We Need to Re-Examine the Meaning of Third Party Disclosure

The FDCPA says that collectors may not communicate about a debt with a third party, except in limited circumstances. I have no problem with the spirit of this requirement. What has become unworkable is the expansive definition of what is effectively inadvertent “communication” with third parties.

In years past this clause gave rise to volumes of litigation related to leaving voicemail messages, because standard voicemail technology required a consumer to listen to a recording in the open, where others might hear. And access to the voicemail was available simply at the click of a button on the machine.

Today, these devices are in far fewer homes, and the vast majority of consumers have the ability to hear voicemail messages in private, with a password typically being required for access. Yet collection agencies are still reluctant to leave messages. In its Outline of Proposals released in conjunction with the 2016 Debt Collection SBREFA hearing, the CFPB suggested a fix to this situation by offering a limited content message that can safely be left and not be deemed a “communication” under the FDCPA. That’s helpful, but really the root of the problem goes further.

There are now parallels for this scenario in countless other communication channels.

eMail

Collectors must undergo contortions to use a decades-old ubiquitous communications “technology” called email. Because a neighbor might see the contents of an email? How… over my shoulder? Or my child might use a shared family email? Email accounts are free. Consumers can have as many as they wish. Why use a family email to open an account, or communicate with a healthcare provider?

In spite of being a well-established, ubiquitous, and generally free-to-the-consumer communication channel, collectors are unable to use it to reach consumers; not so much because the regulations say they can’t, but because they don’t say they CAN, and therefore creditor clients in general will not allow it.

Mobile phones

The proliferation of illegal and unwanted robocalls has stirred a massive effort to put tools in between call originators and called parties. Dozens of applications have been developed with the goal of notifying a consumer who is calling, and WHY, in order to provide them with enough information to determine whether to answer a call. As consumers, we all love this. However, collectors are the ONE INDUSTRY faced with a unique challenge in this new scenario. Should one of these applications disclose on a consumer’s mobile phone screen that a debt collector is calling, would be a third party disclosure? 

This situation has caused the industry to come up with alternate terminology to suggest to application providers that vaguely – but accurately – describes the call. At the moment, this is “account servicing.” So, what happens when account servicing becomes synonymous with debt collection? Another term must be found? How long will it take for a clever consumer attorney to file a lawsuit against the application provider, the carrier, and the debt collector, saying “account servicing” misled their client into picking up a call from a debt collector?

But, the whole point of the technology is to give the consumer accurate information.

This is endless. The broad interpretation of this rule may be protecting a small slice of consumers, but it is inconveniencing the vast majority who need the ability to communicate about debts in their preferred channel. The more barriers we put in front of this goal, the more we end up with debts on credit reports, debts turning into lawsuits, and debts getting re-placed with multiple collection agencies or sold because of an inability to communicate and resolve.

It is time to revisit this definition of third party communication. 

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Editor's note: You may also be interested in this related post today about an updated way for legitimate callers to ensure their calls are properly labeled.