell phones

There is no question that cellular phones have become a ubiquitous component to everyday American life. Each day, more consumers are replacing their landlines with cellular phones. According to CTIA, the association for the wireless telecommunications industry, there were 255 million cellular phone subscribers in the United States as of December 2007, representing 84 percent of the total U.S. population. In addition, 15.8 percent of U.S. households have deserted their landline telephone service and now rely exclusively on wireless service. This figure continues to grow each year.

With this shift, many consumers' preferred methods of communication have changed. Today, consumers increasingly rely on cellular phones and e-mail as their primary means of communication, choosing to list wireless numbers on credit applications and electing to receive bank statements, invoices, bills and other important financial information via e-mail.

Yet, while many federal laws have been amended within the past decade to permit the use of such modern technology to communicate with others, the Telephone Consumer Protection Act (TCPA) continues to pose challenges to the credit and collection industry's ability to communicate with consumers.

Originally enacted to curb telemarketing activities, the law prohibited anyone from using random or sequential automatic dialing devices or prerecorded messages to call wireless numbers. The Federal Communications Commission (FCC), through its rulemaking authority under the TCPA, extended the definition of autodialers to include predictive dialers. ACA, along with several other groups, found this interpretation of the TCPA to be overly broad and detrimental to legitimate business practices nationwide.

In 2005, ACA filed a petition for an "Expedited Clarification and Declaratory Ruling" with the FCC to clarify that the wireless number restrictions placed on this technology do not apply to a legitimate business contacting a consumer with whom they have a previous business relationship. After a public comment period and numerous letters of support from members of Congress, the FCC responded favorably on Jan. 4, 2008.

The FCC's declaratory ruling stated "autodialed and prerecorded message calls to wireless numbers that are provided by the called party to a creditor in connection with an existing debt are permissible as calls made with the 'prior express consent' of the called party." In its ruling, the FCC noted that providing a wireless number to a creditor, such as on a credit application, would constitute prior express consent by the wireless number subscriber to be contacted at that number.

Unfortunately, the Northern District of California ruled in May the FCC exceeded its authority in interpreting the TCPA The court determined the TCPA requires such consent must be expressly provided for the particular act of placing an autodialed or prerecorded message call to a wireless number. Through its Legal Fund Committee, ACA has retained the services of Members' Attorney Program attorney David Kaminski from Carlson & Messer LLP in Los Angeles to coordinate efforts with the defense counsel to develop an appellate strategy.

In addition, ACA is working on multiple legislative initiatives to preserve collectors' ability to use autodialers or prerecorded messages to contact consumers' wireless numbers. ACA has identified two strategies to accomplish this goal. The first involves modifying the TCPA directly to eliminate the prohibition on calling wireless numbers using autodialers or prerecorded messages.

Alternatively, amending the Fair Debt Collection Practices Act's time, place and manner requirements might also provide resolution. This would allow consumers to opt to receive calls on their cellular phones.

Both strategies have pros and cons, as they deal with different congressional committee jurisdictions and therefore different key legislators. ACA is in the process of determining the viability of each of these strategies.

Because Congress is averse to addressing an issue that is still navigating through the federal courts, this issue is not likely to gain Congress's full attention until the Ninth Circuit Court provides a ruling on the predicted appeal. Until then, ACAs government affairs staff will continue to educate members of Congress on the critical nature of this issue and the importance of ensuring businesses may continue to contact consumers through the medium of their choice. In addition, several vendors are providing services to identify which numbers are assigned to wireless carriers in order to help companies comply with the TCPA.

Kristine Adams is the government affairs specialist for ACA's Legal and Government Affairs Department.