Supreme Court Makes Debt Collection Robocalling Illegal (Again)
from the round-and-round-we-go dept
While the US government often makes a lot of noise about their efforts to crack down on robocalls, the reality is they never actually do all that much. While the FCC often goes out of its way to advertise "record" fines levied against smaller companies and scammers, the vast, vast majority of those fines are never actually collected. The Pai FCC has claimed to have made great strides fighting the menace, despite the fact that most of its recent and well-hyped countermeasures are neither new nor effective.
One big reason for our failures is that the government often likes to turn a blind eye to the fact that the biggest and most annoying robocallers aren't scammers, but legitimate companies and debt collectors, many of which call customers (that they know can't pay) upwards of dozens of times a day. In testimony a few years back, consumer advocate Margot Freeman Saunders offered a breakdown of which organizations and companies are the most prodigious robocallers:
The Telephone Consumer Protection Act (TCPA) of 1991 prohibits the majority of robocalls, but Congress, in its infinite lack of wisdom, in 2015 amended the law to add an exemption for debt collectors trying to reach you on your cellphone. The problem is that debt collectors, as Saunders noted in her testimony, utilize many of the same tactics (spoofing, etc.) as shadier robocallers, and are certainly no less annoying and unscrupulous in their tactics. In many instances they're simply attempting to extract blood from a stone, but the government and FCC routinely like to pretend otherwise.
This week, in a bit of good news, the Supreme Court struck down that exemption entirely (pdf), making it illegal again for debt collectors to embrace robocalling.
It's a beneficial outcome to a case that started with less noble intentions. The original case stems from an attempt by telemarketers and political robocalling organizations to strike down the TCPA entirely, under the basis that the 2015 government debt exception unconstitutionally favored debt collection speech over political and other speech. But, flipping that case on its head, the Supreme Court voted 6 to 3 that the 2015 Congressional update to the law "impermissibly favored debt collection speech over political and other speech, in violation of the First Amendment. From the opinion, written by Brett Kavanaugh:
"As the Government concedes, the robocall restriction with the government-debt exception cannot satisfy strict scrutiny. The Government has not sufficiently justified the differentiation between government-debt collection speech and other important categories of robocall speech, such as political speech, issue advocacy, and the like." Government-backed loans affected by the ruling include student loans, home mortgages, veterans' loans, farm loans, and business loans."
In a joint statement, Senator Ed Markey and Representative Anna Eshoo praised the ruling as a win for consumers:
"The court rightly found that government debt collectors aren't entitled to a special exception to the TCPA's ban on robocalling. We applaud the court's decision to side with American consumers, protect our right to privacy from these abusive calls, deter countless scams that target our most vulnerable populations, and ensure that our phones will remain usable."
In short, it's a positive outcome to a case that started with the goal of eliminating robocall restrictions entirely. And it does, albeit not entirely intentionally, a nice job deflating the government's often lazy effort to conflate robocalling harassment exclusively with "scammer."
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Filed Under: debt collection, debt collectors, robocalling, supreme court
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'That... wasn't what we were aiming for.'
Of all the results that could have come from this case I imagine 'good point, we'll gut that exception as well so everyone is treated the same' was the absolute farthest from desired for those that brought it, and the looks on their faces when they realized that not only had they failed to kill the law the court had taken the opportunity to remove the exceptions that had been added must have been priceless.
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Re: 'That... wasn't what we were aiming for.'
You're absolutely right about this. It was a wierd ruling in that the company that was attempting to challenge the law won the case, and yet didn't receive a favorable remedy. The SCOTUS instead delivered a solution that neither party was asking for, and solved a restriction on speech by imposing greater limits on speech.
The real court cases, I think, involve TCPA autodialer restrictions. The industry may get another crack at it in the near future due to circuit court splits regarding other cases, which could potentially nullify the outcome of this one.
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Given how servile our government is to what big business wants, I am surprised there's any restrictions at all.
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Re: Restrictions on government, not the corporations
Notice that the ruling eliminates restrictions on government debt collection. It's possible that corporate middlemen were pocketing most of that money, but I doubt that was the Court's worry.
If you're cynical you might think that this is a way to reduce taxation income (and therefore enlist the Treasury's support to eliminate TCPA at all), or to make it harder in the future for the government to send important communications to consumers and citizens.
Or as Breyer wrote:
Or if you lack ideas on what could be next:
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Re: Re: Restrictions on government, not the corporations
The rulings puts back into place a restriction on government debt collection. Congress exempted the government from some of its own rules back in 2015. Now the exemption is gone.
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Re: Re: Re: Restrictions on government, not the corporations
Yes sorry, that should have been reintroduces restrictions. (Hence Breyer's dissent.)
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Most debt collectors work on a commission basis. If borrowers don't pay, then the collectors go out of business. Very few people take out credit with no intention of paying it back. But unfortunately, sometimes bad things happen to good people, such as job loss, family emergencies, or health problems that prevent them from paying as they wanted. Several of those people get back onto their feet, and become able to pay again. And those people do want to have good credit, and they do want to pay back what they owe. And so many of them do. There wouldn't be an industry if they didn't.
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Re:
You are aware, I assume, that medical debt is itself perhaps the largest category of "overdue" debt? John Oliver (Last Week Tonight) arranged to "forgive" $15 million in debt owed by about 9,000 people, at a cost to him (well, his show, anyway) of $60,000... which indicates how much of that medical debt the industry believes it can recover.
Moreover, because having your debt forgiven/paid off by someone else is considered "income" by the IRS, it is notable that because Last Week Tonight cancelled the debt through a 501(c)(3) charity organization, the "cancellation of debt" "income" was was also forgiven. Upshot? If you want to help reduce zombie debt, do it through a recognized charity.
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Re: Re:
John Oliver also pointed out that the debt sheets themselves are.not always accurate. And people.being harassed might not even owe that debt. As the sheets are sold as is, and all faults. Meaning accuracy not guaranteed.
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Re: Re: Re:
And that term ``sheets'' is important. A lot of the zombie debt is just sold as spreadsheets, no real paper trail at all.
If the person being dunned lawyers up, sometimes these collectors can be put in the position of writing a check instead of collecting. That can be a lot of fun, because they are not used to being pushed around.
With some collectors, however, the trick is to find them. Boiler rooms spring up, guys go through the spread sheets, and then they disappear.
[I am not your lawyer, not licensed in your state, &c.]
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Re: Re:
There are multiple stages to the debt collection industry. Often times debt begins with employees of the original company working in-house to contact customers and arrange payment. Then, it begins being outsourced to collection companies, many of which specialize in collection for different time periods, perhaps 45 days past due, or 180 days.
After some time has passed, debts get sold to debt purchasers. These purchasers may then perhaps do more collections operations, sometimes by yet more outsourced collection companies, or perhaps by lawyers who will attempt to initiate legal action to recover the funds.
For accounts that are still outstanding, they may be sold yet again, probably for pennies on the dollar. In your example, 0.4 cents. But what I'm getting at is that your example is for 3+ year old accounts, after all the other payers have been located, and those remaining are uncontactable/uncollectable. This example skipped over all of the first steps of the account lifecycles. If you don't do that, then you find that the accounts are MUCH more recoverable than 0.004%. You could never acquire a 30 day old account portfolio for that low price.
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Re:
Many so called debts are actually a scam.
Others involve outrageous interest.
The worst are payday loans.
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