On Sept. 25th, InsideARM sent out a “News Alert” with the headline “FTC Settles with Debt Collector for $1 million in its First Text Messaging Case.” (caps theirs) The headline initially made me think that the “big news” and the $1 million settlement were directly related to contacting a debtor using text messages. I immediately clicked on “Read the story.”
A careful reading of page two did not back up my assumption. The “unlawful manner” in which the defendants attempted to collect debts didn’t actually have anything to do with it being specifically via text messaging. The settlement was the result of violating both the FDCPA and the FTC Act. It addition to using text messages, the defendants used phone calls and mailings—in which they failed to disclose that they were debt collectors. They also falsely portrayed themselves as law firms by using deceptive company names and by threatening to sue consumers or garnish their wages for not paying their debts. In the process, they allegedly revealed debts to the consumers’ family members, friends and co-workers.
“No matter how debt collectors communicate with consumers—by mail, by phone, by text or in some other way—they have to follow the law,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.
The settlement does require the defendants to stop sending text messages that “do not include the disclosures required by law, and to obtain a consumer’s express consent before contacting them by text message.” One might assume that consent is required, considering that the same regulation also applies to cell phones.
The article then referred to a 2011 FTC workshop and a 2009 FTC report, both of which stated that debt collectors can use text messages to collect debts in a lawful manner that maintains a consumers’ privacy.
This seems to be the direction in which the use of digital messaging for debt collection is going. On July 26, 2013, InsideARM reported “NY Proposes Tough New Debt Collection Rules.” Some of the proposed reforms sound like those being enacted in many other states, e.g., more documentation. What caught my attention was the reform authorizing email communication. (View a copy the official proposal here.) “Consumers will have the right to communicate with collectors through their email, if they choose to do so. The consumer must consent in writing — with an electronic signature filling this requirement — and the email address cannot be one from the consumer’s workplace.”
As confusing and contradictory as debt collection laws can sometimes be, so far the trend seems to be that collectors CAN use text messaging and email to contact debtors IF (caps mine) they don’t violate any other FTC or FDCPA regulations. If there’s a contradictory “News Alert,” NL will do our best to keep you informed.
By Randy Nicola, NL Vice President