Regulating Robocalls and Modern Debt Practices--examining Governmental Responses and Their First Amendment Implications

• Publication year: 2020

Regulating Robocalls and Modern Debt Practices--Examining Governmental Responses and Their First Amendment Implications

Rachel Harrison

REGULATING ROBOCALLS AND MODERN DEBT COLLECTION PRACTICES—EXAMINING GOVERNMENTAL RESPONSES AND THEIR FIRST AMENDMENT IMPLICATIONS

Introduction

When people pick up their phones to answer a call, most individuals hope to speak with someone who is relaying an important message. With the recent influx of robocalls repeatedly dialing phone numbers, more people are becoming increasingly hesitant to accept a call when an unrecognizable string of numbers flashes across their phone screen. In a February 2019 report from the Federal communications commission, the agency reported that YouMail, a private company that collects information on call volume throughout the united States, estimated that upwards of 48 billion robocalls were placed in 2018, with 26.3 billion of those calls being made to mobile phones.¹

In an effort to combat the growing influx of deceptive calls and mitigate the daily annoyance that these calls bring to consumers, the united States congress, the Federal communications commission, and the consumer Financial Protection Bureau have sought to strengthen the regulations and penalties for telemarketers placing these calls and bolster the protections for consumers to prevent receiving these incessant calls.² The Fair Debt collection Practices Act (FDcPA) was passed to eliminate abusive debt collection practices and applies to personal and household transactions.³ As federal agencies have increased their robocall and telemarketing regulations in efforts to protect American consumers from scams and deceptive call practices, debt collectors are increasingly being perceived as scammers. The consumer Financial Protection Bureau (cFPB) has recently begun to respond to this issue by conducting

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proposed rulemaking in order to better clarify permitted debt collection practices.⁴ Congress has also tried to respond to this issue by passing broader robocall statutes, such as the Telephone Consumer Protection Act (TCPA) and the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act), which both delegate authority to agencies to implement measures that better protect American consumers. Yet, regulating debt collectors' communications also raises First Amendment concerns. These Congressional statutes that provide agencies and private entities with the authority to limit and block communications from debt collectors and robocallers could too greatly infringe one's constitutionally protected First Amendment rights.

The gap between permissible debt collection practices and ineffective federal robocall regulations demonstrates a shortcoming in policy-making where more specificity from the federal government is required to help dictate appropriate and effective parameters for legal debt collection practices. In order to properly protect debt collectors and debtors, federal agencies should amend their regulations to provide clearer and more useful rules for debt collectors when they try to recover their debts, while also ensuring that debt collectors are not effectively barred from trying to make good faith contact with the debtor. Additionally, in order to prevent the unconstitutional stifling of speech by debt collectors, Congress should amend its laws to more directly achieve its stated goals without being too over or under-inclusive of barring speech.

This Comment will provide background information on the steps that Congress and federal agencies have taken to try to solve the issues surrounding robocalls and fair debt collection practices, specifically examining the Fair Debt Collection Practices Act (FDCPA), the Federal Communication Commission's declaratory rulings on call blocking, the Consumer Financial Protection Bureau's notice of proposed rulemaking, the Telephone Consumer Protection Act (TCPA), and the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act). This Comment will examine the provisions and shortcomings of these statutes and regulations. Two notable shortcomings include the FCC employing over-broad standards to detect fraudulent calls and pre-emptively blocking those calls from reaching consumers, as well as the Fair Debt Collection Practices Act allowing consumers to cease all communications with debt collectors.

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This Comment will then examine the growing First Amendment concerns surrounding these provisions and apply a First Amendment analysis to the Fair Debt Collection Practices Act and the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act. Under a First Amendment analysis, the FDCPA could fail under a content-based strict scrutiny standard of review and under a commercial speech intermediate scrutiny standard of review, while the TRACED Act may be able to survive an intermediate scrutiny standard of review. The Fair Debt Collection Practices Act will be the first provision analyzed below.

