Collection agencies are now pursuing debtors in 160 characters or less -- by texting them.
Consumers generally don't like the idea, particularly because text messages can cost money to receive, and government officials are watching to make sure collection companies continue to follow all the rules governing how they approach people.
The Federal Trade Commission announced Sept. 25 that it has reached a $1 million settlement agreement in the first case of this type. Archie Donovan of Glendale, CA, and two companies he controls, National Attorney Collection Services, Inc. and National Attorney Services LLC were charged with attempting to collect debts using English- and Spanish-language text messages and phone calls in an unlawful manner.
While it isn't illegal to contact debtors via text, it is against the law to do so without properly disclosing the fact that the message is from a debt collector. Other charges against the companies included falsely portraying themselves as law firms and illegally revealing consumers' debts to others.
"No matter how debt collectors communicate with consumers -- by mail, by phone, by text or some other way -- they have to follow the law. The FTC has a zero-tolerance policy for deception," said Jessica Rich, director of the FTC's Bureau of Consumer protection, in a statement about the settlement agreement.
The Fair Debt Collection Practices Act requires companies contacting debtors to disclose their company name and the fact that they are attempting to collect payment on a debt. So debt collectors may see texting as the future, but it could be tricky to comply with all the legal requirements in 160 characters or less.
The FTC explains what debt collection companies can and can't do. If you feel you have been approached inappropriately by a collection agency -- whether it's by text, phone, email or snail mail -- file a complaint with the FTC or contact your state attorney general's office.