Debt collectors will soon be able to text and email you. In addition to harassing consumers, these new methods of communication open up more ways for people to become victims of phishing scams, consumer advocates worry.
"Every time the collection industry tries out a new technology to reduce their cost or increase saturation, it does more damage than good," says Pete Barry, a Minneapolis-based consumer rights lawyer.
On Oct. 30, the Consumer Financial Protection Bureau (CFPB) issued a final ruling on its proposed guidelines permitting the use of text, email, social media, and voice messages for debt collection.
The changes come over a year after the CFPB’s original proposal to expand the forms of communication debt collectors may use to reach consumers. Despite the lack of popular support — 70% of voters were concerned that debt collectors would be able to send unlimited emails regarding collections, according to a 2019 report — the CFPB argues that limiting the number of phone calls made by third-party collectors and allowing them to use alternative methods will ease consumers' sense of being harassed.
Here’s what consumers need to know:
What does the new ruling say?
When Congress passed the Fair Debt Collection Practices Act (FDCPA) in 1977, it was designed to take federal action against abusive and invasive debt collection practice by limiting the time, place, and methods of communication debt collectors could use.
Because the bill was passed over 40 years ago, modern modes of communication like text messages and emails were not included — which is where new rules issued by the CFPB come in. Starting in 2021, debt collectors will be able to contact consumers via text, email, social media, and voicemails.
What types of debt can be pursued this way?
The rules apply to all forms of collection covered under the FDCPA, such as mortgages, credit cards, medical debts, and any consumer debts for personal or family purposes (including delinquent student loans).
How will this likely play out for those with debt in collection?
If you face burdensome collection notices, you will still have the right to opt out of receiving messages by requesting in writing for the collector to stop texting or emailing you. The new rule also explicitly states that all collectors must provide instructions for “a reasonable and simple” way that consumers can opt out of receiving any more emails or text messages.
The CFPB also issued new rules to debt collectors allowing them to make no more than seven calls to consumers per week, but a scan of the 653-page document provided by the CFPB did not reveal similar restrictions for texts and emails.
By limiting only phone calls and making all other forms of communication readily available, it seems unlikely that consumers will experience any less harassment, advocates fear. "If anything, the rule will spur even more litigation because it will encourage the collection industry to invade people's privacy in ways it shouldn't," Barry says.
How can you spot a scam?
Opponents have expressed concerns that allowing collectors to send messages these new ways and providing them with a link to opt out will enable scammers to easily prey on vulnerable targets. While it's common knowledge that clicking on links from unknown sources is a big no-no, it may be difficult for consumers to tell the difference between an honest inquiry and illegal scams if they are being bombarded with claims of unpaid debt. The rules that clarify whether or not a message from a debt collector is legitimate are the same as they always have been. According to the CFPB, a debt collector will never:
- Withhold information from you. They are required by law in their initial contact to tell you the name of the creditor, the amount owed, and provide verification of the debt if you dispute the claim.
- Pressure you to pay using a wire transfer or prepaid credit card. They also cannot force you to make a payment on the spot.
- Ask you to provide sensitive information like your bank account, routing numbers, or Social Security numbers. These are not necessary for a collector to know.
- Threaten to tell your friends, family, or employer. A debt collector cannot generally tell anyone about the debt without your permission, although they can ask others about your whereabouts.