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Elements of the Ts and Cs for Texting in The Debt Collection Industry

Terms and conditions, like any electronic service agreement, detail precisely how consumers may subscribe, access Key Words, navigate a text service, avoid text and data rate charges, revoke consent, unsubscribe and access a privacy policy. However, a Terms and Conditions document for the third-party debt collector requires much more.

The Fair Debt Collections Practices Act (FDCPA), state consumer protection laws and laws regarding call frequency and calling times add additional risk for a third-party debt collector’s text message service. As such, this is an area that requires a high degree of compliance and familiarity with all the nuances of the FDCPA and the Telephone Consumer Protection Act (TCPA).

The following list of issues are ones we are reviewing while coming to grips with the many issues presently left forgotten, unclear or unaddressed under the law.

FDCPA Requirements: Third-party debt collectors must take care to ensure their text message program complies with the disclosure requirements of the FDCPA. Agency initiated texts are communications in connection with the collection of a debt under current law. This means agency-initiated texts trigger either the full mini- Miranda if the text is the first communication with the consumer [“This is a communication from a debt collector. This is an attempt to collect a debt and any information obtained will be used for that purpose.”] or the subsequent disclosure requirement [“This is a communication from a debt collector,”] if the text is not the first communication with the consumer.

TCPA Requirements: Text messages are calls under the TCPA. This means consent is required to initiate text messages to consumers on their mobile phones. To date, courts have not interpreted the TCPA to require the consumer to consent to receive calls on their mobile phones using an Automated Telephone Dialing System, and a separate consent to receive prerecorded messages on their mobile phones, and yet again a separate consent to receive text messages from the calling party. To date, consent for one is consent for all. However, due to the novelty of texting in the world of third-party debt collection, the skittishness of creditors and the potential surprise to a consumer receiving his first text communication from a debt collector, most agree it is prudent to specifically obtain consent to text from the consumer before initiating text messages to them.

Agency Initiated vs. Self-Serve Texts: A text message service which only allows a consumer to access information about their account(s) on a self-serve basis by texting a key word to a short code, is not likely going to be interpreted as a call from the debt collector. This is because the consumer requested the automated response. Fortunately, even if an automated text response is deemed a call, or a contact as defined under state law, it remains a response sent solely at the request of the consumer and therefore a response to which the consumer has granted consented. For this reason, key word text message services are a smart move as a first step into the world of texting. To reduce the risk even further, explaining the consumer’s consent to use key word text service also extends to agency-initiated text messages. Like any new collection tool or strategy, we plan to test the waters with a limited number of accounts before doing a full court, text- press across our entire inventory.

Single Message Texts: Another type of text message service is called a single message text service. In this instance, after the consumer consents to the single message service, an agency may initiate text messages that were not requested by the consumer using a key word. These agency-initiated text messages are calls to the consumer’s mobile phone for which the consumer has granted consent by agreeing to terms and conditions. Nevertheless, because these single message texts initiated by the debt collector are calls, they are also subject to all federal and state calling time and frequency restrictions.  Terms and conditions must include the requisite consent to cover agency initiated single text messages such as: your payment is late, your check or payment was returned, your next payment is due, etc.

Voluntary Text Message Service: Explaining terms and conditions and the decision to engage in any form of text messaging is entirely voluntary. Although some courts have held a provision in the credit agreement which requires the consumer to communicate with the lender, its affiliates and agents by way of text or email to be an enforceable, irrevocable term of the agreement, the issue remains an open question. Other courts have interpreted such a provision as something closer to an unenforceable contract of adhesion. Consider this sample paragraph:

“The purpose of this text message service is to allow you to obtain information about your account by texting key words to [Company Name]. The key words and their definitions appear below. It is also to allow [Company Name] to send limited types of text messages to you about your account(s) as explained below under the section titled, [Company Name] Initiated Text Messages Service.”

Text Message Service Termination Process: The CTIA, the self-regulatory body which sets the standards for commercial text messaging, requires any commercial text messaging service to terminate texting of all types at the consumer’s request. For example, if the consumer texts STOP, STOP ALL, END, QUIT, CANCEL, UNSUBSCRIBE ARRET or any other words to that effect, you must discontinue text messaging immediately. Upon terminating text messages and disenrolling the consumer form your text message service, the CTIA requires you to send a one-time, limited purpose text, confirming termination.

This requirement is a messy one for us as the third-party debt collector. Some courts have held the text message confirming termination is a message sent without the consumers consent and is in violation of the FDCPA. As a result, we might want to explain in our terms and conditions that by enrolling in this text message service, the consumer consents to receive a one-time text message from [Company Name] confirming their removal from or termination of the text message service.

The Future: This is not an exhaustive list of the issues we will confront developing terms and conditions for texting, but it is a start. Danny Cantrell, Founder and CEO of Solutions by Text, in an interview, answered two questions. Why enter the third-party space when you are so entrenched in the creditors space and why now? Cantrell explained,

“Solutions by Text is very excited about entering the third-party debt collection space. Over the years we have learned the bedrock of a successful text solution is managing consent and compliance throughout the relationship.

We also know managing consent to communicate with consumers, on their terms, is one of the most challenging issues facing the collection industry today. We are confident, within the regulatory framework of the third-party debt collection world, text messaging can provide a stable environment to communicate with and from consumers safely and effectively.”

I’m not sure how the third-party world will respond, but at XcelRev, we’re excited about the possibilities and are off to the races.

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