• by Ray Schultz , May 8, 2019

The Bureau of Consumer Financial Protection (BCFP) has proposed rule changes that would allow debt collectors to use text and email to contact late payers.

The proposal, designed to update enforcement of the Fair Debt Collection Practices Act of 1977, was released on Monday. The BCFP has set a 90-day comment period, and implementation of the rules would take place in a year.

In reflecting the rise of media that did not exist in 1977, the proposal is driving fears that the channels could be used to used to annoy, abuse or harass consumers--indeed, one headline states that the Trump administration seeks to allow collectors to text and email as much as they want.

The proposed changes are more nuanced. For one thing, they would allow consumers to opt out of email and text communications and require debt collectors to provide instructions for doing so in each communication.

Moreover, they would prohibit the use of a debtor’s work email address without consent, and prohibit use of email addresses that had previously led to third-party disclosure.

However, there are no frequency limits being placed on email or text because the BCFP “is not aware of evidence demonstrating that debt collectors commonly harass consumers or others through repeated or continuous debt collection contacts by media other than telephone calls.”

In contrast, the BCFP proposes that telephone calls to a consumer would be restricted to seven within a seven-day period. And if an actual conversation takes place, the debt collector may not call again within seven days.

Consumer advocates worry that email and text will swiftly be abused. And they fear that debts will be disclosed to parties other than the debtor, despite the BCFP’s protections.

Some might also object to the fact that abuses would have to occur by email and text before the BCFP addresses frequency. However, the BCFP notes that “Massachusetts’s debt collection regulations do not limit the frequency of a debt collector’s email communications.”

And in general, email marketers might object to the use of the already challenged medium for enforcement of any type.

To some extent, the proposed changes reflect communication practices that are already minimally in place.

A consumer survey by the BCFP found that 8% of debtors had been contacted by email, and that 15% prefer email as a method of contact by collectors.

The BCFP and debt collectors contend that use of email, at whatever frequency, could reduce the number of phone calls received by consumers.

The proposal also attempts to define a new term: limited-contact message. This is a basic message that does not mention the debt.

The BCFP states that it “would not enable a debt collector to transmit a limited-content message” because inclusion of information such as the sender's email address could convey information about a debt.

Also, “consumers may be unlikely to read or respond to an email containing solely the information included in a limited-content message (e.g., consumers may disregard such an email as spam or a security risk),” it states.  

Debt collectors are required to send “validation” letters, laying out who they are and that they are trying to collect a debt. These might be sent by email, but courts have ruled that attachment delivery by email does not enjoy the same presumption of success as postal mail.

Social channels are not seen as suitable for debt collection since there is a high probability to disclosure to third parties.

The BCFP notes that financial-services collections are also governed by the Dodd-Frank Act.