Electronic communication a point of contention
The Consumer Financial Protection Bureau recently announced proposals that, if enacted, would change the rules for debt collectors regarding how often they can call borrowers, and what methods they can use for contact in general.
This would be one of the first major moves for CFPB director Kathy Kraninger, and one of the most major changes in debt collection in decades.
“The Bureau is taking the next step in the rulemaking process to ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations,” Kraninger said in a statement. “As the CFPB moves to modernize the legal regime for debt collection, we are keenly interested in hearing all views so that we can develop a finale rule that takes into account the feedback received.”
Debt collection is one of the most complained-about services to the CFPB, with about 81,500 consumer grievances filed last year, according to a bureau report to Congress. The proposals would ensure that debt collectors confirm and collect the correct debt; make details of the debt and disputes easy to understand; provide documentation of the debt; and discontinue pursuing the debt without proper documentation, among other things.
There would also be a limit on the amount of communication attempts that a collector could exercise. Debt collectors would be restricted to six attempts to call a debtor in a week if they don’t have confirmed contact, and one actual conversation between a collector and debtor per week. The bureau is also considering a proposal that would ensure that no information regarding a debt is conveyed via voicemail. Collectors would be prohibited from contacting debtors through social media or through a work email, although they would be allowed to contact debtors via email and text message.
A CFPB spokesperson clarified that the agency’s proposal would not allow debt collectors to issue unlimited texts, as every message sent would have to include an option for consumers to unsubscribe and opt out of future communications. The spokesperson also said that the proposal indicates debt collectors could face liability if the amount of texts and emails they send are deemed to be harassment, oppression or abuse.
These changes would be amendments to the Fair Debt Collection Practices Act (FDCPA), passed by Congress in 1997 to “eliminate abusive debt collection practices by debt collectors” and “to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.” The FDCPA imposes a range of restrictions and disclosure requirements on collectors’ conduct. The FDCPA generally covers the collection activities of debt collectors collecting on others’ debts and debt buyers, but not the collection activities of first-party debt collectors. Many states also have enacted laws similar to the FDCPA to regulate the conduct of debt collectors.
The proposed changes would almost exclusively cover third-party debt collectors and generally wouldn’t apply to in-house creditors, according to a senior bureau official. The proposed rules also clarify what debt collectors have to disclose to consumers in official notices.