Today's Trends in Credit Regulation

A Debt Collection Text Message is Treated Like Any Other Communication
By Shawnielle D. Predeoux

Today, most consumers carry a mobile phone to be able to instantly receive communications from friends and associates. With the increase in mobile phone usage, businesses, including debt collectors, have increasingly used text messages to communicate with consumers. However, there has been some uncertainty as to the types of information a debt collector must disclose in a text message to comply with the Fair Debt Collection Practices Act. The Federal Trade Commission recently clarified its text message disclosure requirements in a consent order released in September 2013 against Archie Donovan and two debt collection companies he controlled - National Attorney Collection Services, Inc and National Attorney Services, LLC.

The FTC made clear in the consent order that a debt collector must include the same disclosures in a text message that it would in any other medium in which an initial or subsequent communication is sent to a consumer. When an initial communication is made by text message, the text message must disclose that the sender is a debt collector attempting to collect a debt and that any information obtained will be used for that purpose. All subsequent text messages must state that the communication is from a debt collector.

The consent order also provides additional guidance on a requirement for debt collectors sending text messages to consumers. The consent order prohibits debt collectors from sending text messages to a consumer's mobile phone unless the consumer has provided prior express consent to receive debt collection text messages. The consent order goes on to define "express consent" to mean "prior to sending a text message to a consumer's mobile telephone: (1) [debt collectors] or their creditors must have clearly and prominently disclosed that the debtor may receive collection text messages on mobile phone numbers provided to the original creditor or to [the debt collector] in connection with the transaction; and (2) the [debtor] has taken an additional affirmative step, including a signature or electronic signature, that indicates agreement to receive such contacts." "Clearly and prominently" is defined to mean "that the required disclosures are of a type, size, and location sufficiently noticeable for an ordinary consumer to read and comprehend them, in print that contrasts with the background on which they appear." This requirement puts debt collectors on notice that the consumer must also provide written consent to receive debt collection text messages on the mobile phone before sending a text message.

Due to a disclosure violation and other violations of the FDCPA, that included: (1) falsely representing that the debt collectors were attorneys, (2) falsely representing that legal action would be taken against the consumer for not paying the debt, (3) failing to provide consumers with the debt collectors' mailing address or the validation notice, and inappropriately communicating with third parties, the FTC imposed a $1 million civil penalty against Donovan and his companies.

As a result of the FTC's action, debt collectors are on notice that they are required to comply with FDCPA disclosure requirements when sending text messages and that written consent must be obtained in order to do so. Lenders may want to obtain a consumer's prior express consent to receive debt collection text messages at the time the lender extends credit so any debt collectors they hire to collect the debt may send text messages. If the consent statement is in a document with other text, the consent statement should be in boldfaced type, underlined, or italicized or in a larger size to be set apart from the other text to comply with the "clearly and prominently" requirement.

Shawnielle D. Predeoux is an associate of Hudson Cook, LLP, in the firm's Hanover, Maryland office. Shawnielle can be reached at 410-865-5425 or by email at

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