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This is the second post in a new blog series highlighting the importance of text messaging for debt collections and what ARM businesses need to stay compliant.


For third-party debt collectors, texting can be a scary proposition. Overlapping requirements and restrictions, and the confusion surrounding them—not to mention the potential backlash from consumers—are enough for many ARM leaders to throw up their hands and say, “No thanks.”

Some agencies, however, have braved this new frontier and succeeded. This begs a simple question: are industry fears of texting overblown?

Previously, we outlined three reasons why adopting text messaging is essential for ARM businesses. Not only does digital communication improve collection results via personalized engagement and convenient self-service tools, but it’s also proving to be the only way to curtail the sharply rising costs associated with live agent calls, paper letters, and first-class postage.

At the heart of many ARM agencies’ compliance fears is uncertainty about how to obtain and manage consent. What constitutes proper consent, and what are the pitfalls to avoid? Here are seven things you need to know, and should discuss with legal counsel, before moving ahead with a text messaging program.



1. A Text Message Is the Functional and Legal Equivalent of a Phone Call

Text messages trigger the same legal and regulatory requirements as phone calls placed to mobile devices using an automated telephone dialing system (ATDS), prerecorded message, or artificial voice. The Telephone Consumer Protection Act (TCPA) applies to text messaging, as do the Fair Debt Collection Practices Act (FDCPA) and the requirements put forth by CTIA (formerly the Cellular Telephone Industry Association).

But not all text messages trigger state calling times and frequency restrictions.

In the case of self-service text message programs, consumers can request information about their accounts and make payments 24/7. These sorts of self-service actions are initiated by the consumer with the expectation and understanding on the part of the consumer an automated response will be provided to their self-service text request.

For example, if a consumer requests the balance on their accounts at 3:00 a.m., the consumer will immediately receive a text from the agency indicating the total balance due on all active accounts. The automated response sent by the agency’s text messaging service informing the consumer of the balance due should not be deemed a communication that must satisfy state calling times and frequency restrictions.

On the other hand, if the agency initiates a text to the consumer, any such text would trigger state calling times and frequency restrictions. For example, if the agency notifies the consumer their last payment failed, such a text would not be deemed a self-service request. It would be deemed an agency- initiated text similar to an agency initiated outbound call.

The Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act complicates matters for collectors, as it fails to address ARM industry concerns about the TCPA and punts the ball for rulemaking to the FCC.

As we await the FCC’s proposed rules, which should be published in the coming months, the U.S. Supreme Court will revisit TCPA’s federal debt collection carve-out. This decision could have big implications for TCPA compliance when it comes to collecting debts owed to the Federal government and any other type of exemption from the TCPA based on the content of the message.


2. Inviting and Convincing Consumers to Text Can Be Challenging

Unless an ARM agency has received consent to text from the creditor (sometimes referred to as pass-through consent), the debt collector will want to create opportunities for the consumer to subscribe to its text messaging program. These opportunities could include the live-agent talk off, the inbound IVR script, a manual text invitation using a Zortman-type voicemail message, verbiage within the text of the collection notice, and the agency’s consumer portal.

If an agency has obtained pass-through consent to text from the creditor, the agency may initiate a text message inviting the consumer to subscribe to its text message service. The caveat to relying on pass-through consent is that this does not solve the reassigned number conundrum (see below).

Apart from compliance concerns, ARM agencies must somehow convince consumers to subscribe to their text messaging service. To the average consumer, the benefits of texting with a debt collector might not be immediately clear. I recommend starting off with a self-service text messaging program that allows consumers to choose the type and frequency of messages received and manage their accounts with ease.


3.  The Reassigned Number Conundrum Is Real, but the Risk Is Manageable

When a consumer relinquishes their mobile number to a carrier, the carrier will reassign the number to another consumer. The law remains unsettled as to whether a text or ATDS call placed to the new consumer using a mobile number for which the calling party once had consent is a violation of the TCPA after the number is reassigned.

