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October 24, 2018 in

Texting, debt collection, Bad Debt

OMG! Texting and Debt Collection - What You Need to Know

More people than ever before are using text messaging to communicate. According to research by Nielsen, Americans text twice as much as they call. Debt collection agencies are doing everything they can to take advantage of this trend, but they need to ensure their practices adhere to federal law in order to avoid penalties. Collectors can accomplish this by having the right terms and conditions. There are a few important factors collectors should consider when drafting their electronic service agreements. 

Closeup of hands of young man in checkered shirt using mobile phone while his partners arguing

FDCPA Requirements

The Fair Debt Collection Practices Act (FDCPA) is designed to protect consumers from predatory behavior, and many of the law's provisions apply to text messaging. One of the most important is that the collector must announce who they are and why they are communicating in the first text message they initiate. For example, "“This is a communication from a debt collector. This is an attempt to collect a debt and any information obtained will be used for that purpose.”

TCPA Rules

According to the Telephone Consumer Protection Act (TCPA), all text messages are considered telephone calls. This rule was implemented by the FCC in 2012. While federal courts have not yet required creditors to obtain separate consent for phone calls and text messages, most agencies are cautious and do obtain consent before pursuing text based messaging. A controversial case involving Microsoft showed that companies could obtain consent by getting consumers to participate in sweepstakes or contests by text. 

Self Serve versus Agency Initiated Texts

One texting tactic that works well for some debt collectors is the automated response to a consumer request. This is when the consumer texts some type of short code and gets an automatic response from the agency. For example, a person could text "balance" and find out how much they still owe to the collector. Compared to getting permission for an agency initiated text, this a great way to obtain consent for communication. 

Voluntary Terms

In the collector's terms and conditions, it should be clearly explained that the consumer has the right to receive text messages on a voluntary basis. It's still on open debate whether the communication terms from the original holder of debt carry over to a collection agency, so collectors should be cautious about transferring consent from the organizations they purchase debt. It's prudent for agencies to make sure their own terms and practices adhere to the law. 

Termination Process

Federal law requires collection agencies to provide a method for consumers to terminate communications under certain circumstances, and this applies to text messages just as much as it does calls or letters. When the consumer sends a text such as STOP, END, QUIT, or CANCEL, the agency must immediately cease all text communications except for a one-time message that confirms the cancellation. Collectors should make sure that sending this one-time confirmation message is in their terms of service.