ACA's Angle: Debt Collectors Need to Balance Risk and Reward When Using Technology

By: Valerie Hayes, ACA General Counsel and Vice President of Legal and Government Affairs

It’s no secret that we live in a technology-laden world. According to the Pew Internet and American Life Project, nearly 75% of all American adults (ages 18 and older) use the internet and more than 150 million people now pay their bills online. The percentage of people using online payment options has increased in recent years and younger consumers are leading the pack in their use of the Internet to manage their finances

New technologies have transformed how people communicate, and expect to be communicated with, by friends, family and companies with whom they have a business relationship. Mobile phones, e-mail, texting, Facebook, Twitter and other social media have replaced the landline telephone and fax machine as essential communication tools for most Americans. Today, more than 80% of American’s own a cell phone and a rapidly growing number of consumers consider their cell phone as their primary telephone versus a landline. Seemingly every day there is a new or emerging method that debt collectors can use to communicate with consumers in a way consumers find convenient.

But, just as many enterprising collectors are using these new technologies, there is a very real risk as the legal boundaries of this vast new frontier are only now being explored. At the heart of the matter is the woefully outdated Fair Debt Collection Practices Act (FDCPA), which needs to be clarified so that debt collectors can communicate with consumers using technologies now available, which were never imagined in 1978 when the FDCPA was adopted. Another concern is the proposed FCC rule change to the Telephone Consumer Protection Act (TCPA) that mandates express written consent from consumers is required before contacting them on their cell phones.

ACA International and partners will be advocating for modernizing these laws to reflect new, emerging and future technologies.

For agencies using virtual collections, it can provide valuable efficiencies including the ability to work with consumers 24 hours a day, provide assistance in several programmed languages, design workable payment options and accept payment without the need for “live” staff. However, there is very little case law so with this lack of clarity many agencies are taking more of a wait-and-see approach before investing heavily in the use of new technologies.

Every aspect of collector communication, including website content, to be viewed by consumers should be considered and evaluated based on compliance with state and federal law or risk liability for any false, misleading or inaccurate information. The bottom line – debt collectors need to balance the risk with the reward when taking advantage of available technologies. But, before jumping on to the information superhighway, take the time to engage an attorney who is well-versed in the FDCPA.

Tags: aca.international, fdcpa, reform, technology, valerie.hayes

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Comment by Jeremy Mapes on March 15, 2011 at 9:13am: I think, right now, agencies would settle for what they could do three years ago. For example the ability to use dialer technology to make calls and leave messages without the fear of some class action from being in technical violation. Over the last several years, due to bad laws and the inability for the feds to agree, the ability of agencies to automate their contact with the consumer has been stifled. If collectors could call anyone on the dilaer wihout few of repisal would be a good improvement, along with updating the laws to consider cell phones as an only way to reach some dobtors.

So in some ways it would be nice for the Feds to go back instaed of forward. Otherwise the new technology will be focused on automating suits, not contacts.

Comment by Michael Mann on March 15, 2011 at 11:24am: Problem with the ruling out cellphones is that almost everyone uses them and most use them in place of a home phone.

Back in the days, cellphone prohibitions were related to making a debtor use their costly minutes when you called them. In todays world most cellphones are on a limitless plan so that the reason for not calling a cellphone is no longer extant.

It seems that debtors are winning the war that allows them to take goods or services and not pay for them and then hide behind government regulation in order to avoid responsibility. Then, to make matters worse, the debtor claims that the collector violated some sancrosanct rule in contacting them and some petty FDCPA attorney litigates against the collector, collects an insurance settlement and the debtor simply rips the lender off for the goods or services.

Mark my words....if it continues this way merchants will simply either stop lending or extending credit and/or the cost of the credit will climb sky high.

It is a shame.

Comment by Chris Baggett on March 15, 2011 at 1:29pm: With regards to Michael's comments, the cost of sending messages to cell phones has been eliminated with Free To End User Text Messaging (FTEU SMS). Eliminates that pesky TCPA issue about causing the debtor to incur a charge. While the 3rd party collectors have not taken advantage of this, the Direct Lenders use our system continuously. And as the volume levels increase, the costs for this have dropped substantially. Consent transfers with the agreement. If they supplied the cell phone in connection with the debt, you can use FTEU SMS legally as well. Just seems that no one in the 3rd party world is willing to do the heavy lifting. Our first party lenders are getting as high as 20% response to FTEU SMS. Our attorney tells us that consent isn't required if the message is FTEU.