QUESTION
We service loans on our own
portfolio and want to expand. Our Collection Department needs advice regarding
collection call restrictions. When borrower’s do not have “optimal” loans, we are
concerned they may seek better refinancing elsewhere. We want to keep these
customers in-house, so we leave auto-dialer collection messages when loans are 15-45
days past due, offering potentially better refinancing.
We have been advised we cannot
leave such information on an answering machine because of 3rd party
disclosure. So, we changed the recording to “…. we have important business to
discuss, including potential refinance.”
But now we have been advised that we
should not use collection call recordings for this information.
We think our borrowers may respond
quicker if they receive this information early on and will possibly refinance past
due loans if they can qualify.
Can you provide guidance on the regulatory
compliance requirements?
Also, what are some restrictions?
ANSWER
Direct answer: No. The company may
not leave prerecorded messages that offer potential refinances during a
collection call attempt.
Although other regulations are applicable
within your stated scenario, this particular issue is regulated under the
Telephone Consumer Protection Act (“TCPA”). This Act governs telemarketing
calls, auto-dialed calls, prerecorded call, text messages, unsolicited faxes
and the National Do-Not-Call-List. The Federal Communications Commission
(“FCC”), its parallel, Federal Trade Commission (“FTC”) and other multi-state
laws have a complex set of compliance regulations that covers this broad area.
These rules result in steep penalties imposed on a “per violation” basis, even
if there is no actual injury to a consumer.
Restrictions apply to collection
calls that may include no overt telemarketing. This scenario appears to be a
combination of both a collection call and a telemarketing call. To
combine calls with these two purposes is prohibited by law.
Telemarketing is defined as “the
initiation of a phone call or a message given for the purpose of encouraging a
purchase, a rental, an investment in property, goods or services to any person.”
The FCC has determined that debt collection calls are not the same as
telemarketing calls, as long as none of the definition of telemarketing calls,
by law, is contained within the collection call.
Under the applicable rule, the FCC
has stated that autodialed or prerecorded debt collection calls, to the extent
that they do not contain telemarketing messages, do not require the
consent of the consumer(s) when made to residential wirelines. However, they do
require either prior written or oral consent if made to a consumer’s wireless
number.
Further, the FCC ruled that any
autodialed or prerecorded collection calls to a wireless number must be made
with the consumer’s “prior express consent” if the consumer made their cell
phone number available to their creditor for use in what are considered “normal
business communications”. This would include what a consumer might offer on a
credit application, by letter, or on a phone call to the organization as a
means in which to reach them.
Separately, the FCC ruled that a
non-exhaustive list of other types of calls would be considered “exempt” from
the aforementioned written consent requirement. This includes components such
as research, bank account fraud alerts, and survey calls; as long as they do
not contain any telemarketing messages. All of these rules apply to texts.
An exception would be if the call
to the consumer was manually dialed and does not contain any
pre-recorded message. There are instances where a wired number may be ported to
a wireless number. In these cases, the rule allows a conditional 15-day grace
period for calls made to numbers which have been ported from wired lines to
wireless where the consumer may be charged for the call.
The company is not liable for
violating the prohibition when this situation arises and the call is a voice
call, not knowingly made to a wireless number, and made within 15 days of the
porting of the number from wireline to wireless service. This includes the
provision that the number is not already on the National Do-Not-Call Registry
(NDNCR) or on the company’s Do-Not-Call List. The rule allows the company
to obtain a version of the NDNCR, which can be procured from the Administrator
of the Registry within 31 days prior to the date any call is made, provided a
qualified representative from the company will conduct an internal training
session and will create good written procedures and records that document the
process.
In your reference, the
organization must let the collection attempt remain as such. Separately, if
there is interest in a refinance, we encourage creating a “Portfolio Retention Department”
within the Sales Team. In this area, the company can utilize an appropriate
database to “earmark” certain existing loans with unfavorable characteristics and
solicit them under routine sales business practices.
To ensure fairness to all consumers
and avoid any disparate issues, ensure that there are multiple avenues which
deliver the same types of offers and invitations to apply for refinances to all
existing consumers via websites, letters, campaigns, and routine sales techniques/practices. These sales efforts
cannot be combined in any way with the collection attempt on a past due loan.
Lastly, from a business perspective, consider whether or not a
consumer’s loan, which has gone 45 days past due (i.e., “delinquent”), would be
able to qualify for a refinance. Therefore, telemarketing calls prior to actual
delinquency are best for success with Portfolio Retention Refinance efforts.
Michelle Leigh, CRCM, MBA
Executive Director/Servicers Compliance Group
Director/Internal Audits and Control
Lenders Compliance Group
