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


In my previous post about compliant texting for ARM agencies, I outlined seven things you need to know to properly obtain consent for your text messaging program. Clearly, collectors have more to consider and contend with than do other types of businesses that engage consumers through digital channels.


The same is true for terms and conditions, which consumers will need to acknowledge and agree to before communicating with you by text.


Like any other electronic service agreement, your terms and conditions should detail precisely how consumers can:


  • Subscribe to your text messaging service;
  • Access keywords (i.e., words or phrases consumers can text to short codes to opt in/opt out of your service and use self-service tools);
  • Navigate your service;
  • Avoid text and data rate charges;
  • Revoke their consent;
  • Unsubscribe; and
  • Access your privacy policy.


But that’s not all. Since you’ll be texting for debt collection purposes, you’ll need to address a variety of issues related to the Fair Debt Collection Practices Act (FDCPA), the Telephone Consumer Protection Act (TCPA), state consumer protection laws, and other laws and regulations applicable to agency-to-consumer communications.


As with obtaining and managing consent, drafting your terms and conditions is not something you’ll want to undertake yourself. You’ll need to enlist a defense or compliance lawyer who understands the nuances of the FDCPA and TCPA.


FDCPA and TCPA Requirements

Under the FDCPA, text messages from a debt collector are communications and must include the required disclosures. Initial communications with a consumer must include the full mini-Miranda.


This is a communication from a debt collector. This is an attempt to collect a debt, and any information obtained will be used for that purpose.


Communications that follow the initial communication with a consumer are called “subsequent communications.” The FDCPA requires all subsequent communications to include a statement indicating the communication is from a debt collector.


Most states also impose disclosure requirements on communications. A majority of states mirror the FDCPA and only require the full mini Miranda in the initial communication. However, a handful of states require that the full mini-Miranda accompany every consumer communication.


I discussed this in my previous post, but it bears repeating: the TCPA does NOT require three separate consents for mobile calls via auto dialer, sending prerecorded messages to mobile phones, and sending text messages. However, given that texting is so uncommon in the ARM industry and unexpected text messages won’t sit well with most consumers, you’ll probably want to get express permission to text.


What You’ll Need to Include for Each Type of Text Messaging Service

Whatever type of text messaging program you decide to offer, you’ll want to make clear in your terms and conditions exactly what consumers are consenting to and the types of messages they can expect.


Self-Serve Texts
Legally speaking, a self-serve text messaging service—one that allows consumers to access information about their accounts by texting a keyword to a short code—likely won’t be interpreted as an agency-initiated call. Even if it is deemed a call, or a contact as defined under state law, it’s a response sent solely at the consumer’s request (and therefore has the consumer’s consent).


For these reasons, I believe a self-service text messaging service is the best way for ARM agencies to begin with texting. If you decide to go this route, you can further reduce your legal risk by explaining in your terms and conditions that the consumer’s consent to use keywords extends to your agency-initiated text messages as well.


Single-Message Texts
A single-message text messaging service involves outbound texts initiated by the agency. The consumer consents to receiving these messages at the outset but does not request messages via keyword text to a short code.


An agency-initiated text message is considered the functional and legal equivalent of a phone call and is therefore subject to the same federal and state calling time and frequency restrictions. Your terms and conditions should include the requisite consent to cover any and all agency-initiated texts (e.g., “your payment is late”; “your check or payment was returned”; “your next payment is due”).


Make Clear That All Forms of Texting Are Voluntary

In your terms and conditions, be sure to explain that the consumer’s decision to engage in any form of text messaging is entirely voluntary. For example:


The purpose of this text messaging service is to allow you to obtain information about your account by texting keywords to [Company Name]. The keywords and their definitions appear below. It is also to allow [Company Name] to send limited types of text messages to you about your account(s) as explained below under the section titled, “[Company Name] Initiated Text Messaging Service.” Participation in this text message service is voluntarily and you may revoke your consent to participate at any time.


Termination Process for Text Messaging

CTIA (formerly the Cellular Telephone Industry Association) is very clear in its requirements for terminating a text messaging service. The moment a consumer withdraws consent by texting STOP, STOP ALL, END, QUIT, CANCEL, UNSUBSCRIBE, or a similar word or phrase, the business must discontinue texting immediately.


In addition, CTIA requires businesses to send a one-time limited-purpose text confirming the consumer’s termination of ALL text communications from that text forward. But here’s the danger for third-party debt collectors: some courts have held that the final confirmation text violates the FDCPA because it comes after the consumer’s termination text.


To bypass this issue, you can explain in your terms and conditions that by enrolling in your text messaging service, the consumer consents to receiving a one-time text message confirming their removal from or termination of the text messaging service.


Start Enjoying the Benefits of Texting in 2020

Many legal issues surrounding text messaging for debt collection purposes have yet to be resolved. But don’t let that hold you back. If your terms and conditions are well developed and you’re prepared to properly obtain and manage consent, you’re a few short steps away from engaging consumers by text and improving your recovery rates.


Before you dive into text messaging, be sure to read our complementary eBook “Ready to Text 2.0: The Collection Professional’s Guide to Compliant Communication in 2020.” This brief guide covers all the basics: what text messaging involves, who regulates it, and how the legal/regulatory landscape is changing. Download your copy today.


If you’re interested in a sample terms and conditions document, send me a message.  I’ll send one your way!



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Ready to Text in 2020?

Text messaging for collections is complicated. It’s also mission critical. Our brief ARM industry texting guide, newly updated for 2020, has the insights and advice you need to get your digital communications program up and running.

Don’t get left behind. Download your copy today!

Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies.

© 2020 Ontario Systems, LLC. All rights reserved. Information contained in this document is subject to change. Reproduction of this publication is not permitted without the express permission of Ontario Systems, LLC.

Are You Ready to Text?

Take charge of compliance and start texting with confidence. This free eBook (newly updated for 2020) explains how.

Posted by Rozanne Andersen

Rozanne Andersen, J.D., serves as Ontario Systems’ Vice President and Chief Compliance Officer. She is responsible for leading Ontario Systems’ corporate efforts and response to the CFPB’s launch of compliance examinations in the ARM industry. Rozanne's advocacy work on behalf of the credit and collection industry has resulted in landmark legislation and regulation at both the state level and the federal level with regard to the FDCPA, FCRA and HIPAA. In 2020, Rozanne was named Chief Compliance Officer of the Year (Large Company) by the international Women in Compliance Network.
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