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Obama Deficit-Reduction Plan Would Allow Federal Debt Collectors To Contact People On Their Cellphones

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WASHINGTON -- President Obama isn't leaving a single couch cushion unturned in his effort to lower the deficit. A new proposal by the White House would allow collectors pursuing a government-backed debt -- which includes most mortgages, unpaid taxes and federal loans -- to contact people via their cellphones, in an effort to secure every last nickel and dime from taxpayers.

On page 28 of the president's deficit-reduction plan released Monday, federal agencies would be allowed to call people's cellphones to collect debts -- an attempt to reach the increasing number of Americans who are ditching landlines for mobile phones:

Allow agencies to contact delinquent debtors via their cellular phones. The Administration also proposes to amend the Communications Act of 1934 to facilitate collection of debts owed to or guaranteed by the Federal Government, by facilitating contact of delinquent debtors who are most readily reached on their cell phones. This provision is expected to provide substantial increases in collections, particularly as an increasing share of households no longer have landlines and rely instead on cell phones.

Kenneth Baer, spokesman for the Office of Management and Budget, said there would be no intrusion into people's cellphones.

"This proposal merely reflects the fact that more and more people rely solely on a mobile phone for their voice communications, and allows debt collectors to call them on these numbers," he said.

Debt collection, however, is a touchy subject, and one that typically leads to a high number of complaints on the Federal Trade Commission's website.

Tena Friery is research director at the Privacy Rights Clearinghouse, a nonprofit dedicated to protecting the privacy of American consumers. She said that if the new regulations are not written correctly, there could be the "potential for a lot of abuse," such as calls accidentally going to people's employers or relatives.

"One of the common problems we hear regarding debt collectors is that the debt collector is calling the wrong number," she said. "Cellphone numbers tend to change more than landline numbers, as people move from place to place or plan to plan. This can be quite annoying for people to receive repeated calls from a debt collector about a debt that's not even theirs, about someone they don't even know."

Another common complaint about receiving calls on cellphones is that the individual may have to pay extra to receive the call.

Currently, private debt-collection agencies are not allowed to use auto-dialers to call people's cellphones. These devices make it so that the caller doesn't have to manually punch in the number. When there's a busy signal or wrong number, the auto-dialer automatically moves on to the next number.

The deficit-reduction plan doesn't specify whether federal agencies would be able to use auto-dialing, or whether they would have to manually call individuals to pay up.

Mark Schiffman is the director of public affairs at ACA International, the trade association of third-party debt collection businesses. He said cellphone restrictions make it incredibly tough for companies to collect unpaid debts.

"With more folks going to cellphone only, how do you reach out to them to collect debts that they might owe? Current law, at least as it represents the private sector, prohibits the use of an auto-dialer to make the call to someone on their cell phone," he said.

"So the first question to the federal government is: Are they subject to the same provision? Because in many of these instances, the government is looking to private firms to do this work for them. They outsource to our members, which are private third-party debt collection firms who go about the business of collecting. But under current law, you can contact somebody on a cellphone, but you have to do it manually."

He added that the new rules would undoubtedly increase revenue for the federal government, since it would be able to reach more people to pay up.

"Consumers are more and more indicating how they want to be contacted, and more and more they're indicating cellphones versus landlines versus direct mail," he said. "And so, not being able to contact a good portion of folks on their cellphone would limit how many people you're reaching. Therefore, the simple math is if we can connect with more people, we obviously can potentially have a better success rate."