Third-party debt collection (collection agents like me) is regulated by a patchwork of different laws in different states. There are also federal laws. The most well-known is the Federal Debt Collections Practices Act (FDCPA). Modifications to the FDCPA were passed into law last year and become effective in November 2021.
A Quick Summary of the New Law
The new law restates and clarifies rules on harassment and abuse, lies, and unfair practices by debt collectors when collecting consumer debt. The rule focuses on communications and gives consumers more control over how often and through what means debt collectors can communicate with them. The rule also clarifies how the protections of the Fair Debt Collection Practices Act (FDCPA) apply to newer communication technologies, such as social media, email, and text.
Things Consumers Need to Know
- It’s always important to remember that the FDCPA only applies to third-party consumer collections. If you owe money to a business, even a large business like a hospital, they do not have to follow the same rules as long as they are collecting themselves. The FDCPA also does not apply to B2B collections.
- The new rule clarifies that a consumer does not need to use specific words to say that a time or place is inconvenient for debt collection communications.
- You can now tell a debt collector that they cannot communicate with you through a certain medium. For example, you can say “email only” or “phone calls only.”
- There are new rules about how a collector can handle a paid debt or one placed in bankruptcy. If the collector knows (or should know) that a debt was paid or is in bankruptcy, they are not allowed to sell or transfer the debt to someone else.
- There is now a clarification that allows a debt collector to discuss a debt with the personal representative of a deceased person. The rule also clarifies how a debt collector may locate the personal representative of a deceased person.
Things Collectors Need to Know
- If a collector calls more than seven times in seven days, it’s now a violation. It’s also a violation if a collector calls within seven days after having a telephone conversation with the person.
- Collectors can use newer communication technologies, such as emails and text messages. However, there are certain limitations to protect consumer privacy and abuse. For example, the rule requires that each of a debt collector’s emails and text messages must include opt-out instructions.
- There is a new term related to communications: limited-content message. This definition covers information a debt collector must include in a voicemail message for consumers. It also concerns information a collector CAN include. For example, collectors can now leave the name of their agency in a voicemail message. Perhaps most importantly, messages that meet limited-content requirements do NOT count against the number of times a collector can contact a consumer.
- The FDCPA requires that a debt collector provide certain disclosures to the consumer. The rule clarifies the standards a debt collector must meet when sending the required disclosures in writing or electronically.
- There are new rules about record keeping. With the new rules, debt collectors must keep records that show if they obeyed or didn’t obey the rules. These records have to start on the date the debt collector begins collection activity and be kept for three years after the debt collector’s last collection activity on the debt. In the case of telephone call recordings, they have to keep records for three years after the dates of the telephone calls.
Third-party debt collection is a complicated business. As a consumer, it’s important to make sure you take notes and get information in writing. If you feel your rights are being violated you have options. As a collector, it’s important to make sure you are following the rules for both legal and business reasons.
Dean Kaplan is president of The Kaplan Group, a commercial collection agency specializing in large claims and international transactions. He has 35 years of manufacturing, international business leadership, and customer service experience. Today, he provides business planning, training, and consultation to a variety of global companies.