Collecting a debt is often more complicated than it may appear, especially with the glut of state and federal regulations impacting the debt collection industry. Two of the most prominent debt collection regulations affecting the industry are the Telephone Consumer Protection Act and Fair Debt Collection Practices Act, both of which have seen enforcement expansions in recent years.

debt regulation

Below is a brief summary of how the regulations impact debt collectors, as well as recent changes that may affect their enforcement.

Telephone Consumer Protection Act

The Telephone Consumer Protection Act of 1991 (TCPA) regulates telephone solicitations calls, auto-dialed calls, pre recorded calls, text messages, and unsolicited faxes.

The act prohibits making a non-emergency call using an “automatic telephone dialing system” (ATDS) and without the recipient’s prior express consent to:

  • Cell phones, paging services, or any service “for which the called party is charged for the call” or
  • Residential telephone lines using an artificial or prerecorded voice to deliver a message, unless one or more exemptions apply

The TCPA defines an ATDS as equipment that has the capacity to:

  • Store or produce telephone numbers to be called, using a random or sequential number generator and
  • Dial such numbers

Impact for debt collection

“Prior express consent,” required for any calls to cell phones regulated under the TCPA, does not have a clear statutory definition, but is instead defined through numerous court rulings and decisions by the Federal Communications Commission (FCC).

In general, debt collectors have obtained consent if the recipient provided his or her wireless number to the creditor and “such number was provided during the transaction that resulted in the debt owed.”

Although the TCPA does not explicitly discuss the topic, a number of courts have ruled that consent may be revoked by the recipient at any time, either verbally or in writing.

If an organization violates the TCPA, the act creates a civil cause of action allowing the recipient to recover damages from the organization in the amount of the actual monetary loss suffered by the recipient or $500 for each violation, whichever is greater. If the violation is found to be willful, the recipient may recover three times the regular damages.

In addition, the FCC and state attorneys general may also enforce the TCPA. However, before the FCC can impose monetary penalties under the act to a party without an FCC license or authorization, it must first issue a citation warning the party of as much.

For more information about debt collection defense, send us an email here or contact us 718-674-1245.