Why your next text or DM might come from a debt collector soon

Almost a third of Americans with a credit history have some type of debt that is in collection, which usually means that they would receive phone calls regarding their outstanding balance. However, new rules released on Friday explicitly allow debt collectors to use a wide range of communication methods to interact with consumers, including texting and messaging on social media.

The Consumer Financial Protection Bureau released a final rule on Friday that essentially updates the rules outlined in the Fair Debt Collection Practices Act, which prohibited debt collectors from engaging in harassing, abusive or unfair practices. The law, which was passed in 1977, is silent on the use by collection agencies of electronic communications because they simply did not exist at the time. Friday’s Rule updates this, stating that collection agencies can interact with consumers through all forms of electronic communications.

“Whatever the reason a consumer has a debt in collection, we want to make sure that there are clear rules of the road for debt collectors to obey the law and, at the same time, swift action against those. who flout the law, “said the director of the CFPB. Kathleen Kraninger said in a blog post posted on Friday.

Among some of the updates brought by the new rules, the CFPB explicitly states that debt collectors can send text messages, emails and direct messages on social media platforms to consumers. The rule does not specify a limit for such communications, but the CFPB notes that it does not allow “excessive” communications that would harass, oppress or abuse consumers and therefore violate both the FDCPA and the new rules. When it comes to phone calls, collection agencies can contact consumers up to seven times a week about any debt they might have.

In a move opposed by consumer advocates, debt collectors will not be required to confirm that they have the exact details of the debt, such as the identity of the debtor and the amount owed, before attempting to recover it.

“Debt collectors have been known to hunt down consumers and sue debts that have already been paid off or were never due in the first place,” Suzanne Martindale, senior policy adviser and western states legislative director for Consumer Reports, said in a statement. “The new CFPB rules do nothing against this blatant practice and do not ensure that debt collectors can prove that money is actually owed and that they have a legal right to sue the debt.”

the The new 653-page rule of the CFPB however specifies that if a consumer tells a debt collector to “stop calling”, he is prohibited from calling him. Additionally, the rule requires debt collectors who use email – such as text messages, emails, or direct social media messages – to provide consumers with an easy method of opting out.

The rule-making process is not over. The CFPB said on Friday that it intends to issue a second debt collection rule in December that will include new rules regarding so-called “zombie” debt, which is typically older debt that has fallen from a credit report or is wrongly sued, either because it is already paid or it actually belongs to someone else.

Consumer Reports urged the CFPB to make it illegal to sell or attempt to collect debt that is more than seven years old – that is, when a debt becomes too old to be reported to a credit bureau.

ACA International, the association of credit and collection professionals, called Friday’s rule a “small step forward” in updating collection practices. “Consumers involved in the collection process deserve to be on an equal footing with others in the financial services market by recognizing their preference for using email and text messaging over others. obsolete methods, such as faxes, as stated in current law, ”the organization said in a statement.

Consumer groups have called Friday’s rule a “mixed bag”, with many fearing the rule does not place enough limits on the number of debt collectors who can communicate with consumers – especially since the pandemic of Covid-19 creates additional financial burdens for Americans.

“With millions of Americans passing amid the economic fallout from a global pandemic, the rule still allows debt collectors to make excessive and harassing calls,” Avril Kuehnhoffan attorney for the National Consumer Law Center said on Friday. “The last thing troubled families need right now is to be harassed by a debt collector.”

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About Natalee Broderick

Natalee Broderick

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