Debt collectors can now send you emails, texts and DMs. Thanks Trump
If you’ve splurged more this year with holiday gifts, you’re not alone.
More than half of Americans were planning to increase their vacation spending as part of efforts to get rid of the pandemic blues, according to a recent poll. Some said they would spend up to $ 1,000 more than a year ago.
But about a third of survey respondents admitted they were worried about taking on more debt – and those concerns are justified.
Household debt exceeded $ 15 trillion for the first time in the third quarter, fueled in part by rising inflation, according to the New York Federal Reserve.
Total credit card balances jumped from $ 17 billion to around $ 800 billion, reversing the more financially prudent behavior that has seen many consumers pay off balances because of COVID-19.
That’s not the whole story, however. You should also be aware that the rules for debt collectors have changed, and not necessarily in a good way for consumers.
Call it a delayed Christmas present from Donald Trump.
While Trump was president, his business-friendly Consumer Financial Protection Bureau passed new rules allowing debt collectors to send emails and texts to people, as well as track and send reports. messages to people via social networks.
These new rules finally came into effect this month.
Kathleen Kraninger, who ran the consumer agency under Trump despite no previous experience in consumer affairs, said in a blog post last year, that new rules were needed for “a debt collection system that works for consumers and industry in the modern world”.
âDebt collectors and consumers have been trapped in a time lag,â she said. “They were required to communicate with each other under standards adopted by Congress in 1977.”
While this is true, consumer advocates warn that freeing debt collectors into the digital realm can only make matters worse for people with financial obligations.
Linda Sherry, spokesperson for the Consumer Action advocacy group, said the prospect of debt collection via email messages can make it difficult for people “to tell if he is a genuine debt collector. or a crook “.
âIt could work both ways,â she told me. “They might ignore a real debt collector or they might answer a scammer, thinking it’s a real collection.”
Sherry said that an expected increase in cyber reviews from collectors “will be very confusing” for many people, “and consumers are going to have to be very careful to respond appropriately and secure their rights.”
I asked the CFPB under the new leadership if there were any discussions within the agency about revising or repealing the Trump-era rules. Noone answered me.
But Sherry makes a good point: At a time when most people are bombarded daily with emails, texts, and social media messages from scammers, adding debt collectors to the mix probably won’t make it. not consumer service.
Legitimate messages can be ignored. Fake messages can cause people to send money to fraudsters. A whole new level of vigilance will be required from consumers.
In announcing the implementation of the new rules last month, the CFPB acknowledged that things are now more complicated for consumers.
âIf a debt collector contacts you about your debts, you may wonder if the debt collector is legitimate, if the debt is yours, or if the amount the collector is looking to collect is correct,â the Debt Collector said. agency.
He reminded consumers that they have rights under federal law Fair Debt Collection Practices Act, which, among other things, makes it illegal for a debt collector to threaten or harass people.
Under the new rules, a collector who contacts electronically must clearly identify themselves and state their purpose, and must specify how the collector can be contacted in the event of questions or disputes.
If a debt collector contacts you through Facebook or another social media platform, their posts should be private and off-limits to other users.
The collector should be upfront about their intentions before asking to add you as a friend or contact for direct communication. It should also provide an easy way to unsubscribe if you no longer wish to receive messages online.
If you encounter a problem with a collector who does not respect the rules, you can file a complaint with the CFPB via its website.
ACA International, a business group for debt collectors, lobbied during the Trump administration to have the new rules passed.
The group called the ability to send emails, texts and messages to borrowers “the biggest development in the accounts receivable management industry” in more than four decades.
But as Spider-Man would say, with great power comes great responsibility.
It remains to be seen whether debt collectors will use their new cyber freedom responsibly, or whether some, especially the more unscrupulous, will exploit online messaging as a cool new way to harass people into spitting money. silver.
Remember that not all debts are collectable. In California, the limitation period for consumer debt is four years. This means that a creditor cannot succeed in court after four years.
But if you pay even a small amount of any bond over four years old, it will restart the debt clock, allowing the collector to bring legal action again.
If you have questions about a message that says you owe money, you have the legal right to ask for details of the obligation and to ask if the debt is within the statute of limitations.
Collectors have just acquired powerful new tools. But you are not helpless. Know your rights. Use them.