Earlier this summer, the Consumer Financial Protection Bureau issued a ruling against Discover Bank to the tune of $18.5 million. The CFPB found Discover Bank to be in violation of the Consumer Financial Protection Act in three instances and in violation of the Fair Debt Collection Practices Act in one...for a mistake that might catch other debt collectors unaware.
Basically, debt collectors were accused of contacting debtors by cell phone outside the hours of 8am to 9pm in the time zone of residence. Here’s why it can be tricky: it takes quite a bit more work to discern where a debtor is actually living, especially since mobile numbers can stay with a person even as they move around the country. This is typically the case for students going off to school (many of the debts in the Discover case concerned student loans.) Instead of relying on the area code of a cell number, debt collectors need to compare zip codes and any other helpful information from billing or collection statements to determine where a debtor is actually residing. One of the unintended consequences of a ruling like this - and a helpful tip moving forward - is to ensure that any cell contact with a debtor occurs between the safe hours...in whatever time zone they might be living in. This clearly increases the burden of collection agencies to avoid TCPA and FDCPA violations.
In the Discover case, the violations of the CFPA were as follows:
- “Unfair and deceptive acts and practices relating to Respondent's failure to furnish clear information regarding the student-loan interest consumers paid, in violation of§§ 1031(a) and 1036(a)(1)(B)”
- “Unfair acts and practices relating to Respondent initiating collection calls to consumers at inconvenient times, in violation of §§ 1031(a) and 1036(a)(1)(B) ofthe CFPA, 12 U.S.C. §§ 5531, 5536(a)”
- “Deceptive acts and practices relating to Respondent overstating the minimum amount due in student-loan billing statements, in violation of§§ 1031(a) and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)”
The violation of the FDCPA related to “collection activities regarding defaulted student loans it acquired.” You can read the full text of the CFPB ruling here.
With that in mind, here are two more cell phone violations for debt collectors to avoid:
- Continuing to make phone calls after receiving notice of a lawsuit regarding debt collection calls. Hard to believe, but this actually happened in a Time Warner Cable case regarding TCPA violations earlier this year! In short: TWC collectors placed 74 calls to a consumer after being served a lawsuit because the cell owner was not the person who owed a debt. This case is an excellent example of a company not having proper processes in place to input valuable information (namely, that the name associated with the cell number was incorrect).
- Calling a debtor who has provided his/her number, but not during the transaction that resulted in a debt owed. In the case of Nigro v. Mercantile Adjustment Bureau, Mr Nigro had provided his cell number during a call to shut off a deceased relative’s utility account. He then continued to receive phone calls from the collection agency. While Mr Nigro initially lost his case, the appellate court reversed the judgment after FCC clarification, because the cell number was provided after the transaction that resulted in a debt (when the deceased relative initially set up the account).
As always, the legislative landscape is constantly changing for debt collectors and collection agencies.
