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Debt collector calling … and emailing … and texting?

Connie Prater

For decades, the debt collection industry has relied on telephone calls and letters to reach out to consumers with past-due debts. They rarely come knocking on your door. The reason: the rise in automated, computer dialing systems has made it more cost-effective to contact the greatest number of consumers using the fewest amount of collection staffers.

Cell phone only
In today’s mobile society, an estimated 12 percent to 18 percent of the population have no land lines and rely solely on cell phones as their primary communication method. The U.S. Centers for Disease Control and Prevention (CDC) talks about the growing problem of reaching representative samples of Americans given the no-land-line, cell-phone only crowd. The CDC relies on monthly health surveys conducted via telephone to gauge health care needs in the country.

The growth of the Internet, email and other electronic and wireless communications has meant that more people are accessible via electronic means. Now, the debt collection industry is trying to figure out the best way to reach out to debtors in the mobile world while adhering to the principles of the Fair Debt Collection Practices Act, the federal law that protects consumers from debt collection abuses.

Updating the law?
The problem: The act protects debtors’ privacy and prohibits disclosing the existence of debts to unauthorized third parties (such as your spouse, children, neighbors and co-workers). The law also bans postcards, which can be read by anyone, and makes clear that written communications such as envelopes must not reveal the name of the debt collection agency if the company name any way discloses that the letter involves debt collection. What isn’t clear in the 31-year-old law is how some more recent communication methods should be treated.

“That has created a challenge for the industry,” says Rozanne Andersen, executive vice president of ACA International, the largest trade group of credit and debt collection industry professionals.  Another example: Since the fair debt collection practices law prohibits calls to consumers before 8 a.m. and after 9 p.m., it may be difficult when making collection calls to determine which time zone a cell phone user is in when the debt collector calls or if the consumer is at work.

As more consumers file credit card applications online and cardholders sign up for email and mobile alerts, credit card issuers are adding email addresses and cell phone numbers to their databases of client information. When accounts go in arrears and are referred for debt collection or sold outright to debt buyers, that contact information may follow the account.

Email privacy?
Collectors must be certain that email notices of debts are not intercepted by others (such as your spouse or anyone with whom you share email accounts). Prior consent of the consumer is needed before electronic debt collection communications can be sent, and many debt collectors have so far shied away from using emails.
Adds Andersen: “The law needs to be clarified to permit those kinds of communications before that becomes a common method of communication.”

Avoiding confrontation
In a paper, filed with the U.S. Federal Trade Commission in October 2007, James Burchetta argues that electronic communication between debtors and debt collectors will be less confrontational.

Writes Burchetta, CEO of Debt Resolve Inc., a White Plains, N.Y., debt collection agency: “Using email is a win-win situation for everyone (debt collectors, creditors and debtors) because creditors are readily able to communicate with its debtor and debtors are empowered with the choice of where and when to read the email.”

Still, other questions persist: Does the name of the debt collection agency have to appear on cell phone caller ID when they call? If so, does that violate the disclosure provision of the fair debt law? Since cell phone owners pay for incoming calls, are debt collectors barred from using cell phone numbers unless they disclose the nature of the calls? The fair debt law currently has a provision that consumers must not be charged to receive collect land line calls and telegrams if collectors fail to disclose the communications are for debt collection purposes.

No doubt, we’ll hear more about this issue in the near future. Electronic communication standards are just one of the reasons cited by those who say the fair debt collection law needs a major upgrade.

What do you think of having debt collectors contact debtors by email or cell phone?

Update: A year after I wrote this blog, the FTC came out with recommendations for amending the Fair Debt Collection Practices Act to ban cell phone calls and texting to debtors without first getting their consent. See FTC urges changes to debt collection law.

See related: Consumer credit woes mean boom in debt collection, Know your rights: Fair Debt Collection Practices Act11 tips for dealing with debt collectionQ&A: Credit counselor urges consumer educationDebt collection samples lettersDebt collectors’ codes of ethics, FTC urges changes to debt collection law

Blog: I’m not a deadbeat, but I play one on my cell phone

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  • regina jackson

    Please be advised that I believe that debt collectors are so out of control mostly when debt is sold now to drug dealers I watch on ABC News last week a serious on what they were talking and I was amazed at what I was seeing, government needs to correct this ASAP because they have placed people lives in danger, also selling bad debt to these people are going to get people killed I myself had some man from New York called me and inform me if I did not paid my debt they where coming to my home and kick down the door and come in and take what they want not tell me who does this,these kind of actions are troubling and so out of control. These are some of the reason that there is ID thieve, because they have all your information home address, social security number, DOB and at this point who knows what else they have about a person and that I am a single mother that is so scary. I do believe that something needs to be done. On top of this I have 19yr at home that is getting ready to start college the banks are not giving the loans even after the government has given money and not even to someone that pays there credit card bill on time every month, my child applying directly with the banks they have lower her credit score and tell her that she do not have credit well guess what, if no one will give her credit how can she get credit, I personally believe that we the people need to go back to the old days and paid for everything with cash because credit has destroy people lifes and the suits give credit to whom they want to so therefore,if you are black and not rich you are screw and they continue to screw you.

  • Elaine

    This is good information to have. My exhusband just went to work at a collectin agency and is now coming home and telling his new wife and my children about my debt. I thought it was illegal but it’s good to know for sure as I will apparently be taking him back to both family court and now criminal court as well. I knew he was stalking me before, now he’s using his job to do it.

  • Banks focus on regulatory policies in giving loans to the customers , in order to minimize defaulters .

  • E. Hansen

    You have a couple of incorrect facts in your blog. Firstly, you may contact the consumer at the place of employment unless you know that the employer prohibits the consumer from receiving such calls (Section 805 a-3) and secondly, the debtor (consumer) also includes the spouse, parent (if a minor), guardian, executor, or administrator (Section 805,d). You should make sure of your facts before representing them as accurate.

  • Eric

    Doesn’t anyone realize why we are in a recession? The creditors and collectors are considered bad guys, not the ones who skip out on paying back what they owe?! This has caused credit to get tighter, higher rates, and we are facing a long recession because of this.

  • Deb

    I am disgusted by the highly unethical methods used to track people today. People are targeted to receive debt collection calls by only the agreement of the first and last name, and town. Capital One has sold their deadbeat info to Portfolio Recovery and others who are using these methods to harass us. We do not have an account with Capital One, and they just refuse to listen! Its unfortunate if you have a common name that this practice is accepted.

  • sarah

    Does anyone know if debt collectors can go to a prvious employers home and ask if so and so worked for them? Looking to garnish persons salary. Is this legal?

  • Sarah,
    The Fair Debt Collection Practices Act bans disclosing the fact that you have debts to third parties. That’s why they can’t mail postcards to debtors’ homes. If they contact a previous employer, they can’t reveal that you have a debt. I’m not aware of restrictions on asking if someone worked for them. If it’s a previous employer, I’m not sure how would impact current income from a current employer.
    If you’re at the garnishment stage, you’ve probably had a judgment entered against you in a court proceeding.
    You can contact your local nonprofit consumer credit counseling agency for more specific advice about getting out of debt. You can find them at