Debt collectors may soon be able to text and email consumers
"Text me $$$":
Debt collectors may soon be able to text and email consumers
Debt collection is a big
business in the U.S., a $10.9 billion industry that employs almost 120,000
workers who help track down overdue payments. Since the financial crisis,
American consumers have taken on more debt, and some delinquencies, such as for
auto loans, have been increasing. Against this backdrop is a CFPB that critics
say has lost its appetite for going after financial abuses by corporations
under Trump administration appointees who favor less regulation.
Fair
Debt Collection Practices Act
Some consumer advocates
say they worry updated rules for debt collectors may lead to an unwelcome
flurry of texts, emails and calls to consumers who owe money.
"I'm really
terrified the rule will say, 'Now you can contact them 10 times a day,"
every debt collector will max out on it," said Linda Jun, senior policy
counsel at Americans for Financial Reform, a nonprofit group formed after the
financial crisis to advocate for Wall Street regulation.
For its part, the CFPB
argues the law that oversees debt collections -- the Fair Debt Collection
Practices Act -- is long overdue for an update. The law was passed in 1977 and hasn't
been updated to reflect new technologies like email and texting, said CFPB
director Kathleen Kraninger in a Wednesday speech.
"This was the same
year that Steve Jobs introduced the world to the idea of a personal computer
with the design of the Apple II," Kraninger said. "Phone booths were
on almost every corner and cell phones were not even imaginable."
Right now, debt
collectors don't typically rely on texting or emailing to reach consumers
because the law is unclear, said Mark Neeb, the CEO of the Association of
Credit and Collection Professionals, the trade group for the debt collection
industry.
"It's not illegal
but it's fraught with a lot of potential pitfalls," he said. "The
rules aren't clear because there just aren't any."
Permitting texting and
emailing may improve the consumers' experience with debt collectors, Neeb said.
Consumers will have more control over how they are contacted, he said, adding
that debt collectors could send a "nudge" via text or email to repay
a bill.
"Debt collectors aren't looking to deluge consumers with
communications," he said.
But there's another
reason why the debt-collection industry is pushing for a regulatory green light
to text and email: Smartphone-addicted millennials are more likely to text than
answer or place a call. "Phone communication is going to be less and less
prevalent" as younger generations come of age, Neeb noted.
He added, "While
they may not be dancing in the streets because they are getting contacted by
debt collectors, their credit is at stake."©
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