New Wine into New Wineskins? CFPB Debt-Collection Rule and Text or Email Messaging

The CFPB recently finalized its debt-collection rule, governing third-party collections. The need for this regulatory update arises because the existing protocols governing consumer debt-collection previously existed in an antiquated law. Meaning, the Fair Debt Collection Practices Act, enacted in 1977. The new CFPB rule was issued in late 2020.

This rule manifests a larger movement by regulators to try updating old laws to conform to new business practices in the digital age. In the 70’s, we had Studio 54 and the summer of love, but no SMS messaging technology, no Internet, and no email for consumers.

In the November 2020 Final Rule, the Bureau explained that yes, a debt collector who communicates with (or tries to communicate with) a consumer may use electronic communications. Namely, communications via email, text messages, or other electronic mediums are permissible, so long as the debt collector includes in “clear and conspicuous” language the method by which the consumer can opt out of further electronic communications by the debt collector to that email or phone number. See 85 Fed. Reg. 76734, 76890 (Nov. 30, 2020).

Stay tuned. More such updates to come, as regulators attempt to modernize longstanding federal rules to accommodate new ways of delivering consumer financial products and services.

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