Christopher Fultz peered at his phone during a break at his job as a paramedic and saw an unusual text displaying his name in all caps.
“I was appalled. They can’t send text messages if it’s a debt collector,” said Fultz, of Ohio. “It was just shocking that they would do that. It felt like a scam.” Fultz filed suit and the debt collection company paid him $3,500 as part of a settlement.
For decades, debt collectors have relied on a limited set of communication tools: landlines and the U.S. mail. Now they are finding increasingly personal ways to reach the millions of Americans regulators say have been contacted by debt collectors. Some debt collectors worry that these contacts fall into a legal gray area because the Fair Debt Collection Practices Act was written 40 years ago and doesn’t directly address digital communications.
The Consumer Financial Protection Bureau on Tuesday proposed rules that would give the industry the go-ahead to send consumers unlimited amounts of texts and emails, accelerating a trend the watchdog bureau says could be beneficial for everyone.
The proposal is a victory for debt collectors such as San Francisco-based TrueAccord. Instead of making a barrage of phone calls, TrueAccord sends out millions of emails and texts every month. Next, it hopes to contact delinquent consumers through chat programs such as WhatsApp.
“When you have a good online digital presence, you don’t need to make those calls,” said Ohad Samet, the company’s co-founder and chief executive. “The only question here is why hasn’t everyone else moved to digital-first models yet.”
But this digital-first approach has alarmed consumer advocates who worry that the CFPB could give an industry known for high pressure tactics a new way to violate consumers’ privacy. While many Americans understand how to deal with a pesky creditor calling their landline, their texts, emails and social media are new and more personal territory.
“People are able to ignore phone calls, and that is the thing debt collectors don’t like,” said David Phillips, an Illinois attorney who has filed dozens of lawsuits against debt collectors. “It’s as if a debt collector is able to show up at your house and pound on the door. That is the effect of a text message.”
In addition to addressing the use of email and text communications, the bureau also proposed limiting the number times a debt collector could call someone to seven times in a week. After reaching the consumer, the debt collector wouldn’t be allowed to call again for a week. It would also update the disclosures the companies must provide in written communications.
Consumers can still tell debt collectors to stop contacting them in any way, under the law.
The debt collection industry said it appreciates the CFPB proposal, but called the cap on the number of phone calls they can make “arbitrary.” It would “unnecessarily impede communications with consumers,” said a statement from Leah Dempsey, senior counsel for ACA International, a large industry lobbying group.
Consumer groups that had called for the CFPB to limit the industry to three calls a week were unhappy with the proposed rules.
The cap applies to individual debts owed by the consumer, said Linda Jun, senior policy counsel at Americans for Financial Reform. Someone with more than one bill in collections could quickly be inundated, Jun said. “It could add up quickly,” she said.
If the debt collectors emailed or texted too often it would be considered harassment and be illegal, according to the CFPB. But unlike with phone calls, the bureau is not proposing a specific cap on the number of contacts.
The proposal also asks debt collectors whether they anticipate using social media to contact consumers while prohibiting such contact if it could be viewed by a third party. Some debt collectors have already found ways to use social media.
Diandra Rivera of Brooklyn said she stopped posting to Facebook and closed her LinkedIn account after realizing debt collectors had started monitoring the sites. One combed through her LinkedIn page to find a former boss and even family members, who the debt collector then contacted, she said.
Another monitored her Facebook page. During phone calls with the debt collection agency, the representative would mention social outings she had posted on Facebook, Rivera said. The agent questioned why she was behind in repaying her student loan payments if she could afford to go to Applebee’s, Rivera said.
“It was really creepy,” she said.
The proposed rules are likely to set up a battle between debt collectors and consumer advocates. The CFPB received about 81,500 complaints about debt collectors in 2018, according to a report released in March, making the industry one of the agency’s most common sources of consumer complaints.
Giving debt collectors such wide latitude to expand digital communication is unwarranted, said Christine Hines, legislative director for the National Association of Consumer Advocates.
