December 20, 2019
Consumers across the country are looking to buy gifts for their loved ones this holiday season but unfortunately, some can’t afford much of anything. Similarly, many small businesses will struggle to pay bonuses or plan into next year due to freezes in cash flow from customers on payment plans.
And Congress hasn’t done much to make it better.
Thousands of consumers and small businesses are in the cross-hairs of an outsized response by lawmakers, regulators, and telecom providers in response to the annoyance of robocalls and scammers. Legitimate businesses are unable to relay critical financial information to consumers and begin the debt payment process.
Enter the recently reconciled Pallone-Thune TRACED Act—a response to the aforementioned rise in the unpopularity of illegal robocalls. The bipartisan initiative expands on the Department of Justice’s authority in prosecution of illegal and scam callers and issues a broad mandate to the Federal Communications Commission (FCC) to tackle the problem quickly.
While a step in the right direction, this legislation does nothing to protect legitimate robocall businesses. In fact, the language that would have addressed this problem was removed from the bill during the House and Senate reconciliation process.
It bears repeating that consumers who are unable to pay off debts suffer significant setbacks to their credit scores. Good credit helps individuals receive reasonable loans for housing, automobiles, and other costly but necessary expenses.
In the same vein, small businesses, especially ones just getting off the ground, require consistent and steady cash flow to continue operations while early margins are thin or negative.
Take a dental practice, for example. A new office requires expensive equipment, all of which is purchased through loans. Additionally, dental hygienists, registered dental assistants, and other specialized support staff command higher salaries than average workers. As a result, customers who are unable to pay for completed dental procedures may jeopardize this and other smaller practices.
These small businesses’ ability to communicate with consumers, often through third parties, is paramount their survival.
Consumers don’t pay a debt for two reasons: either they can’t, or they are unaware it exists. In both cases, third-party debt collectors arecontracted to alert these individuals to outstanding debts or tailor payment plans that work for both parties. After all, eventual payment is better than no payment for both businesses and consumers alike.
And that’s why legal robocalls must be allowed.
Debt collection agencies depend on robocalls for the thousands of communications they must make each day. These are legitimate companies complying with multiple regulatory agencies regarding privacy, transparency, and conveyance of information.However, they are increasingly unable to contact consumers regarding debts they might not even be aware of.
As a result, thousands of consumers suffer preventable hits to their credit scores, small businesses risk bankruptcy, and local credit markets experience freezes that ripple into higher costs for everyone over time.
Recent data shows American households save an average of $579 due to lower costs of goods and services as a direct result of debt collectors contributing to increased market liquidity. Further, in 2016 alone, over $67 billion was returned to U.S. Creditors by the collections industry. What would these numbers look like if legal robocall operators were whitelisted and thousands more consumers began to pay off outstanding debts?
Thankfully, the solution is straightforward.
First, the FCC must prioritize whitelisting legitimate robocall businesses with its new mandate and expanded authority. Second, Congress must codify protections for legitimate businesses.
We all want illegal robocallers and scammers to be blocked and penalized. However, such action must be specifically targeted toward illegal actors. If not, all robocalls—legal and illegal—will continue to stir suspicion among consumers and lead to hasty call blocking and labeling of legitimate communications.
As you shop for your holiday gifts this season, ask yourself how a good credit score could land you a better credit card with more savings. How might your business, or the one you work for, be assured of continued growth and rewards for dedicated employees? It may not be obvious, but protections for legitimate robocall businesses are an essential piece of this puzzle.
