Texting in Debt Collection? LMKWYT!

Amy Hinzmann

September 12, 2023

Due to the lack of specific reference to Regulation F in Cupp, the California case on texting under Regulation F, debt collectors are left with little certainty that they will be protected by following legislative guidelines.

Prior to Regulation F’s effective date, text messaging was generally disfavored within the industry because many debt collectors were concerned about potential FDCPA claims arising out of text messaging. The FDCPA has not been amended in the time since text messaging became widespread and it does not address texting. As a result, most debt collectors avoided the risk presented by texting without more certainty on how it would be received in court. The few debt collections that did communicate via text message typically did so only with specific consent from the consumer, which can only be obtained after contact is first established through a different communication medium.

Enter the CFPB

The CFPB made it clear in the commentary provided with Regulation F that it endorses debt collectors’ use of modern communications methods like text messaging and email. Consumers want debt collectors to use these communication methods because they find these methods to be more convenient. Regulation F therefore included a tremendous amount of guidance about texting and emailing consumers, particularly consent and opt-out requirements, providing the industry with concrete rules to fill in the ambiguity of the FDCPA and enable collectors to develop policies, procedures, and strategies for engaging consumers through consumers’ preferred communication channels.

Judicial Reaction to Regulation F

Cases litigating the safe harbor created by Regulation F are starting to trickle out. A debt collector was sued in the Northern District of California after it sent 15 text messages to a consumer over the course of a month. On its facts, Cupp is definitely not the case on which consumer attorneys or debt collectors want to build case law on. First, the plaintiff is pro se. Additionally, the decision notes that the plaintiff alleges that he did not owe the debt, without reference to whether the defendant contested that fact. Based on the opinion, it seems that there was some mistake of identity or phone number.

Regulation F In Cupp

In short: There is no mention of Reg F in Cupp. The pleadings do not even tell us if the text messages sent to the plaintiff contained opt-out language, much less whether the plaintiff attempted to opt-out. Rather, the Court simply treated the text messages as if they were phone calls and determined, based on existing FDCPA case law (not the 7-in-7 rule), that 15 such ‘calls’ in a month could be considered harassment and therefore that the FDCPA claim could not be dismissed on the pleadings.

What does this mean for debt collectors? First, it suggests that the courts may not adopt the 7-in-7 presumption at all and that courts may be willing to find an FDCPA violation even where a debt collector does comply with 7-in-7. Second, it suggests that opt-out and consent may not be dispositive in these types of claims, as we may have expected in light of the regulation’s emphasis on consent and opt-outs.

But most importantly, it suggests that Regulation F did not change nearly as much as we thought it did. FDCPA plaintiffs and defendants can still litigate claims about issues that are thoroughly addressed in Regulation F without discussing the regulation at all, relying entirely on the older case law. There are no causes of action created in Regulation F; consumers must tie their claims back to the FDCPA, which has already been extensively interpreted by the courts. We may discover, as these cases progress through the courts, that the protections for debt collectors – the safe harbors and rebuttable presumptions – are similarly meaningless unless they tie back to the FDCPA or the case law interpreting it.

What is the diligent compliance professional to do?

For the time being, it appears that any FDCPA risk assessment must assess practices and policies both under Regulation F and then separately under only the FDCPA and its existing case law. Until we have more guidance from higher courts, we have to assume that any case and any court could go either way, while also bearing in mind that the CFPB has yet to bring any enforcement actions tied to Regulation F, which it may view very differently than the courts.

What’s your strategy WRT to text, then? LOL, IDK! LMKWYT!

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