Tired of having debt collectors inundating your mailbox and voice mail? Get ready for them to start contacting you via text, email and social media.
There might not be an emoji angry enough to show your reaction to that news.
But starting in November 2021, new rules from the Consumer Financial Protection Bureau opened the floodgates for debt collectors to contact you via text, email and even on social media. While there are some marginal new protections for your average citizen, there are also a lot of new and potentially concerning rights for debt collectors.
The Fair Debt Collections and Practices Act (FDCPA) hadn’t been updated since 1977. In our digital age, that meant we were largely protected from having debt collectors harass us online. Not anymore.
Debt Validation and Consumer Education Required Upfront
Previously, these debt validation and debt verification letters had to be paper and mailed the old-fashioned way. But under the new rules, that validation can be provided electronically or even orally – as long as the oral validation is provided in the initial communication.
A debt validation letter must include how much you owe, who you owe it to and what action you can take. It is one of the main tools to catch mistakes or frauds.
This is a big divergence from the old rules, and was instituted because the debt industry argued that mailing validation letters was too expensive for them. The CFPB under the Trump administration sided with the debt industry over arguments from consumer advocates on this issue.
It’s important to know that if the debt collector does not provide validation during the initial contact and you pay them before the five-day period expires, they are no longer required to provide you with that validation.
New Rules for Electronic Communications
Now that debt collectors can contact you online or via text, let’s delve into what that means for your communications with them.
When Debt Collectors Contact You Via Email
According to the new rule, debt collectors can now contact you via email.
But if debt collectors send you an email, they could potentially use it as an opportunity to start collecting payments without clearly explaining information you have the right to know, according to Bruce McClary, vice president of communications for the National Foundation for Credit Counseling in Washington, D.C.
This gets even more confusing for consumers because debt validation letters can now be provided electronically.
“There’s the possibility that they could include docusign elements in these emails that allow for people to request validation of debt — or to enter into agreements to repay the debt,” he said.
But just because a debt collector sends an email doesn’t mean you’re stuck receiving endless messages.
The rule does require debt collectors to offer a “reasonable and simple method” for opting out of future communications via these methods.
If the debt collector contacts you via electronic communications, you can place a cease communication request. Bear in mind that this communication must be in writing – telling them over the phone won’t do.
When Debt Collectors Contact You Via Text
Debt collectors are now allowed to contact you via text, too. And there’s no mention about a limit for the number of contacts when it comes to electronic communications. If you don’t have an unlimited text message plan, one eager debt collector could send your cell phone bill through the roof pretty quickly.
You’ll want to nip this situation in the bud by conveying immediately that they should stop contacting you via text. Again, make sure this request is made in writing.
Debt collectors are allowed to use hyperlinks in their texts now, too, which is confusing in a world where we’ve been taught to never click on links from people we don’t know. The CFPB allowed this because it concluded it was easier for consumers to access validation and verification information via these hyperlinks.
But it also potentially opens up the door for scammers.
When Debt Collectors Contact You Via Social Media
Perhaps most alarmingly, the rule change left the door open for social media exchanges.
Debt collectors are prohibited from disclosing any information about the debt — or even the reason for the contact — to anyone other than the person who owes the debt, according to McClary. There is one exception: If you are managing the estate of someone who is deceased, the debt collectors can reach out to you about their debts, too.
Because they’re not allowed to disclose the debt to anyone but you, any posts or messages they send you on social media platforms cannot be public.
“There’s one debt collector that even suggested that … they’ll be able to use social media tools like WhatsApp to contact people,” McClary said. “That’s a little more alarming. There are privacy issues when you start talking about social media as a communications tool for debt collectors.”
You’ll also want to look out for debt collectors who attempt to friend you on Facebook, Instagram, or any other social media network as a way to establish contact.
New Rules for Debt Collection via Phone
Another change under this new rule states that making more than seven calls in one week in regards to a specific debt is considered harassment. And once the collector has spoken with the consumer, the collection agency must wait a week before calling the consumer again in regards to the debt.
That seems reasonable, but people who are overdue on debts rarely owe on only one account.
“If you think about it, a person might not just owe one debt — they may have three debts in collections, so that’s 21 attempted contacts per week that would be allowed,” McClary points out. “It’s easy to understand how this might add a little more stress than some of the regulations that are currently in place.”
Protect Yourself Against Online Debt Collection Scams
If you’re unsure if the person reaching out to you is a legitimate debt collector, you can use a strategy called ‘out-of-band authentication’ to reduce your chances of falling prey to a scam.
Out-of-band authentication is a fancy way of saying if someone contacts you on one platform, you can verify who they really are by looking them up on another. In this case, if someone slides into your DMs over a debt, you could look up the collection company, verify their legitimacy, and call them directly, requesting a debt validation letter.
Keep at Least One Line of Communication Open
Even if you don’t think you owe the debt or think it may be a scam, you should keep at least one line of communication open with the collection agency.
“Their efforts to collect the debt will continue regardless of whether you talk to them or not,” McClary said. “It’s better to have a conversation and know what their next steps are going to be rather than guess … and proceed based on the hope that they’re not going to escalate the account or take some type of legal action.”
You may also have additional consumer protection rights depending on which state you live in. You can find out more by heading to your state’s attorney general website.
Pittsburgh-based writer Brynne Conroy is the founder of the Femme Frugality blog and the author of “The Feminist Financial Handbook.” She is a regular contributor to The Penny Hoarder. Information from Penny Hoarder writer and editor Tiffany Wendeln Connors is included in this report.