I. Fair Debt Collection Practices Act

A. The Creation of CFPB

Congress enacted the Fair Debt Collection Practices Act (FDCPA) in 1977 with the goal of preventing debt collectors from utilizing abusive debt collection practices against consumers.⁵ In 2010 under the Dodd-Frank Wall Street Reform Act, the CFPB was created and granted concurrent authority with the Federal Trade Commission (FTC) to oversee debt collection practices and enforce the goals and provisions of the Dodd-Frank Act.⁶ More recently in May of 2019, the CFPB decided to take action by issuing a notice of proposed rulemaking that seeks to provide consumers with stronger protections against debt collectors.⁷ The notice of proposed rulemaking highlighted the CFPB's intention to place limits on the number of calls that can be placed to debtors each week, to outline how debt collectors can utilize new technology to reach consumers, and its plan to require debt collectors to provide more information to consumers on how to respond to calls for the collection of their debts.⁸ The notice of proposed rulemaking specifically addresses new communications technology, such as text messaging, emails, and voicemails, that were unaddressed by the initial passing of the FDCPA.⁹ These regulations seek to modernize the FDCPA to address modern needs unique from the debt collection practices at the time of the law's passage.

The passage of the Dodd-Frank Act in 2010 allowed the FDCPA to be adapted to issues concerning consumers and debtors in a modern economy. Prior

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to 2010, the FTC retained a majority of the enforcement role for the FDCPA. The FTC could work in conjunction with other federal agencies whose work related to a party identified to be the subject of an FDCPA enforcement action.¹⁰ The FTC was permitted under the FDCPA to issue advisory opinions on the proper application of the statute, but the agency lacked power delegated from Congress to create new rules and regulations to meet the growing challenges of a constantly modernizing consumer landscape.¹¹ The Dodd-Frank Act created the CFPB and delegated authority to the Bureau to create new rules for debt collection practices.¹² The purpose of the Consumer Financial Protection Bureau is to protect consumers from "unfair, deceptive, or abusive acts and take action against companies that break the law."¹³ The agency's supervisory authority is wide-ranging and includes financial institutions, depository institutions with assets over $10 billion, mortgage-related businesses, pay day lenders, student lenders, and financial companies—including debt collectors.¹⁴

B. Who the FDCPA Applies To

The FDCPA applies directly to the conduct of debt collectors,¹⁵ which includes any act that is taken "in connection with the collection of any debt."¹⁶ In order to qualify as a debt collector, the primary purpose of the actor must be to collect debts.¹⁷ Debt collection agencies are encompassed in the definition of debt collection since their primary business is based on the collection of debts. Under the FDCPA, an individual attempting to collect a debt from a consumer on behalf of the creditor is not necessarily a debt collector.¹⁸ People who collect consumer debt that is not at default at the time of purchasing the debt are not held as debt collectors, but those who purchase debts, such as debts that are part

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of loan portfolios, that are in default at the time purchase are held to be debt collectors for the purposes of the Act.¹⁹

Case law has demonstrated a willingness by the courts to treat individuals as debt collectors under the FDCPA when through their communications with debtors, the caller requesting payment acts as if a debt is in default even if the debt has already been repaid. The Sixth Circuit Court of Appeals in Bridge v. Ocwen Federal Bank²⁰ held that a debt collector includes "any non-originating debt holder that either acquired the debt in default or has treated the debt as if it were in default at time of acquisition."²¹ Through this ruling, the Sixth Circuit placed these debt collectors under the authority and limitations of the FDCPA for merely treating a perceived debt as if it was in default, thus opening debt collectors up to penalty for their mistakes or lack of updated information on the status of a debt.²² Harvesters of phone numbers can also be deemed debt collectors. The Ninth Circuit Court of Appeals in Romine v. Diversified Collection Services, Inc.²³ held that when the Automated Voice Telegram System service obtained debtors' phone numbers and subsequently provided those numbers to creditors and collection agencies, that third party's conduct would be enough to deem the company a debt collector.²⁴ The court relied on the legislative history of the FDCPA and argued that the purpose of the statute is to "limit harassing, misleading, and fraudulent contacts and communications with or about consumer debtors. . . . Most of the 'collection abuses' outlined in

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