Editor's Note: This article previously appeared on the Ontario Systems Blog and is republished here with permission.

Once you understand how commercial text message services work and the type of text message service your agency will offer consumers, it’s time to draft your Terms and Conditions. Terms and conditions, like any electronic service agreement, detail precisely how consumers may subscribe, access Key Words, navigate your text service, avoid text and data rate charges, revoke consent, unsubscribe and access your privacy policy. However, a Terms and Conditions document for the third-party debt collector requires much more.

The Fair Debt Collection Practices Act (FDCPA), state consumer protection laws, and laws regarding call frequency and calling times add additional risk for the third-party debt collector’s text message service. As such, this is not the time for a DIY. Rather it is time for the services of a highly skilled defense or compliance lawyer, familiar with all the nuances of the FDCPA and the Telephone Consumer Protection Act (TCPA).


The following list of issues should help you and your lawyer jump start the first draft of your agency’s terms and conditions document and come to grips with 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 if the text is not the first communication with the consumer (“This is a communication from a debt collector.”).

TCPA Requirements

Text messages are calls under the Telephone Consumer Protection Act (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.

Please understand, I did not say it is in fact required to secure specific consent to text from the consumer under the TCPA. I said it was prudent. This is a great discussion topic for you and your attorney.

Agency Initiated vs. Self-Serve Texts

A text message service that 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 consent. For this reason, I am a huge fan of key word text message services as an agency’s first step into the world of texting. To reduce the risk even further explain the consumer’s consent to use your key word text service also extends to your agency-initiated text messages. Like any new collection tool or strategy, test the waters with a limited number of accounts before doing a full court text-press across your 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 your 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. Make sure your terms and conditions 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

In your terms and conditions, explain 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 its 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 that 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 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, you may want to explain in your 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.

Coming up 

This is not an exhaustive list of the issues you will want to include in your terms and conditions, but it is a start. Look for Part IV of this series where we wrap up our discussion of critical issues, recommended practices and gather some practice tips from the leading text platform provider for the receivables management industry, Solutions by Text. In prepping for part IV, I sat down with Danny Cantrell, Founder and CEO of Solutions by Text and asked him 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 I told Danny I think we are off to the races.

Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies. 

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