Debt Collection via Text Message

Posted: November 6, 2013

phonemoneyThe Federal Trade Commission (FTC) issued a $1 million civil penalty in a settlement agreement with a California-based debt collector and two companies he managed. This is the FTC’s first undertaking with a debt collector for allegedly sending text messages to consumers with the purpose of illegally collecting debt.

The defendants supposedly misrepresented their identity through text messages, calls, and mailers by failing to identify themselves as debt collectors, as required by law, and falsely representing themselves as lawyers. Additionally, the defendants intimidated consumers with threats of prosecution or salary garnishment and failed to maintain the consumers’ privacy by releasing debt information to the consumers’ relatives, friends, and coworkers through mailers.

This settlement provides insightful considerations for other companies attempting to collect on outstanding debts. It is very important that debt collectors accurately identify themselves, without providing misleading information, when contacting the consumer regarding the outstanding debt as well as ensure the company collects debts without harassing or threatening the consumers. Additionally, such entities must ensure all personal debt information remain confidential (debt collectors cannot publicly divulge any debt information to any person other than the debtor) for the purpose of protecting the consumers’ privacy and reputation, and to avoid causing distress among the debtors’ families or at the work place. Furthermore, for companies conducting debt collection campaigns through calls and/or text messages, debt collectors must ensure consumers’ valid express consent has been obtained before placing such calls and/or sending these text messages.

As evidenced in this settlement as well as other recent actions against debt collectors, these kinds of practices are not only illegal but will likely generate complaints resulting in lawsuits, enforcement actions, or similar settlements.

Whether your company performs its own debt collection activities or hires third parties to collect debt on its behalf, your company faces a myriad of state and federal laws that apply to debt collection practices. CompliancePoint can assist with your compliance efforts related to debt collection compliance issues. For more information, please reach out to

Juliana Betancur

Author: Juliana Betancur

Juliana Betancur is a Consultant Support Administrator at CompliancePoint. She assists the consulting team with the tracking of new enforcements and regulations. Juliana also assists with a variety of specialty tasks including international compliance projects.

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