Some people just don’t like change. New developments are often opposed by small groups prioritizing their own self-interest over the interests of the community at large. In real estate, these groups are sometimes known as “NIMBYs,” short for their rallying cry: “Not in My Backyard!” Well, it looks like debt collectors may have some NIMBYs of their own.

The Development

When the Fair Debt Collection Practices Act (FDCPA) was passed in 1977, the most common ways for debt collectors to reach consumers were through phone calls, letters, and telegrams. It took 44 years for the law to catch up to modern technology, but the CFPB finally did it in 2021 with Regulation F’s guidelines for FDCPA-compliant electronic communications like email and text messages. Here are some of the key takeaways:

  • Email, text messages, social media, and other electronic media are valid forms of ‘communication’ under the FDCPA. This includes electronic delivery of the initial validation notice or a response to a request for debt validation (options previously discouraged by case law).
  • Regulation F allows emails and text messages to be sent with direct consent given by the consumer to the debt collector and indirect consent passed along by a creditor or previous debt collector who obtained direct consent. While not mandatory, there are suggested procedures for obtaining direct and indirect consent that, if followed, grant safe harbor protection against inadvertent disclosure of the debt to a third party.
  • Regulation F’s call frequency limits do not apply to email, text messages, or other electronic communications. However, the FDCPA’s general prohibitions against harassment and contact at inconvenient times still apply, so frequency is still a factor and messages should generally be sent between 8:00am-9:00pm local time for the consumer (rather than late at night or early in the morning in the sender’s time zone).
  • Electronic communications must contain all the usual FDCPA and state law disclosures plus specific account information required by Regulation F. The rules vary depending on the type of communication.
  • Opt out notices are required in all electronic communications. They must be clear and conspicuous and provide reasonable and simple methods for the consumer to opt out. The CFPB’s Small Entity Compliance Guide suggests using a hyperlink or allowing the consumer to reply with words like “stop” or “unsubscribe” to opt out. The Guide also offers sample language such as “Reply STOP to stop texts to this telephone number” or “Click here to opt out of further emails to this email address.” The CFPB left it up to debt collectors to decide where to place the notice.  “Although no minimum type size is required, the location and type size must be readily noticeable and legible to consumers.”

For a complete review of all rules related to electronic communications, check out these resources on the CFPB’s website: Regulation F, FAQs, and Small Entity Compliance Guide.

This long-overdue update was hardly revolutionary; it simply gave debt collectors permission to use the same modes of communication that most businesses use to interact with consumers – options that are increasingly popular with consumers who want to “go green” or enjoy the freedom of doing things “on demand” whenever, wherever, and however they choose.

The Opposition

Now, NIMBY litigators, legislators, and even private companies are lining up to protest, trying to limit or block debt collectors from using these options even if it’s what the consumer wants.

  • Litigators cannot change Regulation F but they can try to make electronic communications more trouble than they’re worth. One of the most popular claims is that the opt out notice is not “clear and conspicuous” and fails to provide a “reasonable and simple method” for the consumer to opt out. These arguments can be made in any situation. For example, compare these two complaints filed by the same attorney making the same arguments about two very different emails:
    • Hoskins complaint was based on this opt out notice at the bottom of the email: “Unsubscribe.”
    • Green complaint was based on this opt out notice near the middle of the email: “Click here to opt out of further emails for this account.”

Two very different emails, two very similar complaints. Yet it’s difficult to see why these emails are a problem. Both notices are consistent with the CFPB’s guidance (outlined above). They also look just like the opt out/unsubscribe links consumers are used to seeing in emails from their favorite retail stores, social media platforms, banks, and other services.

  • Federal and state legislators have introduced bills imposing more restrictions:
    • US HR 8334 would broaden the scope of the Telephone Consumer Protection Act (TCPA) to prohibit calls and text messages from an automatic telephone dialing system (ATDS) without the prior express consent of the “recipient.” The bigger concern is how they’ve redefined ATDS as “equipment which has the capacity to store or produce telephone numbers to be called or sent a text message” without limiting it to equipment that uses “a random or sequential number generator.” While the bill does direct the FCC to pass a rule clarifying definitions, the removal of that language could reopen the floodgates of litigation for anyone (not just debt collectors) using dialing or texting platforms not currently covered by the TCPA. This bill was introduced on July 12, 2022 and remains pending committee review.
    • NY SB 3121 would create a debt collection license requirement and new regulations. While it largely tracks the FDCPA, it deviates in requiring debt collectors to obtain “prior written or recorded and revocable consent of the consumer debtor given directly to the debt collector” before using electronic communications such as email or text message. This bill was reintroduced and referred to a committee on January 5, 2022 where it remains pending.
    • DC CB 24-0357 is the latest move by the DC Council to restrict collection activity by debt collectors, debt buyers, and even original creditors. It would prohibit electronic communications before sending the initial notice (meaning those notices must be sent by post), require prior express consent directly from the consumer, and limit debt collectors to a total of 5 electronic communications (emails, text, etc.) per 7 days. The bill was signed by the Mayor on July 7, 2022 and transmitted to Congress where it remains pending review. Unless Congress objects, it will become law and take effect on January 1, 2023. 
  • T-Mobile and Twilio have added third party debt collection to their lists of forbidden message categories, effectively blocking debt collectors from using their platforms to communicate with consumers without any consideration for consumers’ preferences.

Creditors and servicers should pay attention because these same rules may also apply to you! In addition to the TCPA and DC law mentioned above, other states – like California and Maryland – already have laws that require creditors and servicers to comply with the FDCPA (and Regulation F) even if they are passively accepting payments on pre-default debt.

Community Impact

Such policies may be based on good-intentions but they have the potential to do real harm by taking away choices that would actually improve accessibility. Some consumers may prefer phone calls and letters, but that doesn’t work for everyone. For example, phone calls and letters may be embarrassing for people with families or roommates. Some people do not have their own phone but they can check their email at a public library. Others may miss letters because they have unstable living arrangements, travel frequently, or have multiple addresses because they’re a seasonal resident (aka “snow bird”). Email and text messages would allow all of them to stay informed no matter where they go. These consumers have the same rights and deserve the same quality of service as everyone else.

Many consumers have developed a taste for on-demand services that adapt to their preferences and behavior. While most industries have evolved, debt collectors have been held back by rules that are increasingly out-of-touch with society’s expectations for user-friendly experiences. In fact, electronic communications like email and text are particularly convenient ways for businesses and consumers to interact quickly, quietly, and on-demand. Many consumers prefer these options to the disruption of a ringing phone or the delay of exchanging letters by mail. Electronic communications are generally more private and respectful of a consumer’s valuable time. They deliver the same important information in a concise format that’s easy to retain for future review with a continuous history of conversations saved all-together in one place. The ability to share hyperlinks, images, audio, video, and attachments can also help streamline services for faster results.

Most importantly: If a consumer does not like these options, it’s incredibly easy to opt out!

In the end, it all comes down to giving consumers the freedom to make their own choices about when, where, and how they want to communicate with debt collectors – even if it’s sending an email or text message from the privacy and comfort of their own backyard.