Inside the effort to embrace technology in a highly-and inconsistently-regulated industry.
12/14/2018 11:30
What does it take to embrace today’s digital communication trends in a heavily—and often inconsistently—regulated industry like accounts receivable management? In short: A tolerance for risk, a lot of research and a passion for listening to the consumer.
Neither email nor text messaging is explicitly allowed or disallowed in the debt collection process by current laws, but both must comply with the rules and regulations governing the accounts receivable management industry. Here’s an excerpt of what you need to know about using email and text messaging to communicate with consumers from Collector magazine editor Anne Rosso May.
Communicating with Consumers Using Email – Risks & Issues
There’s a tremendous amount of regulatory uncertainty surrounding email. Under the Fair Debt Collection Practices Act, emails can present third-party disclosure risks based on both the content in the body of the email as well as what’s in the “from” or “subject” lines of the email, which could contain information that the email is about a debt.
What if you send an email to a consumer’s work address and the consumer’s employer reads it? What if consumers are automatically logged into their email account and someone else sits down at the shared family computer?
You’ll also have to consider time constraints and the location of the consumer, just as you would when sending a physical letter.
Other federal laws, such as the Gramm-Leach-Bliley Act and Health Insurance Portability and Accountability Act may apply too, as well as state-specific text considerations.
Most debt collection laws are silent on the applicability of the Electronic Signatures in Global and National Commerce (E-SIGN) Act to the accounts receivable management industry, but complying with the act may be extremely beneficial when sending emails for purposes of collecting a debt.
In addition to allowing you to substitute an electronic signature for a paper one, E-SIGN also contains a provision about consumer disclosures, including if and how you can substitute an electronic disclosure for a paper record, such as a validation notice or post-dated payment reminder.
The FDCPA requires debt collectors to send a written validation notice within five days of the initial communication with a consumer. In an amicus brief submitted to the Seventh Circuit, the Bureau of Consumer Financial Protection acknowledged that “the five-day window within which a debt collector must provide written validation notices may not afford debt collectors sufficient time to make compliance with the E-SIGN Act a viable option,” but the short time frame “does not justify ignoring” it “absent a regulatory exemption.”
Communicating with a Consumer Using Text: Risk & Issues
Rozanne Andersen, vice president and chief compliance officer for Ontario Systems LLC, outlined three primary ways accounts receivable management firms can use text messaging to reach consumers:
• Short code text messages, which rely on keywords. For example, consumers could text the word PAYMENT to get payment information. These may be the least-risky as they are initiated by the consumer.
• Recurring single-message texts, which allow consumers to sign up for specific notifications that you push to their phone. The consumer could request the agency routinely text them a reminder when their payment is due.
• Free-form text programs, which involve agents actually responding to and chatting with the consumer, usually pulling from a list of standard responses.
“For our industry, that’s the highest level of risk,” Andersen said.
Text messaging is primarily regulated by the TCPA, FDCPA and state laws. Under the TCPA, you must have consumers’ verbal or written consent to call or send a text to their cell phone. Failing to obtain this—or ignoring the consumer’s consent revocation—can land you in court.
Text messaging raises some potential FDCPA concerns, including possible third-party disclosures and consumer-incurred fees for messages. Agency-initiated texts are also subject to calling time and frequency restrictions, and can trigger FDCPA disclosure requirements. That can make it very tricky to send a text as a first communication with a consumer.
You’ll also need to keep E-SIGN requirements in mind if you text legally required disclosures or documents. State-specific rules could also limit the number of texts you send per week or month.
Read more issues to be aware of when sending email and text messages as well as relevant case law in the December issue of Collector magazine.
If you are interested in sharing articles and analysis on legal cases, industry laws and regulations or other relevant topics for possible publication with ACA International, email our Communications Department at [email protected].
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