October 29, 2015
Although the impact of government is not always everyone’s top concern, there are times when new policies can affect ordinary consumers and their use of information technology. The latest budget bill on Capitol Hill is one such policy; if passed in its current form, it could include a provision allowing debt collectors to make robocalls to individuals’ cell phones.
Current rules at the Federal Communications Commission (FCC (News – Alert)) do not allow companies that process federal student loans, home mortgages, or tax returns to contact consumers with automated, computer-generated calls. According to a report on the matter at The Washington Post, such companies have pushed back in recent years, arguing that people such as student loan borrowers are more likely to make their scheduled payments when lenders can reach them via mobile.
The Federal Department of Education is even quoted as saying that mobile phones may be the only way for lenders to reach their borrowers.
“Many student loan borrowers, especially those who may be about to graduate, move frequently and no longer have landline phone numbers,” the Department of Education said. “It can be difficult for servicers to locate a borrower without using a cell phone number.”
The link between the government and private entities here is clear. The government pays private debt issuance and collection companies such as Nelnet, Navient, and American Education Services to manage borrowers’ payments. As private entities, their goal is to prevent borrowers from defaulting on their loans. When borrowers make their payments on time each month, they avoid default. However, many people either lack the funds or the flexibility in their schedules to keep up. Even if a borrower simply forgets to make a payment—regardless of his financial situation—he could end up in default. Payment managers argue that robocalls could help resolve such problems.
Of course, the passage of this legislation could adversely affect students and their mobile payments in the first place. Automatic text messages or calls could significantly deplete the number of minutes or allowed text messages an individual has under their phone plan. For that reason, among others, the FCC has taken the position of protecting consumers.
At this point, there is a clear standoff between the FCC and what Congress, the Senate, and President Obama will allow to happen. The FCC appears to remain steadfast in its commitment to protecting mobile users. There appears to be support for the bill among both Republicans and Democrats, so it would come as no surprise to see it pass. If it does become law, the real turmoil will lie in how the FCC responds and how consumers pick up their own phones to let the FCC know whether robocalls are helping or hurting their lives.