Working with third party debt collectors can be confusing and frightening. For the more than 68 million American adults with debt collection, knowing their legal rights is crucial.
The Fair Debt Collection Practices Act covers third-party debt collectors – those who buy overdue debt from an original creditor, such as a credit card company. An update to the rules of application of the law, announced by the Consumer Financial Protection Bureau at the end of October, modifies the conditions of engagement.
Some changes will modernize the law and clarify how it is promulgated. But consumer advocates say further revisions don’t go far enough or could have unintended consequences.
Know your rights
The FDCPA offers several protections, comprising:
Limits to collection actions
Collectors must be truthful, including about the details of the debt. They cannot use abusive language, harassing calls repeatedly or threatening violence.
Collectors cannot request a post-dated check for the purpose of threatening or initiating criminal proceedings. They also cannot collect more than the amount owed or threaten to take property when this is not allowed.
Disclosures of information
Debt collectors should send consumers a “debt validation letter” outlining important details, including the amount owed, the name of the collection agency, and how consumers can dispute the debt.
People can limit how and when a collector contacts them, including telling them to stop communicating altogether. In all circumstances, except limited, the collector must honor this request.
If consumers are in doubt about the details of a debt, they can send the collector a debt verification letter requesting more information beyond the validation letter.
Updates to FDCPA rules
Here are some of the changes, which are expected to take effect in fall 2021:
New communication possibilities
Debt collectors will be able to contact consumers by email, text and social media messages. Messages should explain how the consumer can restrict contact by these methods or request no communication. Notably, debt collectors do not need consumers’ permission before contacting them on these new channels.
Consumer advocates fear that collectors will send crucial information such as the debt validation letter to emails or social media accounts that are not being used.
“What consumers need to know is that it will be very important for them to be proactive in opting out if they do not wish to receive communications by text or email,” said April Kuehnhoff, lawyer at National Consumer Law Center.
She also notes, “If consumers start to receive communications from a debt collector and you haven’t received the initial notice regarding the debt, they should ask for that information. “
New limits to the actions of collectors
Further changes are expected to be announced by the CFPB in December. These will govern when collectors can add information to consumer credit reports and debt disclosures, such as whether it is after the statute of limitations, which vary by state and limit the length of time a collector can sue a consumer for payment.
Why consumer advocates are concerned and what you can do
Some advocates are concerned the updates don’t go far enough and say some of the changes may actually reduce consumer protection. Here are two of the main concerns:
Frequency of communications
The update clarifies the definition of a frequency of “harassment” of phone calls from collectors – but it could also allow such harassment, advocates warn.
The new rule restricts collectors to calling no more than seven times per week per account. It prohibits calls within seven days of having a conversation with a consumer. But consumers can have multiple accounts in collections, resulting in an avalanche of calls.
The One Contact Per Day does not cover text messages, emails, or social media channels, so consumers can be inundated with messages. The new rules also allow “limited content messages”, which could mean a proliferation of voicemail messages that do not count as “communications”.
“We’re concerned about what this will mean, especially for consumers who might, for example, have multiple medical debts in collection,” Kuehnhoff said.
What you can do: If you think you are contacted too frequently, you can require the collector to stop communicating in all cases, except in a few cases, such as when legal action is threatened. This goes so far as to prohibit communication on different channels.
No coverage for original creditors
The main advantage of the FDCPA is that it only regulates third party debt collectors, that is, a collector who does not represent the original creditor. A collector who works directly for an original creditor is not bound by these standards.
What you can do: Work to resolve an account quickly when contacted by a debt collector – no matter who they represent. You may be able to work out a payment plan or settle an amount that is less than what was originally owed.
Rights violated? Submit a complaint
If your rights have been violated by a debt collector, file a complaint with the FTC.
Dan Dwyer, a lawyer with the Federal Trade Commission, says consumers should provide as much identifying information as possible about the collector.
“Then just tell us what the problem is as clearly as possible,” he says.
This article was written by NerdWallet and was originally published by The Associated Press. Sean Pyles is a debt writer at NerdWallet whose work has appeared in The New York Times, USA Today and elsewhere. Read more