Inbox Dunning: Should Email Be Used For Debt Collection?

Email, while loved by most groups of people, may lose some of that love if the Fair Debt Collection Practices Act (FDCPA) is amended to allow debt collection by email and text.

That law was passed in 1977 — long before email marketing and smartphones — and the collection industry feels strongly that it should be upgraded, according to CBS News.

Text and email are more popular with Gen Xers and millennials than phone, and reflect twenty-first century realities, CBS notes. 

That’s probably true, not only among the younger set, but even among boomers. Email could well be seen as less aggravating than telephone calls. 

But the change could lead to abuses, especially against the vulnerable, judging by comments to CBS.

"I'm really terrified the rule will say 'now you can contact them 10 times a day,' and every debt collector will max out on it," said Linda Jun, senior policy counsel at Americans for Financial Reform, according to CBS. 



This, in turn, could result in legal trouble, adding to the already staggering number of complaints — some of them frivolous — filed against debt collectors in the U.S. each year.

GDPR is another concern. From the advisories we have seen, there is no specific guidance on email collection, but there are very tight rules on data processing and the handing of data off to third party collection agencies.

Those agencies are also tightly regulated. The EU data protection law “in effect prevents outsourcing of legal and brand risk to dodgy debt collectors,” attorney Stuart Ritchie wrote on Quora last year. 

Debt collectors, wherever they are based, have to assume that they fall under GDPR, particularly Articles 13 and 14, he adds.

This is Ritchie’s scheme for dealing with firms that fail to send the proper notifications: “My intended policy…will be to refuse to deal with such gratuitous folk until they’ve complied with Articles 13/14, then rip them apart in small claims litigation if they annoy me sufficiently.”

DebtCase warns: “Before you go chasing a late payment, it’s vital that the data you’ve received has been given with consent. While you are not directly responsible for this, you are responsible for making sure any data handed over to you by a business has the consent of the individual – otherwise you’ll both be liable if found in breach of GDPR.”

The question remains: Should email be used for debt collection at all, given the impact on marketing? Brands have enough trouble getting their emails opened—the channel should not be seen as a potentially hostile one. 

It might not even work. For starters, who in their right mind will open an email from an unknown company trying to collect a debt, given the threat of malware and online fraud?

Most consumers who fall behind in payments will remedy the situation in good faith, but not all. They might direct such emails to their promotions or junk folders. Or, they might simply set up new email accounts. It remains to be seen if they can opt out from them. 

Here’s some advice—first, test it, and make sure debtors can reply to your emails and texts.

The collection industry is putting as benign a face as possible on this possible change, saying that little email “nudges” can help young people protect their credit.

It might work if it’s limited to that. But email is no way to send formal legal notifications, including those required by GDPR.

In a collection case in 2017, a federal judge ruled that an email attachment does not enjoy the same presumption of receipt as a letter sent by postal mail.   

Judge Debra McVicker Lynch determined that debt collector Met-1 Solutions, had not “sent” notices to plaintiff Beth Lavallee, as required by the FDCPA, when it included them in email attachments.  

Lynch observed that “not opening an email attachment is not the same as failing to open a letter one receives through the United States Postal Service mail system.”

She continued that “while consumers may open emails from companies to which they had given their email addresses, Lavallee would not have seen as safe an email from Med-1 Solutions.”

The judge continued that, “Today, email users are regularly warned and know to beware of email invitations to click on web-based attachments,” Lynch wrote.

Who needs all this? People, just pay up!




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