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Turning Red to Black Blog: Discussing Topics Related to Revenue Cycle Management, Debt Collection, Debt Recovery, Debt Management, Billing Operations and Billing Procedures

Commonsense Prevails… When Consent is Contractual

Courts are finding that when consumers sign a contract with a company and establish a bargained-for exchange they can no longer revoke consent to be contacted. This has broad implications for the collections industry as it relates to an agency’s ability to contact consumers on behalf of the clients they serve.

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Last month, the Northern District of Alabama cited a groundbreaking opinion by the Second Circuit Court of Appeals from 2017 to award summary judgement to the defendant in a lawsuit which saw the plaintiff alleging violations of the Telephone Consumer Protection Act (TCPA) by a collection agency.*

This case has broad implications for the collections industry as it relates to an agency’s ability to contact consumers on behalf of the clients they serve.  It essentially says that because the consumer consented to be contacted by the original creditor “and/or any debt collection agency” they hired, via an automated predictive dialing system, the agency in question did not violate elements of the Telephone Consumer Protection Act (TCPA) even after the consumer verbally revoked consent because the original contractual consent cannot be unilaterally revoked

The court essentially found that the common law concept of consent applied to the situation because there was a contractual obligation that superseded the verbal request.  The consumer offered this consent in a bargained-for exchange and therefore could no longer unilaterally revoke that consent after the fact.

This a long and arduous way of saying that common sense finally prevails. Once the consumer signs a contract stipulating that they are giving their consent to be contacted by a debt collector using dialing technologies it cannot be pulled back on a whim because the consumer doesn’t feel like paying their bill. It is also a strong statement in support of using this type of language in a provider’s patient agreements and consumer contracts thereby giving their third-party collection agency a broader stroke in recovering the hard-earned money they are owed.

This also has far-reaching implications with regard to accepted modes of communication and should not be limited specifically to telephonic channels as can be seen in the actual contractual language.

By using the following language in your consumer contracts and patient agreements, you ensure that your organization, as well as any organization you hire, will be able to use any and all means necessary to communicate with your potential debtors:

By signing above, you authorize ORGANIZATION’S NAME, and/or any debt collection agency and/or debt collection attorney hired by ORGANIZATION’S NAME, to contact you regarding your ORGANIZATION’S NAME account and any other accounts we service, or to recover any unpaid portion of your obligation to ORGANIZATION’S NAME, through an automated or predictive dialing system or prerecorded messaging system, at the phone number (including any cellular phone number), or other contact information you have provided or subsequently provide to ORGANIZATION’S NAME. You understand that you do not need to provide a cellular phone number to receive ORGANIZATION’S NAME products/services.

When included as a separate box with a separate and corresponding signature on a form that includes the consumer’s phone number, cell number, email address and texting options, you will empower your agency to pursue this debt beyond a verbal consent revocation by the consumer which will without a doubt increase the amount of money your agency can collect on your behalf.

The decision by the courts is a welcome illustration of common sense prevailing in an over-regulated industry.  However, the real common sense is only exercised in full when you incorporate this language into your actual contracts and patient agreements. Until then, this open window is closed to your organization and puts you and your chosen debt collector at a decided disadvantage.

*The Northern District of Alabama cited the groundbreaking opinion by the Second Circuit Court of Appeals from the case of Reyes, Jr. v. Lincoln Automotive Financial Services , 861 F.3d 51 (2d Cir. 2017) in its decision in Few v. Receivables Performance Mgmt. , No. 1:17-cv-02038 (N.D. Ala. Aug. 8, 2018).  The Northern District of Alabama used the Reyes reasoning in granting the defendant’s amended summary judgment motion. While the Second Circuit’s opinion focuses only on the TCPA and is only binding within the Second Circuit, the fact that the Norther District of Alabama used it shows that its reasoning is broad enough to take root in other parts of the country (as is the historical nature of the Second Circuit Court of Appeals).


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