The CFPB says debt collectors can contact you via social media

Nov 15, 2020

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Just when we thought 2020 couldn’t get any more dystopic, the Consumer Financial Protection Bureau (CFPB) changed its debt collection rules to allow debt collectors to contact consumers through social media. The regulation change will allow debt collectors to contact consumers up to seven times per week by phone, and as much as they’d like through text message, email and private messages on social networks. The changes are set to go into effect next October.

So if you have outstanding debt, you may soon be bombarded with a slew of texts, Facebook messages and Twitter DMs. As noted by Miles to Memories, the National Consumer Law Center states that up to 70 million Americans have an outstanding debt at any time. This means the new rule could affect over 20% of the U.S. population.

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The CFPB is framing this change as an effort to get with the times. In a blog post, Kathleen L. Kraninger — Director of the CFPB — said the following:

“The 1977 Fair Debt Collection Practices Act prohibits harassing and abusive and unfair debt collection practices as well as false and misleading representations by debt collectors. Our rule applies these protections to modern technologies. The rule clarifies how debt collectors can use email, text messages, social media, and other contemporary methods to communicate with consumers. And our rule will allow consumers, if they prefer, to limit the ability of debt collectors to communicate with them through these newer communication methods.”

Related: Credit card debt: Everything you need to know

IS this really a consumer-friendly regulation?

Person Looking at Credit Card Bills
(Photo by Pormezz/Shutterstock)

To be fair, Kraninger’s statement is true. There were no regulations on how debt collectors could contact consumers through more modern means of communication. This has historically meant that debt collectors weren’t allowed to contact consumers through these means, and instead relied on phone calls. So in regulating this form of contact, it’s opened previously illegal forms of contact to debt collectors.

Thankfully, there are clauses in the regulations that allow consumers to limit how and when debt collectors make contact. Consumers will reportedly be able to opt-out of all electronic communications with debt collectors, although the CFPB doesn’t state how that will happen. We’re hopeful that a centralized solution will roll out over the next year.

Further, Bankrate (owned by TPG’s parent company, Red Ventures) notes that debt collectors aren’t allowed to deceive you through social media. For example, they can’t send you a friend request to then send you messages regarding a debt. Instead, they will need to make themselves known as a debt collector before they can legally discuss a debt with you over social media. They are also not allowed to make public posts about your debt — all communication must remain private.

Related: 3 ways to pay off credit card debt

Debt collectors don’t have to verify debts

That said, there is still one glaring issue with this regulation. Nothing in this law requires debt collectors to verify that debt actually belongs to the person they’re contacting or if it’s still legally valid debt. So if you have a somewhat common name, you may receive messages about debt that’s meant for someone else. Make sure to double-check all debt collection messages you receive electronically.

If you’re contacted about a debt, always ask for verification of the debt and check your local laws surrounding debt collection before you pay. Some states regulate how long outstanding debt can be collected. For example, New York State has a six-year statute of limitations on outstanding debt. This means you are not legally required to pay the debt after this period and a creditor cannot sue you to collect.

Related: Know your rights: 3 tips for dealing with debt collectors

Bottom line

While it’s nice to see the CFPB get with the times, I don’t think this is a consumer-friendly regulation. Being in debt is hard enough, especially if it’s incurred from job loss or an unexpected trip to the ER. Debt collectors already have means of contacting consumers over the phone. Adding social media, text messaging and email to the mix has the potential to make this stressful situation even worse for consumers.

With that in mind, the timing of this regulatory change is especially bad when you look at the state of the world today. We’re in the middle of a global pandemic that skyrocketed unemployment rates in many U.S. states.

CFPB, this is a really bad look on your part.

On the flip side, it does make sense for the CFPB to open more modern means of communication. The debt collection industry is huge, and — in the end — the debt is still owed. That said, letting debt collectors bombard consumers with electronic communication doesn’t seem like the best way to modernize debt collection.

The best way to soften this blow would be for the CFPB to roll out a centralized way for consumers to opt-out of electronic communication from debt collectors. Likewise, the bureau should add limits on how often these electronic communications can be made and debt collection companies should be required to verify the debt before making contact. Hopefully, we see these concerns addressed in the near future.

Feature photo by shurkin_son/Shutterstock

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