On Friday, Wired published an opinion article by David Vladeck, the former director of the Federal Trade Commission’s (FTC) Bureau of Consumer Protection, criticizing the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rulemaking for debt collection (NPRM). Vladeck, currently a law professor at Georgetown and a board member with the National Consumer Law Center, specifically takes issue with the use of hyperlinks in electronic communications from debt collectors and the lack of contact frequency limits for electronic communications.
According to Vladeck, the CFPB’s proposed rule regarding the use of hyperlinks creates a potential for exposing consumers to cyber threats such as viruses, malware, and phishing scams. Regulators, such as the FTC, have specifically warned consumers to not click on links sent from unknown addresses or phone numbers. If debt collection emails and text messages contained hyperlinks, then consumers may be reluctant to click on them due to the fears outlined above. In this case, consumers would not receive important disclosures, such as the validation notice that outlines the consumer’s rights and how to dispute a debt.
Vladeck points out that with the boom of debt buying, a consumer’s ability to know their dispute rights is more important than ever. He states:
Debt buyers sell and resell debts for years on end, typically without account records verifying that the debts are accurate, making the validation notice even more essential. Without one, a consumer won’t be told how to dispute a debt, and they may be harassed for a debt they do not owe. According to an analysis of the CFPB’s complaint database, 44 percent of complaints against debt collectors concern attempts to collect a debt that the complainant does not owe. Worse yet, the collector could report the debt to credit reporting agencies, damaging the person’s credit, or even bring suit.
(Original source: Wired.)
The opinion article also points to the NPRM’s opt-out provisions and the lack of contact frequency limits for electronic communications. Vladeck writes, “People could opt out, but the proposal does not specify how, and collectors might require an inconvenient method. Consumers should have a right to simply reply ‘Stop.’”
While the NPRM proposes the use of hyperlinks in electronic communications if certain conditions are met, recent things like the Seventh Circuit’s Lavallee decision and the above opinion article might put things in limbo. Lavallee found that including a hyperlink in a debt collection email that leads consumers to a secure portal with account information and disclosures does not count as an initial communication, at least not if the consumer does not click on the link.
There are three issues to point out for this discussion in general.
First, the opinion article referenced above does not address the procedures outlined in the NPRM regarding the conditions a debt collector must meet before using hyperlinks. The article makes it seem as if the consumers are going to receive emails out of the blue with hyperlinks to disclosures under the proposed rules as written. However, proposed § 1006.42(d) (NPRM, pp. 479-80) states that hyperlinks to disclosures may only be used if the consumer was previously given notice that they would receive important disclosures via a hyperlink, and the consumer has the ability to opt-out of the use of hyperlinks if desired. The NPRM allows for including the contents of a validation notice—thus eliminating the need for hyperlinks to disclosures—within the body of the email. Realistically, most debt collectors would probably opt for this option as it requires fewer steps and does not conflict with Lavallee.
Second, contrary to the opinion article, the NPRM does indeed require debt collectors to maintain methods for the consumer to opt-out of electronic communications, and it is simpler than the article makes it seem. Proposed § 1006.14(h) (NPRM, p. 461) specifically states that a debt collector may not use a communication medium that the consumer specifically requested not be used, putting the power in the consumer to control how a debt collector communicates with him. Subsection (2)(i) specifically states that a consumer may opt-out of electronic communications in writing.
Third, without the use of hyperlinks, text messaging becomes all but unusable in the context of debt collection since the required disclosures would not fit within the character limits of a text message. Since the NPRM’s call frequency provision is premised on the ability to freely use electronic messages such as email and text messages (naturally capped by the rule against harassment and abuse), and since one of these forms of communications would be made unusable if hyperlinks are not permitted, then it follows that the call frequency limits should be raised or eliminated since one of the underlying premises will no longer be true.