Based on 2018 data compiled by Urban Institute, an estimated 31.6% of Americans with credit files have at least one collections account in their credit reports. Many people will deal with debt collection at some point in their lives, sometimes due to simple misunderstandings or lost invoices, so understanding your rights regarding debt collection is critical no matter how your finances look.
That’s why it’s unfortunate that there has been little discussion outside the world of finance about the new FDCPA changes that have recently gone into effect. To help you understand these changes and what they mean for your finances, our experts are weighing in.
What Is the FDCPA?
The FDCPA is the Fair Debt Collection Practices Act, a US law that was first enacted in 1978. This law outlines specific legal limitations and rules for debt collectors to prevent from them using deceptive or unethical methods to get your money. This act also gives you, the consumer, certain rights and allows you to seek legal recourse against collectors who violate the FDCPA.
About the FDCPA Changes in November 2021
As our world changes, so must our laws to fill in loopholes and adjust to shifts in technology. This is why the Consumer Financial Protection Bureau or CFPB issued a new amendment to the FDCPA this year, and that amendment recently took effect on November 30th, 2021. The amendment is known as the Debt Collection Rule.
This amendment made a variety of changes to the FDCPA, but the eight changes that likely affect you most include:
- Call Frequency Regulations – Debt collectors now cannot call a consumer more than seven times in seven consecutive days or within seven days of having a conversation on the phone with the consumer about the debt. Note, however, that this restriction applies to each debt, not each consumer, so collectors can call you more often if they’re trying to collect on multiple debts from you. There are other limitations to this as well – for example, it doesn’t apply to calls you have consented to already.
- Use of Electronic Communications – This new amendment allows debt collectors to use digital communication methods like texting to contact you about your debt. There are some restrictions, though. For instance, the collector can’t contact you about your debt on a publicly accessible platform like social media. If they send you a friend request, follow request, or similar connection request on social media, they must also disclose that they are a debt collector.
- Abiding by Consumer Requests Regarding Contacts – Under the new FDCPA amendment, as a consumer, you now have the right to request that debt collectors stop contacting you on specific platforms such as by phone or by text. You can also request that they cease communication.
- Opt-Out Options – Thanks to the new changes to this debt collection regulation, debt collectors now need to provide you with an easy opt-out task if they contact you digitally. For instance, their text message must contain a clause that says “Reply NO to opt out of text communications” or something similar.
- Voicemail Limitations – When a debt collector leaves you a voicemail, they are only permitted to include certain information: the company’s business name (without stating that they are a debt collection business), a request for you to return their call, and contact information for you to reach them. This protects you from others hearing your voicemail and learning about your debts without your consent.
- Restrictions for Work Emails – Debt collectors can no longer contact you at an email address that they know to be your work email address. There are a few exceptions, such as situations where you previously used your work email to communicate with them about the debt or previously gave them your consent to use this email address, and you haven’t yet withdrawn your consent or asked them to stop using this email.
- More Requirements for Debt Validation Notices – As a result of the new law changes, there are now more pieces of information required when debt collectors provide you with debt validation notice. Collectors are now also permitted to give these validation notices orally, not only in writing.
- Restrictions on Time-Barred Debts – Some debts have a specific statute of limitations, after which the debt collector has no recourse if you don’t pay the debt. The November 2021 changes prohibit debt collectors from threatening or bringing legal action against consumers in reference to time-barred debt.
How the FDCPA Changes Affect You and Your Finances
What do all these changes mean for your finances? They actually offer you several important benefits.
First, your financial privacy is better expanded and protected. Many of the legal changes focus on ensuring that your debt information doesn’t fall into the wrong hands.
Second, your debts now have less of an impact on your quality of life. Debt collectors can’t harass you to the degree they previously could, nor can they contact you in a public way such as on social media where your colleagues, friends, and family members will see them. Your financial challenges will remain in the financial realm, so debt collectors have less ability to manipulate other areas of your life.
Third, you’re now less likely to be deceived into paying non-collectible debts because there are strict regulations about debt collectors’ conduct regarding time-barred debts.
So many financial difficulties stem from simply not understanding the financial world. Our aim is to help you get the details you need to protect your finances, including the latest updates to the FDCPA and beyond. In the meantime, head to our free financial resource center for help aligning your finances for 2022.