Reed Smith Client Alerts

Anyone paying attention to goings-on in Washington last week might have heard a loud, bipartisan sigh of relief when both the House and the Senate passed a budget deal that temporarily averted another government shutdown or even a near-term showdown, and could possibly clear the way for a little less gridlock – at least until after the 2016 election. While Republicans and Democrats were almost breaking their arms patting themselves on the back, however, a barely noticed provision was slipped into the bill that not only stinks of hypocrisy, but also demonstrates just how nicely Members and the Administration can play when they smell money.

Buried in the budget bill is a provision that would allow robocalls to cellphones (the very calls that Congress sought to curtail in the TCPA) for the collection of debts owed to the government, such as in the case of unpaid student loans. Ironically, it is those very same kinds of calls that, when made by or on behalf of banks or other lenders, have probably generated the most – and certainly the largest – lawsuits under the TCPA provision establishing a private right of action.

To be fair, some Senate Democrats blasted the provision, such as Sen. Claire McCaskill, D-Mo., who expressed distain for what she referred to as “this nutty path,” and commented during a Commerce Committee hearing last week that “we should be getting rid of robocalls, not empowering the federal government to make them.” Others, including Sen. Richard Blumenthal, D-Conn. and Sen. Ed Markey, D Mass., agreed. Indeed, Sen. Markey is reportedly preparing a “Hang Up Act” designed to repeal the robocall provision. His bill could apparently be filed as early as midweek.

The White House, however, known to support ever-more government enforcement of the TCPA, released a comment that would have been funny were it not for how the TCPA has harmed legitimate businesses just trying to do their jobs. “This provision clarifies that the use of automatic dialing systems and prerecorded voice messages is allowed when contacting wireless phones in the collection of debt owed to or granted by the United States …In an age where more and more Americans rely on cell phones, often exclusively, it is important to be able to alert those who owe money to the government if they are in danger of default, which can harm their ability to secure credit long term. In the case of Federal student loan debt, if loan servicers are able to contact a borrower, they have a much better chance at helping that borrower resolve a delinquency or default.” This statement sounds strikingly similar to (unsuccessful) arguments made by the American Bankers Association and others when arguing to the FCC for more flexibility in allowing robocalls for debt collection purposes.

Before we all start punching walls, though, let’s try to think strategically. It is noteworthy that the budget bill provision at issue reportedly compels the FCC to develop regulations, in consultation with Treasury, within nine months of the bill’s enactment to limit the number and duration of these soon-to-be-permitted robocalls to collect government debt. Shortly after the President signs the budget bill into law, we should, therefore, expect to see the FCC announce a rulemaking to begin the process of developing regulations. Undoubtedly, the Commission will bring consumer groups into the tent as it moves forward to implement Congress’ mandate. Shouldn’t the banks, other financial institutions, and debt collectors also have a seat at the table, and try to participate in fashioning a safe harbor that would work for everyone?


Client Alert 2015-310