Debt collectors are now allowed to contact Americans on social media and by text message, according to new rules enacted by a US agency this week. Here’s what you need to know.
Yes, debt collectors can slide into your DMs.
The Consumer Financial Protection Bureau has updated its communications rules for the digital age, but consumer advocates worry about privacy issues and scams.
They can also text you, email you and reach out to you on your social media pages — including via direct messages on Twitter TWTR, -0.40% or Instagram, or over Facebook FB, -0.07% Messenger — to collect unpaid debts, according to updated rules from the Consumer Financial Protection Bureau.
The change, which brings the decades-old Fair Debt Collection Practices Act up to speed with the digital age, took effect this past Tuesday, Nov. 30. While debt collectors were not previously banned from contacting consumers over text or on social media, per se — since, when the 1977 Fair Debt Collection Practices Act was first written, social media and text messaging didn’t exist yet — the revised rules in effect this week are intended to provide “clear rules of the road” in 2021 and beyond, the bureau says.
The first rule, which was first announced last year, clarifies how debt collectors can use email, text messages, social media and other contemporary methods to communicate with consumers. The second clarifies the disclosures that debt collectors must give to consumers when they first make contact.
So with social media, for example, a debt collector can send you a friend or follower request — but they must identify themselves as a debt collector. And in each message, they must also provide a simple way to opt out of receiving further communications from them on the social media platform — although there isn’t a cap for how many messages they can send.
The rule from the Consumer Financial Protection Bureau (CFPB) opens the door for creditors to slide into the DMs of millions of Americans who have loans.
Critics say the messages could be lost online or lead to invasions of privacy and a proliferation of new scams.
Advocates say the change is a simple update to rules created in the 1970s.
The change, which was approved by the CFPB last year under the Trump administration, requires creditors to contact defaulters privately – meaning they can send direct messages but not post on your public-facing page.
Consumers can opt out of these messages, but creditors do not need permission to contact people. There are no rules for how many messages they are allowed to send.
Lenders had argued that the change was needed, given that the Fair Debt Collection Practices Act, which regulates the industry, became law in 1977 – long before the creation of social media and cell phone texts.
“I think it’s a Pandora’s Box that can lead to more harassment.”
Christine Hines, legislative director of the National Association of Consumer Advocates
The rule also creates a new limit for phone calls. Seven calls can be made each week for any particular debt, but people with multiple debts may still be called dozen of times each week.
Debt collectors are also limited from contacting any consumer by phone within one week of speaking to them about a specific debt.
Mark Neeb, CEO of the debt collector trade group ACA International, said in a statement that the change represents “a small step forward in modernising communications with consumers”.
Critics say the option creates new ways for communications to go amiss, especially given that some people lack constant access to the internet. Messages about overdue bills, though private, could still be sent to the wrong person.
Around one-third of Americans who have had a credit report have a debt that has been sent to a collection agency, according to CBS News, meaning the rule could affects tens of millions of people.
And it’s concerning the other way around, too. “If you’re the ‘other’ John Smith, maybe you suddenly think you have this debt, and that could create all sorts of concerns for that individual, who may become confused or anxious. So I think there’s a lot of problems,” Kuehnhoff said.
“I’ve already gotten my first scam debt collection email, and that was even before the rule took effect.”
April Kuehnhoff, staff attorney for the National Consumer Law Center
And approving a friend request or follower request from a debt collector could also give that collector access to private information that you share with your friends and family on social media. “The debt collector who becomes part of your social media network may use information about your location and your assets in an attempt to collect a debt,” Kuehnhoff said. “That’s going to be even more of a privacy concern.
“I think it’s a Pandora’s Box that can lead to more harassment, or just allowing [debt collectors] to be more invasive into a person’s life to collect than is perhaps needed,” agreed Christine Hines, legislative director of the National Association of Consumer Advocates. “There’s the bare minimum here in terms of safeguards,” she told MarketWatch.
What’s more, consumers could easily miss direct messages from debt collectors if they’re not active on those social media accounts, for example, or if their online accounts filter messages from people outside of their friends’ lists into a spam folder. Or they might think this is a scam. “If you’re a debt collector and you’re trying to reach me by sliding into my DMs there is a 0% chance I’m going to believe you’re actually a debt collector,” mused one Twitter user in response to the updated rules.
Indeed, this also opens up a new avenue for potential scammers to prey on consumers. “I’ve already gotten my first scam debt collection email, and that was even before the rule took effect,” said Kuehnhoff. “Electronic communication really lowers the bar in term of making it cheaper and easier for scammers and bad actors to enter this space.”
So some social media users weren’t happy about the news, either. “This is absolutely terrifying,” tweeted one. “Having been on the bad end of debt collections in my life, I can attest to the anxiety around your phone or mailbox, so much that you don’t even answer/check them. This adds new avenues to terrorize people.”
Hines suggests that people become even more cautious about who they let access their social networks. “We know already it’s a jungle out there [on social media], and this is just another factor” that can put their identity and personal information at risk. “This is another place where consumers should be careful of whom they’re communicating with, or who’s communicating with them, and the type of information they share.”
And Kuehnhoff reminder social media users not to click on any hyperlinks or download any attachments from DMs, texts or emails claiming to come from debt collectors. “All of those rules [to avoid scams and identity theft] still apply, even if it’s a debt collector email,” she said.
The Consumer Financial Protection Bureau notes that debt collection is a multi-billion dollar industry, with more than 8,000 debt collection firms in the United States.
Household debt in America hit a record $14.6 trillion in the spring of 2021, according to the Federal Reserve. And Americans racked up $17 billion in credit card debt in the third quarter of 2021.