What debt collectors can learn from the FTC settlement with GC Services


Last week, we wrote about the settlement agreement between the FTC and debt collector GC Services Limited Partnership. In most circles, the $700,000 civil money penalty would be the most significant aspect of the settlement. In our opinion, however, the most noteworthy and valuable information appears in the sections of the consent order that prohibit GC from engaging in specific collection practices and in the detailed descriptions that lay out how GC must perform certain collection activities.

We recommend that legal and compliance departments pay close attention to the GC stipulated order. The agreement contains invaluable guidance regarding the FTC’s expectations regarding voicemail messages, call attempts, and account recordings and documentation. We believe the CFPB’s position on the issues in the GC case would be very similar to the FTC’s, so the settlement agreement could serve as a blueprint for collection call compliance.

Voicemail Messages

One of the more noteworthy aspects of the stipulated order is a provision that governs when and how GC can leave voicemail messages for debtors. Under the order, GC is “permanently restrained and enjoined” from leaving recorded messages in which GC states the debtor’s name and discloses that it is a debt collector attempting to collect a debt (or that the debtor owes a debt). GC may, however, leave such a message if:

  1. The debtor’s greeting on the messaging system discloses the person’s first and last name, and only that person’s first and last name. The first and last name on the greeting must be the same as the person who allegedly owes the debt; and
  1. GC must have previously spoken with the person using the telephone number associated with the messaging system and confirmed that only that person can access any message left at that number.

Alternatively, GC may leave such message at the number if the person has consented to such messages. However, GC may not leave such a message under any circumstances if the person has explicitly prohibited GC from leaving recorded messages on that phone number.

Comparing the FTC’s approach to CFPB proposals

The FTC’s approach to voice messages is much more nuanced in comparison to the limitations contained in the Outline of Proposals that the CFPB issued last July. According to the Outline, the CFPB is considering a proposal that would provide that would clarify that no FDCPA “communication” occurs when collectors convey only: (1) the individual debt collector’s name, (2) the consumer’s name, and (3) a toll-free method that the consumer can use to reply to the collector.

For example, a collector could leave a message stating, “This is Joe Smith calling for Jim Johnson. Mr. Johnson, please call me back at 1-800-555-5555.” According to the Outline, this could reduce legal risks borne by collectors when leaving a message by eliminating ambiguity regarding whether the initial debt collection disclosure required by FDCPA section 807(11) (sometimes referred to as the “mini-Miranda”) must be made in connection with such messages.

We believe this proposal would provide the industry must needed clarity and a “safe harbor” for leaving messages.

We presume that the stipulated order does not preclude GC from leaving a message similar to the example cited above. However, the order does not clarify whether or not such a message would be considered an FDCPA “communication.” Thus, ambiguities surrounding the initial debt collection disclosure requirement persist.

GC may believe that under the FDCPA it cannot leave voicemails or other messages like our example message, because the FDCPA requires collectors to leave information identifying themselves and to provide certain warnings to consumers.

If GC decides that a message similar to the “safe harbor” message proposed by the CFPB does not meet FDCPA standards, GC could leaves messages in which it provides the “mini-Miranda,” but doing so would subject GC to the complicated requirements outlined in the stipulated order.