The Use of Robocallers to Collect Debt

Congress has recently passed a budget bill that includes a provision to allow debt collectors to used robocall technology to contact borrowers of federal loans. Robocalls either use a technology with the capacity to autodial or utilize a pre-recorded or artificial voice. The provision in Section 301 of the Budget Act will allow loan servicers and other collectors of federal loan debt to use robocalls “to collect a debt owed to or guaranteed by the United States.” This provision in the new budget bill repealed the advanced consent requirement for collectors of debt that is owed to or guaranteed by the federal government. While student loans are the primary focus of this provision, it is possible that other types of government-based debt such as back taxes and Federal Housing Administration loans.

This change comes in the wake of tightened rules implemented by the Federal Communications Commission and the Consumer Financial Protection Bureau on the use of robocall technology by debt collectors. In June, the FCC adopted a proposal to protect consumers against unwanted robocalls and spam texts. The proposal includes several clarifications including empowering consumers to revoke their consent to receive robocalls and robotexts and allowing consumers to use robocall-blocking technologies. The robocalls are among the biggest sources of consumer complaints. In 2014, the FCC received over 251,000 complaints from consumers about automated calls. In July, the CFPB settled with Discover Financial Services after the company placed more than 150,000 calls demanding payments to private student loan borrowers’ cell phones at inappropriate and inconvenient times.

Nearly 41 million Americans have federal student loans, and about 6.9 million borrowers were in default as of June 30, 2015. Section 301 of the budget bill removes the current requirement for a caller to have the consent of the called party before making autodialed or prerecorded calls for the purpose of collecting debts owed to or guaranteed by the federal government. It also removes the ability of the called party to stop these unwanted calls from reaching their cell phones or the cell phones of third parties. The Department of Education has argued that using robocall technology can help prevent student loan borrowers from defaulting by reminding borrowers to make payments. However, consumer groups have pointed out that student loan servicers, such as Navient and Nelnet, could use robocall technology to harass students even before the loans go into default. It can be argued that there are better ways to assist students struggling with loans than to harass them into making payments. The focus should be on assisting these borrowers in making payments and keeping them from defaulting rather than adding to their stress with oppressive robocalls. Additionally, the borrowers should be given the option as to whether they would like to be reminded automatically as to when their payments are due.

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