Seeking to significantly update federal debt-collection rules for the first time in more than four decades, the Trump administration released proposed new regulations on Tuesday that has left neither debt collectors nor consumer groups entirely satisfied.
Under the new regulations, debt collectors will be able to send an unlimited number of text messages and emails to delinquent borrowers; the number of calls they can make per week, however, will be curtailed.
The rules, proposed by the Consumer Financial Protection Bureau, are an update to the 1977 Fair Debt Collection Practices Act, which protects debtors from abusive and unfair practices by third-party debt collectors. The FDCPA, for instance, prohibits debt collectors from calling people before 8 a.m. and after 9 p.m.; and restricts collectors from calling “repeatedly or continuously” with an intent to annoy or harass. But the exact number of calls has, until now, not been specified.
Having been written in the 1970s, the FDCPA was enacted before the ubiquity of mobile phones, email and social media. As The Washington Post noted, debt collectors have expressed concerns about digital communications falling into a legal gray area and have asked for clearer rules pertaining to them.
Announcing the proposed amendments to the FDCPA this week, Kathleen Kraninger, the director of the CFPB, said in a statement that the new rules aim to “modernize the legal regime for debt collection.”
“The Bureau is taking the next step in the rulemaking process to ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations,” Kraninger said.
Under the new rules, debt collectors will only be able to call a debtor up to seven times per week and if they manage to speak to the borrower, will have to refrain from calling back for at least seven days.
Debt collectors will explicitly also be allowed to contact borrowers via text message and email. The rules state that collectors cannot engage in harassment and consumers will have the ability to opt-out of these communications, but no cap has been set on the number of texts or emails that can be sent.
The use of social media was also covered by the proposal, which seeks to bar debt collectors from using public-facing platforms to collect a debt.
“The Bureau believes that communications or attempts to communicate by social media platforms that are viewable by a person other than a person with whom a debt collector may communicate … risk exposing a consumer’s affairs to the public,” the proposal states, adding that such conduct could “have the natural consequence of harassing, oppressing, or abusing the consumer.”
Debt collectors and consumer groups alike have offered a mixed response to the new rules.
Collectors said they were pleased the regulations included guidance on the use of digital communications.
“We’re very happy to see that email, text messages and voice mail are addressed, with clear guidance about how to use them lawfully. That’s a major step forward,” Jan Stieger of the Receivables Management Association International, a trade association which represents debt collectors, told The New York Times.
Leah Dempsey of industry lobbying group ACA International took issue, however, with the cap on the number of calls debt collectors can make per week, calling the figure “arbitrary.”
The cap would “unnecessarily impede communications with consumers,” Dempsey, senior counsel for the group, told the Post.
Consumer groups, on the other hand, have lauded the limit on the number of phone calls, though some have said the measure doesn’t go far enough.
Consumer groups have also raised the alarm about the unlimited number of text messages and emails that will be allowed.
“We see this as a step backward,” Lauren Saunders, the associate director of the National Consumer Law Center, told the Times.
The proposed rules would impact millions of Americans. According to the CFPB, almost 70 million people in the U.S. are contacted each year by a creditor or debt collector attempting to collect a debt.
The bureau will welcome public comments on the proposal for 90 days. According to The Associated Press, the rules will likely be finalized later this year or in early 2020.