Obtaining Consent In Digital Debt Collection

By on December 13th, 2017 in Compliance, Debt Collection, Industry Insights

There are few industries left that are as ripe for disruption as the collections industry is right now. In the case of collections, the old adage of “if ain’t broke don’t fix it” has guided the process for collection agencies for the better part of 40 years. Collectors knew that they could reliably collect on past due accounts by simply sending a letter or two and calling debtors repeatedly until they made contact and then convincing the debtor to pay off the account. Creditors built their customer contracts knowing that the collections model of phone and letter outreach was well established. Today, things are changing and they’re changing fast. Nearly 77% of American consumers own a smartphone. Naturally, consumer preferences on how they want to be communicated with have evolved, and at TrueAccord we’re working hard to stay on top of this trend, while maintaining the highest standard of compliance, and pushing the industry to catch up to the times.

The collections practices set out by the Fair Debt Collection Practices Act (FDCPA) were designed primarily to protect consumers from abusive contact by collectors in person, by phone, and by letter, but gave little thought to new technologies or how they would be used by consumers. It was only last year that the new proposed rules on debt collection were announced by the CFPB referencing new digital communications methods. This announcement has been creating waves for both creditors and debt collectors and now is the time to start thinking about consumer communications preferences and how to leverage new communications tools to contact your customers, even in collections.

The legal standards for how to obtain consent to contact a debtor is outlined in regulations and in basic agency law. In almost all cases consent to contact a consumer transfers to an agency. Most creditors have added to their contracts provisions allowing for consumer contact by mail and phone with some forward thinking creditors including consent language for the creditor to service the account using email or even better, digital communication channels. However, not many contracts underlying a debt that gets placed in collections anticipated a collector wanting to contact a debtor by email or text message.  With new rules coming, now is the time to anticipate this change and create broad consents that incorporate digital channels that currently exist, and that may be created. An example of a broad consent in a contract might look like:

“If we need to contact you to service your account or to collect amounts you owe, you authorize us (and our affiliates, agents, contractors and third party servicers) to contact you at any number you provide, from which you call us, or at which we believe we can reach you, at any email address you provide to us or at which we believe we can reach you, or through any social media or other digital communications platform you may use. We may contact by calling or texting. We may contact you using an automated dialer or prerecorded messages. We may contact you on a mobile, wireless or similar device, even if you are charged for it.”

This clause incorporates phone, email, text, social media, and leaves the door open for new technology like push notices.  Even though there is some uncertainty around the ability to contact consumers using all of these new channels it’s important to think ahead for when the laws catch up to consumer preferences. It’s not uncommon for a consumer to reach out to TrueAccord and ask for us to text them account details and we wouldn’t be surprised if a consumer asked us to contact them using other messaging apps like Whatsapp or Facebook Messenger. With the consent language above a collector could respond to consumer demand and use these channels to contact a consumer in the way they want to be reached. Respecting consumer preferences will open the door to more successful collections opportunities benefiting consumers, collectors, and creditors.