The Bipartisan Budget Act of 2015, recently signed into law by President Obama, includes a significant amendment to the Telephone Consumer Protection Act (“TCPA”) regarding the collection of federally-backed debt. The amendment, effective November 2, 2015, specifically exempts calls made “solely to collect a debt owed to or guaranteed by the United States.” It amends 47 U.S.C.227(b) to exempt government backed debt and allows for the FCC to promulgate rules limiting the number and duration of calls made under that exemption.
HUD guarantees its loans with the full faith and credit of the United States (Sec 5308 (f)). FHA, VA, RD (Rural Development), and PIH (Public and Indian Housing) mortgage loans are federally backed, as are Ginnie Mae Mortgage Backed Securities. The USDA’s Farm Service Agency, Department of Education, and the Small Business Administration guarantee various loans in their respective areas of commerce.
The Budget Act’s amendment has an immediate impact on all new TCPA cases filed on federal loans. Servicers attempting to collect on federally-backed mortgage and student loans are exempt from TCPA restrictions on the use of automated telephone equipment, prerecorded messages, texts, and facsimiles. Prior to the amendment, statutory damages awarded in class-action litigation under the TCPA typically ranged between $500 and $1,500 per incident.
The Budget Act also directs the Federal Communications Commission (“FCC”) to prescribe regulations implementing the amendment, but it was clear that collection calls on federally-backed debt is exempt. However, a new bill has already been introduced by Senator Edward Markey of Massachusetts in an attempt to repeal the Budget Act’s TCPA amendment (S. 2235). ALAW will continue to monitor developments and keep clients informed.