New Rules Allow Debt Collectors to Pursue Debtors Via Email, Text Messages, and Social Media

Last month, new debt collection rules went into effect to expand the ways that collectors can go after debtors, including through social media, email, and text messages. The changes to the Fair Debt Collection Practices Act (FDCPA) were introduced by the Consumer Financial Protection Bureau (CFPB) during the Trump administration to prohibit abusive debt collection practices, but became friendlier to the business community.

The collection industry advocated for the update, saying that text and email are the preferred modes of communication for most people.

The CFPB’s debt collection rule “is a small step forward in modernizing communications with consumers,” said Mark Neeb, chief executive of ACA International, the association of credit and collection professionals, in a statement. “Consumers in the collections process deserve to be on a level playing field with others in the financial services marketplace with recognition of their preference to use email and text messaging over other outdated methods, such as faxes outlined in the current law.”

“In 2019, the debt collection industry returned $90 billion back to small businesses and other creditors and continues its work to help keep the economy afloat,” Neeb continued. “Consumers benefit when they are able to engage in two-way communication with the [accounts receivable management] industry, so that they can understand their choices for resolving outstanding financial obligations. The updated final rule is a step forward in updating outdated collections practices that hurt small businesses and left consumers in the dark. Collections professionals are uniquely trained to provide flexible payments schedules and emergency hardship assistance, and consumers will now reap these benefits more efficiently—especially during COVID-19. The new rule will also allow individuals to safeguard their access credit and services in the future.”

The rule establishes contact limitation to protect consumers’ privacy and shield them from abuse and unfair practices. On social media, a message from a collector must be private, and the company must communicate that it is trying to collect a debt. Collectors must also give people a way to opt out of receiving more communication from them on that social media platform.

While many companies operate within the law to collect debt, many are allegedly involved in illegal or unethical practices. Collectors have a limited number of years to collect debt until it becomes “time-barred,” but some companies try to revive what they call “zombie debt” to continue collecting. They are also limited to seven telephone calls per week per debt, but many companies make more phone calls.

“Too many people are hounded to pay debts they don’t even owe,” said CFPB Director Rohit Chopra. “Abuse and harassment by debt collectors are strictly prohibited under federal law, regardless of whether consumers are being contacted in person, over the phone, or on social media. The new debt collection rules will be useless unless they’re enforced.”