The Federal Communications Commission (FCC) rolled out a new ruling last Thursday, allowing voice service providers to block unwanted robocalls in a move that could halt communication between lenders and consumers, John Redding, a partner at Buckley LLP, told PowerSports Finance.
The decision empowers voice service providers to automatically protect their customers from unwanted robocalls before it reaches their phones. Consumers can create white lists that explicitly state which calls should be allowed through or choose to block callers that aren’t on their contact list. However, the customer can choose to opt out of the blocking.
A consumer could conceivably not list a creditor as an authorized caller, Redding noted. “So if that creditor, who is not listed as an authorized caller, attempted to use an auto-dialer, even if they had the consent of their customer, that call could be blocked by the telecom,” he said. “And the implications of that are significant.”
For instance, creditors may struggle to get in touch with their customers about past due payments. For customers, it increases the risk of delinquency, default and bad credit scores because the lender was unable to warn about late payments, Redding explained. Additionally, more serious delinquent customers may not receive calls that would help them avoid repossession.
Previously, the FCC offered consumers the ability to add their names to a national Do-Not-Call registry and required telemarketers to obtain written permission before they could send someone robocalls. The approach that the commission is taking now is a bit more “radical,” David Gemperle, a partner at Nisen & Elliott LLC, told PSF.
“I think everyone understands the problem the FCC is trying to address and that is the telemarketing at dinnertime through robocalls — the more traditional types of things we’re used to hearing of in this space –and I don’t think anyone really objects to trying to solve that problem,” Buckley’s Redding said. However, the broad approach in the most recent ruling could have unintended consequences, he added.
For example, if creditors start losing payments, they might need to increase the cost of credit to offset losses. It’s “too early” to say if rates will go up or by how much, but it’s “certainly a possibility,” Redding said. It depends on how successful creditors are in their efforts at outreach to their customers and whether they’re being added to a customer’s white list.
“I think that it’s going to end up being very important that creditors use a multichannel strategy to try and contact their customers, inform their customers of the risk around the default call-blocking and recommend to them that [the lender] be added to the white list, so that their calls are allowed,” Redding said.
Currently, the FCC is in the comments stage, and “hopefully,” it will find some way to make sure that people can still have “normal business communications,” Nisen & Elliott’s Gemperle said.