The Consumer Financial Protection Bureau proposed new debt collection rules on Tuesday that would restrict telephone contact between collectors and consumers but allow unlimited text messages.
The CFPB’s proposal represents the first update to the Fair Debt Collection Practices Act (FDCPA) in more than 40 years. The Dodd-Frank Act provided the bureau with the authority to prescribe new rules amid concerns over abuses by the $11 billion debt collection industry.
Under the proposal, collectors would be prohibited from calling a debtor by phone more than seven times within seven consecutive days or for seven days after having spoken on the phone with a debtor.
Those limits would not apply to emails or text messages but the proposal requires collectors to notify consumers how to opt out of receiving communications “directed at a specific email address, telephone number for text messages, or other electronic-medium address.”
Collectors would also be entitled to a “safe harbor” from liability if they maintain procedures that are “reasonably adapted … to avoid a bona fide error in sending an email or text message communication” that would result in a violation of consumer privacy protections.
“The bureau is taking the next step in the rulemaking process to ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations,” CFPB Director Kathleen L. Kraninger said in a news release.
The FDCPA was passed in 1977 but hasn’t been updated to reflect digital technology.
According to The Washington Post, the CFPB’s proposal could unleash “a battle over the [collection] industry’s tactics and consumers’ rights,” with collectors hopeful the CFPB will allow them to email and text consumers, and consumers asking the agency to protect them from harassment.
In the proposal, the bureau said it “generally believes that the use of electronic media for debt collection communications can further the interests of both consumers and debt collectors.”
Another new rule would prohibit collectors from suing or threatening to sue a consumer over a “zombie” debt when the collector knows or should know that the statute of limitations has expired.