Few people will sympathize with anyone writing or calling them for money. But debt collectors serve a necessary role in balancing the financial sector’s basic tenants of fair play. What if exploding technology outpaces rules for retrieving what is legally owed and protecting consumers from overzealousness?
The Consumer Financial Protection Bureau recently clarified how debt collectors can contact consumers, what they can disclose about their debts and how to inform them of their rights. Moreover, it conforms 1977 regulations to cover emerging cell phone and social media communications.
The agency’s Final Rule was enacted in December to modernize rules of the road after months of lobbying by consumer groups and trade associations. The end game is to empower consumers without disadvantaging debt collectors.
Defining rules of engagement
A collector must try to speak with a debtor on the telephone, mail them a letter or send an electronic message before reporting the person to a consumer reporting agency. They must detail “in plain language” the debt, such as the original creditor, and how consumers can dispute it.
If they are unable to make contact, the collector must wait at least two weeks before reporting them. Besides the disclosures, the Final Rule defined techniques collectors can use in various forms of communication:
- Voicemail: Identify themselves and the third party for whom they are collecting in compliance with consumer protections.
- Email: If the collector received direct communication from the consumer’s address or if the consumer does not withdraw consent.
- Texting: The consumer used their telephone number to text with a collector or consented to use the number for messages.
- Social media: Collectors can send a private message to a consumer but not post on their “wall” for others to see.
Congress tried to eliminate ambiguity about conduct to protect consumer rights and create competitive balance for debt collectors who play by the rules. The goal is to reconcile outstanding debt and avoid costly litigation that hampers both sides in their objectives.
Finding the right solution
About 70 million Americans have bills in collections. Unpaid debts can ruin credit scores and decrease buying power, which hurts the economy. Moreover, businesses suffer when they are owed money and unable to collect.
Merchants who comply with the law should be reciprocated. Sometimes the threat of bank levies, wage garnishments and lawsuits do not get a debtor’s attention. The collection process is a tool that enterprises can use to leverage payment for what they are owed.
Nobody wants to go to court because of costs and uncertainty. But it pays to have an expert in the evolving laws governing responsible collections on your side when all reasonable options have been exhausted.