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Working with third-party debt collectors can be confusing and scary. For the more than 68 million U.S. adults with debt in collections, knowing their legal rights is crucial.
The Fair Debt Collection Practices Act covers third-party debt collectors — those who buy a delinquent debt from an original creditor, like a credit card company. An update to the rules on how the act is applied that went into effect in late 2021 alters the terms of engagement.
Some changes modernize the law and clarify how it is enacted. But consumer advocates say other revisions don’t go far enough or may have unintended consequences.
Know your rights
The FDCPA offers several protections, including:
Limits on debt collector actions
Collectors must be truthful, including about details of the debt. They cannot use abusive language, call repeatedly in a harassing manner or threaten violence.
Collectors can’t ask for a post-dated check for the purpose of threatening or instituting criminal prosecution. They also cannot collect more than the amount owed or threaten to take property when that’s not allowed.
Debt collectors must send consumers a “debt validation letter” outlining important details, including the amount owed, the collection agency’s name and how consumers can dispute the debt.
People can limit how and when a collector contacts them, including telling them to stop communicating altogether. In all but limited circumstances, the collector must honor that request.
If consumers doubt the details of a debt, they can send the collector a debt verification letter seeking more information beyond the validation letter.
Updates to the FDCPA rules
Here are some of the changes, which went into effect in late 2021:
New communication options
Debt collectors are able to contact consumers by email, text message and social media messages without prior consent from the consumer to use these channels. The messages must explain how the consumer can restrict contact by these methods or request no communication.
The CFPB also limits how debt collectors can use these channels. A debt collector cannot communicate with a consumer through social media if other consumers can see the message, such as a public comment on an Instagram post. Collectors also must disclose to a consumer that they are a debt collector before sending a friend request. And the FDCPA's limits on communication with a consumer at inconvenient times or places is also extended to electronic channels like social media.
Consumer advocates worry that collectors may send crucial information like the debt validation letter to email or social media accounts that aren’t in use.
“What consumers should know is it’s going to be really important for them to be proactive to opt out if they don't want to receive communications through text message or email,” says April Kuehnhoff, staff attorney at the National Consumer Law Center.
She also notes, “If consumers start getting communications from a debt collector and you haven't gotten the initial notice about the debt, they should ask for that information.”
New limits on collectors' actions and disclosures
In late 2021, new rules from the CFPB around how debt collectors can disclose information about a debt and when they can mark a debt on a consumer's credit report went into effect. There are also new limits on actions around "time-barred debt," which is debt past the statute of limitations for suing over the debt.
Specifically, when making first contact about a debt, collectors must provide detailed disclosures about the debt, the consumer's rights around collection and how they can respond to the collector. This information must be given before the collector reports a consumer's debt to a credit reporting agency.
For debt past the statute of limitations, the CFPB clarifies that collectors are prohibited from suing or threatening to sue consumers for payment on the debt. That said, debt collectors can still ask consumers for payment on the expired debt, a sketchy practice that can result in a consumer inadvertently reviving a so-called "zombie debt" and making themselves vulnerable to a lawsuit.
Why consumer advocates are concerned, and what you can do
Some advocates worry that the updates don’t go far enough and say some of the changes could actually lessen consumer protections. Here are two of the primary concerns:
Frequency of communication
The update clarifies the definition of a “harassing” frequency of phone calls from collectors — but this also might enable such harassment, advocates warn.
The new rule limits collectors to calling no more than seven times a week per account. It bars calls within seven days after having a conversation with a consumer. But consumers may have multiple accounts in collections, leading to a barrage of calls.
The one contact per day doesn’t cover text, email or social media channels, so consumers may be inundated with messages. The new rules also allow for “limited-content messages,” which could mean a proliferation of voicemails that don’t count as “communications.”
“We have concerns about what this is going to mean especially for consumers who might, for example, have multiple medical debts in collections,” Kuehnhoff says.
What you can do: If you feel you’re being contacted too frequently, you can demand the collector cease communication in all but a few instances, such as when legal action is threatened. This extends to prohibiting communication in different channels.
No coverage of original creditors
The kicker with the FDCPA is that it only regulates third-party debt collectors — that is, a collector who doesn’t represent the original creditor. A collector who works directly for an original creditor isn’t held to these standards.
What you can do: Work to quickly resolve an account when contacted by a debt collector — no matter whom they represent. You may be able to work out a payment plan or settle for less than originally owed.
Rights violated? Submit a complaint
If your rights have been violated by a debt collector, file a complaint with the FTC.
Dan Dwyer, staff attorney at the Federal Trade Commission, says consumers should provide as much identifying information about the collector as possible.
“Then, just tell us what the problem is as clearly as you can,” he says.
This article was written by NerdWallet and was originally published by The Associated Press.