Debt Collectors Should Consider Changing Dialing Strategies in Light of State Supreme Court Decision

Supreme Court in Massachusetts rules more than two unanswered robocalls to consumer in a seven day period constitutes harassment.

6/26/2018 4:00 PM

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Debt Collectors Should Consider Changing Dialing Strategies in Light of State Supreme Court Decision

Massachusetts Supreme Judicial Court reversed on Monday a Massachusetts trial court’s decision that a creditor’s unsuccessful attempts to speak to a consumer do not constitute “communications” under Massachusetts regulations. Instead, the appellate court found that an automated dialing system “initiates” communication even if the consumer does not answer the call and no message is left on the consumer’s voicemail.

In Armata v. Target Corp., No. SJC-12448, 2018 WL ------- (Mass. June 25, 2018), a consumer opened a credit card account with a creditor incurring a debt. When the debt was 30 days past due, the creditor called the consumer to collect the debt. The creditor called more than the “twice in a seven-day” period mandated by the state regulation. The consumer stated that she answered a least one call from the creditor and heard a prerecorded message asking her to contact the creditor. However, the consumer did not testify how many times in a week she heard the message. Taking these facts into consideration, the Massachusetts trial court found that the unanswered calls did not constitute a “communication” and, because the consumer did not state she heard a prerecorded message more than twice in a week, the trial court granted the creditor’s motion to dismiss. The consumer appealed the trial court’s decision and found a much more sympathetic ear in the appellate court.

On appeal, the Supreme Judicial Court  looked at the Massachusetts regulation prohibiting creditors from “[i]nitiating a communication with any debtor via telephone, either in person or via text messaging or recorded audio message, in excess of two such communications in each seven-day period[,]”  and the state attorney general’s guidance, which is available on its website, stating creditors are exempt from the regulation when they are, “truly unable to reach the debtor or to leave a message for the debtor.” In its examination of the regulation, the appellate court took a very narrow view of this statement, finding that the Attorney General’s guidance applies in situations where it is impossible for the creditor to leave a message, such as, “when the debtors do not answer and their voicemail or answering system is not set up, their mailbox is full or their telephones have been disconnected.” In taking such a strict view of the attorney general’s guidance, the appellate court denied the creditor the safe harbor of the exemption.

The creditor attempted to argue that even if the exemption did not apply to the calls in question, the regulation did not apply in this situation because: 

1) The calls were placed with a predictive dialer,

2) The calls did not initiate a communication with the consumer and,

3) Leaving a message would violate both state and federal laws.

The appellate court did not accept any of the creditor’s arguments. Instead, it found that the regulation was not concerned with the specific technology a creditor uses to contact a consumer, but seeks to limit the amount of attempts to contact the consumer. The appellate court explained, “[the creditor’s] reading would create a loophole so large as to swallow the rule, such that nearly every creditor would be able to evade the limits imposed by the regulation simply by changing its dialing technology.”

As to the question of “initiating” a communication, the appellate court found that the calls did “initiate” a communication within the meaning of the statute, as a creditor can harass a consumer by repeatedly calling, even if no voice messages are left. The appellate court went on to state that if only calls that were answered by the consumer or terminated in voicemail messages were subject to the regulation, “a creditor would be permitted to telephone a debtor unremittingly so long as it chose not to leave voicemail messages.”

The appellate court denied the creditor the exemption for those who are unable to leave voicemail messages. In doing so, the appellate court reasoned that, “[the creditor] was not prevented under the Massachusetts debt collection regulations from leaving the consumer a voicemail message, so long as [the creditor] refrained from implying that the telephone call concerned a debt.” The appellate court also found that the creditor was not subject to the Fair Debt Collection Practices Act because the statute is applicable to third-party debt collectors and not first-party creditors. Therefore, the creditor was not required to leave the mini-Miranda if it did leave a message.

While this case involves a creditor, it encompasses issues for third-party debt collectors to consider as well. As Armata illustrates, there are no risk-free approaches to voicemail messages, including not leaving a message. To mitigate risk, debt collectors must be cognizant of both state and federal laws when making the decision to leave a voicemail. For more information on voicemail considerations, members may want to check out ACA’s SearchPoint® document #1146 Leaving Messages for Consumers. Questions of how often to contact a consumer are also influenced by state and federal law. Absent guidance from state law, courts will often look at the pattern of calls as well as the frequency. Courts will also consider a combination of distinct factors when determining if a debt collector’s calling attempts rise to the level of harassment or abuse. Therefore, members may also want to review ACA SearchPoint® document #2333 Frequency of Collection Calls: What Constitutes Harassment?

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