At least one court recognizes the conundrum, holding that the calling party is not liable for the call placed in error. In Sandoe v. Boston Sci. Corp. (Civil Action No. 18-11826-NMG, 2020 U.S. Dist. LEXIS 2800 [D. Mass. Jan. 8, 2020]), the Court granted summary judgment in favor of the defendant, ruling a calling party may reasonably rely on consent associated with a mobile number

“This Court declines to contravene the FCC’s regulation by interpreting the TCPA as requiring callers to do what the competing expert reports in this case demonstrate is either impossible, or at least highly unreliable.”

To avoid any issue over the validity of pass-through consent, debt collectors should conduct a scrub to ensure the consumer who originally granted the consent is still associated with the mobile number.


4. Text Consent Need Not Be Specific to Meet the Requirements of the TCPA

Under the TCPA, you do not need consumers’ specific permission to text as long as you properly obtain consent (whether verbally or in writing) to meet the minimum requirements of the TCPA. From a legal standpoint, consent to autodial, leave a prerecorded message, or use an artificial voice in an outbound communication to a mobile phone includes consent to text.

Nevertheless, most creditors and third-party collection agencies err on the side of caution by seeking express, specific consent to text—not just to avoid legal complications, but to be sensitive to consumers’ wishes. This is a smart move, especially now that service quality has become a leading differentiator in the ARM market.


5. CTIA—the Mobile Industry Standard for Short Code Text Messaging—Requires More Than the TCPA

CTIA (formerly the Cellular Telephone Industry Association) is the self-regulatory body governing the use of short code text messages. The CTIA’s consent-to-text requirements are more stringent than the TCPA’s.

Unlike the TCPA, which recognizes a consumer’s verbal permission to text, the CTIA requires consumers to affirmatively subscribe to or join a text message program. Consumers can do so by replying to a text message inviting them to participate or by initiating a text message to a short code using a keyword such as YES, ENROLL, or SUBSCRIBE.

Although the CTIA’s guidelines for text messaging consumers do not establish a private right of action,  operating outside of them could lead major carriers to block your text messages.


6. Prior Express Consent Gives Third-Party Collectors the Green Light to Text First

If you have received pass-through consent to text from the creditor, or the consumer provides their consent to text verbally, you are permitted to send a text message to that consumer’s mobile number inviting the consumer to agree to terms and conditions and opt into your text messaging program by way of a text message response.


7. Invitations to Text Should Be Transparent—with No Strings Attached

CTIA comes down hard on what it considers unfair practices—not just the failure to properly obtain consent, but also unreasonable claims and demands.

For example, carriers prohibit the use of the word “free” in describing a standard messaging rate texting campaign. Any messages a consumer receives from a business may trigger text and data charges for which the consumer must pay.

CTIA also prohibits a business from requiring a consumer’s consent as a condition of an opportunity—e.g., a settlement or type of payment. If you’re going to offer consumers the option to text, you must offer it as a service without demanding anything in return.

Clarity and transparency are key to a compliant, successful text messaging program. Make sure your invitation to text is worded in a simple, straightforward way, with no inflammatory language (intentional or not). This will help ensure consumers understand exactly what they’re consenting to—and help you avoid service failures, legal problems, and lost opportunities to collect.


Learn More About Compliant Texting for Collections

To successfully make the leap to digital communications, you’ll need to focus your efforts in three areas: 1) applicable laws, regulations, and industry standards; 2) consumer expectations for service; and 3) day-to-day compliance management.

If you missed my recent webinar “Game-Changing TCPA Cases & the TRACED Act: The Bottom Line for Collectors,” I encourage you to download the recording today so you can better understand how these laws intersect and the steps you should take to protect your business.


Don’t miss the other blog posts in this series:


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Rozanne Andersen serves as Ontario Systems’ Vice President and Chief Compliance Officer. She is a licensed attorney and a 30+ year veteran and advocate of the banking, credit, and collection industry. She holds Chief Compliance Officer certifications from both ACA International and RMAI International. In 2020, Andersen received an international Compliance Officer of the Year award from Women in Compliance. Prior to joining Ontario Systems, Andersen served as former general counsel, director of government affairs, and CEO of ACA International. Since 2011, she has led Ontario Systems’ regulatory compliance efforts to ensure compliance solutions are embedded in the company’s software, contact management, payment processing, and cloud solutions. Ontario Systems is widely recognized as a leading software provider to the collection, healthcare, debt buyer and Federal, state, and local government markets.
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