How much should debt collectors be able to invade the privacy of the roughly one-third of Americans who have debts in collection?
When Congress last answered that question more than 40 years ago, people did not communicate through email or text messages. Instead, Congress protected consumer privacy by barring collectors from sending post cards or telegrams that might embarrass consumers by telling people the collector was trying to collect a debt from them.
In early May, the Consumer Financial Protection Bureau proposed new regulations to make the federal Fair Debt Collection Practices Act more useful in the modern era. Unfortunately, the proposal would make it easier for debt collectors to invade consumer privacy.
Obviously, people should pay their debts, but some simply can’t. Many people who have difficulty paying debts have suffered loss of a job, medical problems, or a family breakup. People who have experienced such problems should not also have to endure privacy invasions without good reason.
And so Congress struck a balance: Allow debt collectors to seek payment, but not to call so frequently, for example, that the calls amount to harassment or abuse. But the bureau proposal disrupts this balance, tilting it too far to collectors in two ways.
Private Matters Disclosed
First, the proposal would enable people to learn that the consumer is being dunned by a debt collector. That’s because it permits debt collectors to leave messages with people that refer to an “account.” If the proposed rule takes effect, people may quickly realize that those leaving such cryptic messages are debt collectors, thus frustrating Congress’s goal of saving debtors from embarrassment.
Under this proposal, consumers might pay debts—including debts they don’t owe, which happens more often than you might think—to avoid the risk that they will be humiliated by collectors calling them at work or elsewhere.
Second, the bureau proposal would invade consumer privacy by allowing collectors to bombard consumers with demands for payment. Under the proposal, debt collectors could try the consumer’s phone number seven times a week and leave voicemails each time. That may not sound too bad, but the CFPB reports that nearly 75% of consumers with a debt in collection also have other debts in collection, meaning that such consumers could be overwhelmed with calls from multiple collectors.
No Limit on Individual Collectors
Add in that the proposal does not limit the number of texts and emails individual collectors could send, and the result might be that consumers, far from receiving occasional reminders that they owe a debt, flinch when their phone vibrates with a call, text, or email.
While an individual collector could not send so many texts or emails that it harassed the consumer under the statute—a number that courts could decide is quite high given the reluctance of the bureau to limit them—collectively, multiple collectors could far exceed that threshold.
Some Opt Out Options Not Enough
There is some good news for consumers with debts in collection: While collectors could call consumers each day, once they actually spoke to the consumer, they could not call for another week. And collectors would have to provide consumers instructions for opting out of text and email communications.
But a study I co-authored found that when debt collectors provide consumers with required disclosures, consumers often misunderstand them. Debt collectors who want consumers to focus on paying them rather than their legal rights have an incentive to supply disclosures in ways that make consumers overlook them.
Laws that say the disclosures must be clear and conspicuous or cannot be overshadowed by other messages have frequently failed to cure the problem. Consequently, it remains to be seen whether consumers, as a practical matter, will be able to opt out of the texts and emails.
The CFPB should reconsider its proposal, and it should prevent collectors from leaving messages that enable outsiders to guess that the caller is a debt collector. Similarly, it ought to limit the numbers of emails and texts collectors can send consumers, and cut back on the seven calls a week.
As Congress determined long ago, even consumers who might owe money are entitled to some privacy.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Jeff Sovern is a professor at St. John’s University School of Law and co-coordinator of the Consumer Law and Policy Blog. Sovern has been teaching and writing about consumer law for more than 30 years.