Cell Phone Collections

Many consumer practitioners and debt buyers may not realize that federal law specifies a two-year statute of limitations for actions to recover on cell phone and interstate and foreign landline communication charges.  This short limitations period has significant practical import because a large portion of collection lawsuits based upon telecommunications charges are brought beyond this two-year limitations period.  In addition, while the federal limitation does not apply to state-regulated local phone charges, today telephone bills often combine on the same bill charges for local, long distance and cell phone service.  After two years have elapsed, the collector will have to specify which telephone charges it seeks to collect on are just for local service.  This may impose an impossible burden on a debt buyer with limited access to the original monthly billing statements.

47 USC. § 415(a) states that “All actions at law by carriers for recovery of their lawful charges… shall be begun, within two years from the time the cause of action accrues, and not after.”  Note that this applies to all actions, and not just to actions under the federal telecommunications statutes or pursuant to federally regulated tariffs.

47 USC. § 153(10) defines common carrier or carrier as “any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio or interstate or foreign communication by wire or radio or interstate or foreign radio transmission of energy…”  Thus “carrier” includes cell phone, interstate, and foreign communications.  47 USC 332(c)(1) (A) exempts call phone service from federal regulation under subchapter II, but the provision relating to the limitations period is in subchapter IV.

Debt buyers may argue that cell phone service and long distance service are not subject to federal tariffs.  But this does not change their status as carriers subject to federal law, including the federal statute of limitations.  Tariffing and federal regulation are two different things.

Moreover, there should be no doubt that a shorter federal statute of limitations preempts a longer state limitations period.  This shorter limitations period applies not only to carriers collection on charges, but also to assignees of those carriers, such as debt buyers:

Congress could not have been clearer.  To suggest a carrier could otherwise assign its contract to a third-party debt collector to bypass the requirements of section 415 and bring a state action pursuant to a four-year limitations period, would undermine the express language and purpose of the statute.  Therefore, the clear lanuage of section 415 states a two-year statute of limitations applies.

NCLC Reports, “Debt Collection and Repossessions Edition”, Volume 27, May/June 2009