Debt Collection, Done Digitally?

Unlimited texting? Perhaps. Nights and weekends – well, maybe not.

The latest salvo of proposed rule-making that would change the debt collection landscape seeks to include means of communication that were not on offer decades ago.

The Fair Debt Collection Practices Act took root more than 40 years ago. Back then, there were no cell phones and no email, which might make readers a bit wistful. And the newest changes to the way debt is handled and pursued – at least in collectors’ hands – will embrace those digital methods of communication, at least if the current administration has its way.

Under the tenure of Director Kathy Kraninger, the Consumer Financial Protection Bureau (CFPB) aims to limit some of the ways in which debt collectors can contact debtors, while expanding others. Under the proposal that debuted Tuesday (May 7), collectors have to wait a week after talking to a consumer – at least over the telephone.

There are other methods on offer, though, as the same proposal would let debt collectors contact consumers through text and email – and, as The Washington Post reported Tuesday, there are no limits to how those digital conduits can be used to contact debtors. The embrace of bits and bytes continues to the workplace, after a fashion. If a consumer contacts the debt collector first through the use of their work email, the collector can keep sending email to that address.

The stage is set for a debate over how much contact is too much, and whether the debt collection efforts may get a boost from such contact. So far this year, there have been more than 81,000 complaints about debt collection practices, and the latest proposal seeks to curb debt collectors’ ability to take “certain actions” that could hit credit ratings or lead to litigation. The collectors also would not be able to contact the credit rating agencies without notifying the debtors, and lawsuits would be banned should a statute of limitations be reached.

Thus, we might surmise, the collection efforts might focus on a lot of …. outreach. Debtors, in turn, would be able to unsubscribe from those communications.

Per a statement by Kraninger, the CFPB is eying 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 proposal is open for feedback for 90 days after the rule is published in the federal register later in May, and it takes effect a year from publication.

Get ready for the great digital debt collection debate of 2019.