“With the extreme examples of debt collectors’ harassment and invasion of consumers’ privacy that we’ve seen, it’s always a bad idea to exempt debt collectors from liability or grant them a safe harbor, in any circumstance,” she said. “Seems like an invitation to encourage more abuse not deter it.”
But some industry officials say the move into the digital space could be transformative. Debt collectors are already combing through social media to track consumers’ digital footprints and building models to determine whether they would be more likely to respond to male or female voices.
TrueAccord, launched in 2014, has been attempting to put a friendly face on the debt collection industry and rarely calls consumers, Samet said. The company he co-founded “crunches a lot of data” to build a profile of consumers, based on what kind of products they have purchased and on their previous responses to attempted contacts, he said. Ninety percent of the company’s communication with consumers does not involve a human, he said.
“There is machine learning at play here,” he said.
Samet said he believes consumers appreciate TrueAccord’s approach. Text messages and emails are a “channel you engage with more frequently but if you don’t like my email it’s a swipe of the finger to make me go away. You can set up filters. You can do a lot of things to manage your communications,” he said.
The CFPB has received more than 50 complaints about TrueAccord since 2015, according to the bureau’s database, which doesn’t identify complainants.
“This lady keeps emailing me constantly. She has even went so far as to tell me that she knows I am opening the emails. She is harassing me at this point,” according to a complaint filed with the CFPB earlier this year. “This is not okay. Please help me.”
In 2017, a consumer told the CFPB that TrueAccord had been too aggressive. “This email was written in such a matter [as] to convince me that they will threaten me both physically and try to ruin my reputation. They stated they would use any means available to collect the money they say is owed,” according to the complaint.
Samet said the complaints are typical of the kind received by other service companies such as Comcast and a “fraction” of what competitors receive. “We never want people to complain,” he said.
To be sure, digital communications from creditors can sometimes be helpful to consumers. Emails and text messages create a footprint that can be used to track down debt collectors hiding behind post-office boxes and shell companies, said Ohio attorney Jonathan L. Hilton, who practices consumer law. In some cases, Hilton said he has subpoenaed Google or cellphone companies to find the names, addresses and even bank account information of debt collectors. “It’s very useful from the investigative side,” he said.
Vicki Chester, a retired nurse’s assistant, said she was being inundated with phone calls from a debt collector about an old $350 debt for months before she relented and made two $60 payments. “The calls were nasty,” said Chester, a client of Hilton’s. “I was tossing and turning every night wondering if I am going to be picked up.”
Finally, she asked the debt collector to send her an email with details about the debt. That is when Chester said she realized she was being hounded about money she didn’t owe. “I realized, this isn’t my debt,” said Chester, who received a $6,000 settlement against the debt collection agency. “They had the wrong Vicki.”
The 1977 Fair Debt Collection Practices Act was written before cellphones became the constant companion of millions of Americans. The law prohibits debt collectors from calling before 8 a.m. or after 9 p.m. and prohibits harassment. But it did not directly address most forms of digital communication.
The CFPB proposal would change that, which would be a relief for Elle Gusman.
Minnesota-based Direct Recovery Services has experimented with both text messages and emails, said Gusman, who founded the company in 2012. Emails were effective initially but then began getting flagged as spam by Google, especially when sent out in large batches, she said. The company even created a new domain name, but words included in the emails or their attachments -- such as debt, password, account, pay online -- would get flagged, she said.
“It won’t go through,” said Gusman.
Consumers also appeared to like receiving text messages about their delinquent bills, said Gusman. “Millennials just want to go online and pay” their bills, she said. “It would be crazy, within an hour of just sending our messages, we would get 20, 30 payments online.”
Sending the messages was expensive and it was difficult to include all of the required disclosures in a few characters, said Gusman.
One of the people Direct Recovery Services texted was Fultz, the Ohio paramedic, who said he found the messages intrusive.
The company has stopped the practice but Gusman said she is hoping the CFPB proposal will allow the company to try again.