How Will New Debt Collection Laws Impact Consumers?

When you are unable to pay debts or have debt that has gone to a collection agency it can be very stressful. The burden of a difficult financial situation is already anxiety-inducing without having to also worry about other issues. This can include questions about the legitimacy of the debt collector who reaches out or if the amount they are attempting to seek is the correct amount.

This is why there are laws associated with debt collection like the Fair Debt Collection Act. This law, and others, govern the ways and methods by which a collector can try to contact you. Furthermore, it puts limitations on them so that the debtors cannot legally be harassed or threatened by the debt collector.

In November of 2021, a new set of Consumer Financial Protection Bureau (CFPB) rules go into effect which will make some updates for these guidelines and practices. The CFPB’s new Debt Collection Rule has five major impacts on how debt collectors should be contacting debtors as well as what rights the debtor can exercise.

What is a debt collection validation notice?

The first area that CFPB’s new Debt Collection Rule addresses are in the initial contact phase. When a debtor is first contacted the debt collector is required to send details about the debt. This can be sent in paper mail or emailed and the official title of this is the “Validation Notice”. Most likely this form will be comprised of information such as:

  • Name and mailing address of the debt collector
  • Name of the creditor (the business whom you originally owed money)
  • Account Number connected with the debt (not always applicable)
  • An itemized list of the current balance which should include any:
    • Interest or fees
    • Payments
    • Credits
  • Information about your debt collection rights such as how you could dispute the debt

The central intent of sending the notice is to allow the debtor to confirm that they owe the debt as well as confirm the balance of that debt and any other relevant details. What’s most important about the notice is that it has to allow the debtor the opportunity to respond and dispute any inaccuracies associated with the account.

To that end, they include a perforated line and tear-off portion so the debtor can easily dispute the debt or respond in a timely manner.

How often can a debt collector contact me?

The existing regulations on contact vary by the method the debt collection agency chooses. The two main ways debt collectors will reach out are through a telephone call or by other electronic means such as email. However, they may try other methods which carry more specific guidelines.

How often can a debt collector call me?

The Fair Debt Collection Practices Act (FDCPA) forbids debt collectors from constantly or incessantly reaching out with the objective of harassment or abuse.

For example, a debt collection agency is not allowed, by law, to just keep calling you all day back-to-back for consecutive days. The Debt Collection Rule stipulates that debt collectors are acting in an unlaw way where they do the following:

  • Place a call to a person more than seven times with a week (7 calendar days)
  • They call within seven days of talking with you about your debt

So, if they don’t end up being able to speak with you, or you don’t pick up, they are only allowed to call seven times in a week. If they do talk to you, that resets the 7-day clock, they can’t call again for 7 days following that conversation.

Can a debt collector contact me through social media?

Limitations and guidance of contact via telephone are pretty straightforward. However, a debt collector can also attempt to collect debts through social media. The frequency limits don’t apply to text, email, or other kinds of electronic communication. That said, there are restrictions and guidance for these forms of communication which include:

  • Privacy – The communication can only be in a vehicle that is private in nature.
    • For example, if they contact you via social media, it must be done in a private message. They cannot reach out in a way that would be publicly viewable to other parties including friends, family, or followers on the social media platform.
  • Identification – The debt collector must identify themselves.
    • So, if they were to attempt to add you as a friend on Facebook, they must include a message that explains who they are.
  • Option to cease contact – The debt collector has to provide the debtor the option to cut commination and stop receiving messages.
    • For example, a debt collector who reaches out by social media must provide an opt-out choice for the person they are seeking the debt from.

For example, a debt collector is not allowed to simply post details of your debt on your Facebook wall or Tweet at you publicly. They could reach out only in Facebook messenger or in Twitter’s direct message service since those will not be seen by followers or other users on the platform.

When can a debt collector report my debt to a credit reporting company?

There are procedures debt collectors have to take prior to reporting a debt to a credit bureau. The protocol before sending the information to a credit reporting company is the following:

  1. Communicate by telephone or in-person to address the debt
  2. Mail a letter or send an electronic communication about the debt and wait for a reasonable amount of time, generally 14 days, in case it is returned as undeliverable
  3. If the debt collector sends you a validation notice, it means that they’ve fulfilled their legal obligation to contact you. In general, this means they could begin reporting the debt to credit reporting agencies.

What is a “limited-content message?”

According to the new Debt Collection Rule, a limited-content message is defined as a voicemail message recorded for a consumer that has to include certain mandatory information. It can also contain additional optional information.

The significance of this is that a limited-content message is not defined as a “communication”. In other words, a limited-content message is not restricted in the way communications are and therefore not subject to their legal curtailments.

For example, a debt collector who leaves only a limited-content message does not violate the prohibition against third-party communications.

This “limited-content message” voicemail message that a debt collector may leave for you that must include specific information such as:

  • A business name that does not reveal the caller is a debt collector
  • A telephone number the debtor can use to call back
  • A request for response and the contact information of who will handle the interaction

They may also include other information that is not mandatory by law. Often collectors will leave recommended dates and or times for you to reply.

The bottom line

Understanding how the CFPB’s Debt Collection Rule impacts you is an important part of taking charge of your financial circumstance and being able to exercise your rights. Communications with a debt collector should be civil and the information they provide should be accurate. If you’ve experienced harassment with a debt collection agency, know that you do have options for recourse. You have the right to file a complaint with the CFPB online or by calling (855) 411-2372.

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