Communication has come a long way since 1977, when the Fair Debt Collection Practices Act was passed. Because email, voicemail and texting did not exist back then, the act does not cover their use in debt collection attempts. The Consumer Financial Protection Bureau (CFPB) announced Tuesday that it is proposing updates to the act that would “modernize” debt collection practices for the Information Age.
The main purpose of these proposed updates is to establish rules and boundaries regarding the use of electronic communications in debt recovery efforts. CFPB director Kathleen L. Kraninger said in a statement that 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.”
The full text of the proposal is 538 words long, but here are the most important takeaways:
Proposed Rules for Modern Debt Collection
- Limited Calls, Unlimited Text. The proposal calls for debt collection phone calls to be limited to no more than 7 per week. Once the debt collector speaks with the consumer, they must wait a week before calling again. There is no proposed limit to the number of weekly emails or texts that could be sent.
- Texts Must Follow the Rules. Because some consumers don’t have unlimited texting, the debt collector must take steps to avoid running up charges for the consumer. Texts must provide an option to unsubscribe from future messages. Collectors must clearly identify themselves as such when sending text messages, or they could be subject to lawsuits by the FTC. One agency misrepresented themselves as a law firm, and were ordered to pay a $1,000,000 fine.
- Full Disclosure Required. The proposed changes call for debt collectors to give consumers a full disclosure that includes their right to dispute the debt. Also included would be an itemized list of the debt, along with a plain-language explanation of the consumer’s options to pay the debt, verify it with the original debtor, or dispute it.
- No Expired Debts. Another proposed change involves debts that are no longer valid due to the statute of limitations expiring. Debt collectors may no longer bring a law suit, or threaten to bring a suit, over expired debts. This applies to debts where the collector knows, or should have reasonably known, that the statute of limitations had passed.
- Not At Work. Debt collectors will be prohibited from contacting a consumer through that consumer’s work email, unless the consumer first made contact using that email address.
- A Warning Before Reporting. Finally, the CFPB wants to prevent collectors from sharing information with credit reporting agencies before communicating with the consumer. For example, debt collectors would be required to send the consumer a letter about the debt or have a successful phone conversation where they indicated that they were planning to report the debt to a credit agency.
The proposed changes to the Fair Debt Collection Practices Act will go into effect in 90 days. Until that time, the public has the right to comment on the proposals.