Debt collectors could soon be making a comeback.
Delinquent consumers could get phone calls up to seven times a week, and an unlimited number of texts and emails from debt collectors under the rule proposed by the Consumer Financial Protection Bureau released this week, making it the first major update in more than 40 years.
The new proposal states that once a debt collector speaks to a consumer, however, they’re not allowed to call again for a week. There is no limit to how many emails or text messages they can send under the proposed rule. Consumers will have to opt out or unsubscribe to texts and emails.
“This rule opens the door to increased contact by debt collectors to new channels or existing channels that they haven’t utilized to date like emails and text messages. That’s very dangerous to consumers,” Joanna Darcus, a debt attorney at the National Consumer Law Center in Boston.
She said many people may not know that they can push back against aggressive tactics by debt collectors: “Consumers should know that they have the right to tell debt collectors when and how to contact them and they still have the right to revoke consent from folks who try to contact them.”
While debt collectors have been able to contact consumers for decades, the personal access to emails and text messages can be extremely overwhelming to them, Darcus says. If a student has eight loans out, for example, they could receive up to 56 calls per week.
People are already unhappy with how they’re being hounded. There were more than 80,000 complaints sent to the CFPB about debt collectors in 2018, according to a report released earlier this year. And debt collection is the most common compliant, according to the CFPB.
The proposed rule would be a win for companies, consumers groups say. Some companies slide under the radar of CFPB scrutiny. A NerdWallet investigation from October found that more than 100,000 retailers are not subject to oversight by the CFPB, despite complaints by consumers.
The Fair Debt Collection Practices Act — a federal law that limits the actions and behavior of third-party debt collectors attempting to collect funds on behalf of another person or company — was established in 1977 before the rise of digital correspondence and hasn’t been updated since.
So debt collectors have been able to send text messages. However, it’s illegal for them to send texts or emails that trick or harass people into contacting them to collect money, according to the Federal Trade Commission.
Debt collectors must tell you who they are by law. A violation to the Fair Debt Collection Practices Act can result in a lawsuit against the debt-collection company and the person collecting the debt.
“As the CFPB moves to modernize the legal regime for debt collection, we are keenly interested in hearing all views so that we can develop a final rule that takes into account the feedback received,” CFPB Director Kathleen Kraninger said in a statement.
Consumers have 90 days to dispute the proposal before the rule is implemented. If approved, the rule would go into effect one year after the final rule is published. “We need to hold the debt collectors’ abuses and harassment at bay,” Darcus said.
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