Have you received an Instagram DM from a debt collector yet?
Last week, new rules implemented by the Consumer Financial Protection Bureau went into effect that allow debt collectors to reach out to consumers via electronic communication, including social media direct messages. The CFPB said it believes the rules will modernize the debt collection process, as they amend an act that was originally passed in 1977. But advocates believe these amendments can open the floodgates for scammers, or cause a less tech-savvy consumer to miss information about debts owed.
Here’s the low-down on what these rules mean for consumers — and the potential downsides.
What do these rules allow?
Yes, debt collectors can now slide into your DMs on any platform. They can also reach you via “any medium” including oral, written and electronic, including text or email. The rules allow debt collectors to friend request users on social media, but specify that they must identify themselves as debt collectors when reaching out. They also must give users the option to opt out of texts, emails or DMs, and can’t post on users’ personal pages in attempts to get in contact with them. Any kind of publicly viewable message is not allowed.
This rule covers various debts for personal or household purposes, including mortgages, credit cards and medical bills.
How did these rules happen in the first place?
The rule changes were first introduced in 2020 by Kathleen Kraninger, the former director of the CFPB under the Trump administration. The rules are an update to the 1977 Fair Debt Collection Practices Act, which prohibits harassment, abuse and misleading and unfair debt collection practices through phone calls. The updates went into effect on Nov. 30.
“Advances in technology in particular have transformed how we communicate, with cell phones enabling us to take a call or receive a text 24 hours a day in our neighborhood or on the other side of the globe,” Kraninger said in an October 2020 blog post about the rules. “But debt collectors and consumers have been trapped in a time warp. They have been required to communicate with each other under standards Congress enacted in 1977.”
But the process of defining what counts as electronic communications in the rule was hotly debated. During the new rule’s comment period, industry advocates argued that direct messaging communications on social media should be treated the same as email, because both are “password protected and generally not reassigned.” Meanwhile, critics argued that because some platforms require users to search for each other by first and last name rather than by distinct usernames, this increases the likelihood of debt collectors reaching out to the wrong people.
The bureau ended up declining to include direct messaging under the definition of email, separating social media into its own category in the final rule with some additional restrictions.
Another argument was over the times during the day that debt collectors can reach out to consumers. Some commenters suggested that calls be allowed within the hours of 8 a.m. and 9 p.m. local time, but requested that emails and texts be exempt from this rule. One stated that putting time restrictions on emails and texts puts debt collectors at a “competitive disadvantage because no other industry has such a restriction.” But the CFPB negated those comments, applying the time restrictions to debt collectors’ electronic communications as well as phone calls.
During Kraninger’s two years in office, the CFPB, once known for its consumer watchdog practices, saw an easing of enforcement and regulations. Kraninger resigned in January at the request of President Biden and was replaced by Rohit Chopra, who was the assistant director of the agency until 2017 when he joined the FTC.
What could go wrong?
Some advocates believe the new communication options could lead to an uptick in debt collection scams. The updates provide another, potentially even simpler avenue for scammers, which were already a common occurrence (i.e. endless robocalls), to spam users and swindle money out of those who may not know the difference between a real debt collector and a fake one.
“There are a lot of scams out there in this field,” said Christine Hines, legislative director at the National Association of Consumer Advocates. “And adding electronic communications to that minefield would open up another way for scammers to take advantage of people.”
Aside from scams, consumer advocates say they’re concerned that while the update limited the calls that a debt collector can make to seven per week per debt, it doesn’t put any limitations on the number of electronic communications one can send out.
The rules also put the onus on the consumer to check their social media, which means someone who’s more unplugged from social media may miss information about a debt they owe.
What happens next?
While the rules provide no specific limitations on the number of DMs that can be sent to a consumer, a CFPB spokesperson said in an email the agency makes it clear to debt collectors that they are “breaking the law if they harass consumers” via electronic communication. The agency said it will be “looking very carefully” at how debt collectors use these rules.
“We’re not going to tolerate excessive emails, texts or DMs, and we expect debt collectors to verify consumers’ identities as well as the underlying debts,” the spokesperson said. “Far too many Americans are hounded to pay money they do not owe.”
The rules apply specifically to debt collectors, but they could open the door to other kinds of spam DMs, especially amid reports of rising robocalls over the past year — 4.1 billion occurred in November, according to research by robocall blocking app YouMail, more than four times higher than in the same month six years ago. Maybe you’ll start to get messages on Twitter soon about your car's extended warranty… even if you don’t own a car.
Though Hines said she hasn’t heard of any reports of DM, text or email scams to the association yet, the rule has only been in effect for a week. If one does occur that is reported to the organization, it offers representation from its network of 1,500 consumer attorneys for people who are facing debt collection abuses.
“This is an issue that deserves monitoring,” Hines said. “Because we're kind of just speculating on what could happen based on past experience.”
