Will FCC Regulations Damage Reputable Debt Collection?

You’ve loaned someone money and they won’t pay it back. It’s a sad but familiar story; research shows total household debt in the US is well over 13 trillion dollars.

If you’re in the debt collection business, you know that household debt isn’t going anywhere; the national aggregate amount is expected to continue to increase through 2022 at a minimum.

Many collection operations use automatic dialing technology to assist with the process, especially for simple functions like bill payment reminders. This can be done in compliance with federal and industry regulations by segmenting contacts who can be autodialed, and those who must be called manually. But increasingly, scammers and other bad actors have been making non-compliant robocalls.

That said, new regulations from the FCC may curtail the way that businesses use automatic dialing technology to reach out to people. Here’s why legitimate debt collectors need to worry.

Robocalls Have Poisoned the Well for Reputable Businesses

Contrary to popular belief, the accounts receivables industry has not created the current situation that may prevent it from using robocalls. Over the past 10 years, consumers have been inundated with a tidal wave of robocalls from spammers, predatory lenders, and scammers trying to lure them into swindles that result in identity theft.

Charlatans posing as the IRS use Voice-over-IP for “Caller ID spoofing” and other dishonest tactics that have made answering the phone risky and unbearable for most consumers. In fact, according to the FCC, Caller ID spoofing is often the key to making robocall scams work. Generally, Caller ID services permit the recipient of an incoming call to know the telephone number of the calling party, and in some cases a name associated with the number, before the recipient answers the call. But Caller ID information can be altered or manipulated, i.e., spoofed, so that the name or number displayed to the called party does not match that of the actual subscriber or the actual originating number.

On the surface, the quest for transparency appears to be in everyone’s best interest. But sweeping legislation against all robocalls poses a threat to businesses that depend on this technology for legitimate uses.

First, let’s talk about the scale of the problem. This year, 45% of calls – nearly one in two calls that you receive on your cell phone – are expected to be spam. That works out to billions of calls – and consumers have lost over one billion dollars by falling for scams perpetrated by fraudulent callers. What’s more, the high rate of fraud has made it relatively unlikely that any individual will answer a call from an unknown number.

To combat this problem, telecom operators have embraced standards like STIR and SHAKEN to make it impossible for scammers to use VoIP spoofing in order to appear as though they are calling on behalf of a legitimate business or government agency. This solution would not affect debt collectors much, but another proposal would have drastic consequences.

If the technological solutions don’t work, the FCC is willing to cut the Gordian knot by enacting default call blocking – which has a two-fold implication. For one, it will allow carriers to block nebulously defined “unwanted calls” by default. It may also allow consumers to block all calls from numbers not on their contact lists. In short, this would disrupt the business model for many industries, including debt collection. And further implications include calls from neighbors and even schools and hospitals potentially being blocked.

How Can the Debt Collection Industry Respond to Call Blocking?

Obviously, it would be much better for the debt collection industry as a whole if carriers rolled out STIR and SHAKEN as opposed to forcing the FCC’s regulatory hand. How can they do that?

  • Be Good Corporate Citizens
    The FCC already has several well-defined regulations about when and how debt collectors can call a customer’s cell phone via an autodialer. In particular, debt collectors cannot call consumers without consent. Under the standard provided by the Telecom Consumer Protection Act, this means that they must have put their phone number on the load application related to the debt that you are trying to collect. If you can prove that you’ve been adhering to that standard, then you can make the case that it’s unfair to let consumers block your calls entirely.
  • Work with Telecoms
    STIR and SHAKEN is the way forward, but there’s no agreed-upon framework for implementation. In other words, if a consumer is receiving a call from a verified non-spam number, what should it look like? As an industry that makes heavy use of phone calls and caller ID, your input would no doubt be valuable.
  • Advocate for a Middle Ground
    A complete ban on automatic calling would damage many industries, not just debt collectors. Work with other industry associations to adopt voluntary restrictions or regulations that would stop short of a total ban.

New restrictions on the use of autodialers, on top of years of evolving regulations, may feel like getting kicked while already being down for some in the collections industry. Debt collectors (and the businesses they represent) need to help regulate robocalls, in order to limit the disruption to the industry caused by the bad behavior of scammers and spammers.


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