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Guide to Debt Collection Text Messages

Published: April 12, 2023 by Laura Burrows

It’s easy to ignore a phone call—especially from an unknown number—or delete an email without looking past the subject line. Even physical letters get thrown out without being opened. But nearly everyone will quickly open and read a text.

Surveys have repeatedly found text message open rates can range from around 90 to 98 percent. And now, debt collectors that are serious about streamlining operations and connecting with consumers via their preferred channel can integrate text messaging into their process.

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Using text messages in debt collection

It’s been a couple of years since the Consumer Financial Protection Bureau (CFPB) revised Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA). The ruling was effective starting November 2021 and confirmed that debt collectors could use emails, text messages and other digital communication channels.

Businesses in many other industries have been communicating with customers by text for years. At a high level, the changes to Regulation F allow debt collectors to add new outreach methods to their debt collection tools. However, even with the go-ahead to communicate via text, strategy and compliance must be top of mind.

WATCH: Webinar: Keeping pace with collections compliance changes

The move to digital debt collections

Incorporating text messaging could be part of a larger shift toward digitizing operations. Some debt collection agencies are also using artificial intelligence, big data and automation to help verify consumers’ contact information, assist call center agents and follow up with consumers.

As the Experian 2022 Global Insights Report reports, 81 percent of consumers think more highly of brands if they have a positive online experience with that brand that involves multiple digital touchpoints. And over half of consumers trust organizations that use AI.1

Your website or mobile app is an important starting point. And digital tools, such as chatbots that can answer common questions and virtual negotiators offering payment plans, could be part of that experience. Your automated and manual text message outreach could also be increasingly important in the coming years.

The benefits of debt collection text messages

A text message strategy can be part of an omnichannel approach, and it offers debt collectors a few distinct benefits:

  • Get direct access to consumers who will likely see and read your messages.
  • Allow consumers to respond and ask questions via a channel that may be easier or more comfortable for them than a phone call.
  • Start a two-way dialogue and build rapport.
  • Save time by texting multiple consumers simultaneously and automating responses to common questions.

However, collection agencies also need to beware of the potential drawbacks. Consumers might see your texts as a nuisance if you frequently send messages or if you’re messaging people who truly can’t afford a payment right now.

Many consumers are also rightly wary of scammers texting them and asking them to click on a link. You’ll want to carefully think through your messaging strategy. Starting by getting consent to send a text message while you’re on the phone or when the consumer fills out a form online—and then immediately sending a text with an opt-in—can help overcome this potential barrier.

How to leverage debt collection text messages

Sending payment requests via text to consumers who have a high propensity to repay, and including a link to self-service payment portals, could offer a quick and easy win. However, it may be best to think through how you’ll use text messaging to optimize your outreach rather than replace other communication channels.

WATCH: Webinar: Adapting to the new collections landscape

Perhaps you’ve spoken directly with someone and helped them set up a payment plan. You could now use automated texts to remind them of upcoming payment due dates and thank them for their payments. It’s a simple way to test the water without sending debt collection-related messages that may fall under stricter regulatory requirements.

Staying compliant while texting

As part of a highly regulated industry, debt collection agencies must consider compliance. And it’s especially important to consider when trying new technology that directly interacts with consumers.

Laws and rulings may change, and it’s important to consult your counsel before making any decisions or implementing a text message strategy. However, at a high level, the Regulation F requires debt collectors to:

  • Prioritize capturing consent.You must obtain direct consent from a consumer or indirect consent from an original creditor that got the consumer’s consent. The initial communication before sending a text or email must be written. Debt collectors that use specific procedures for obtaining consent may receive safe harbor protections against inadvertent disclosures to third parties.
  • Make opting out easy. You must send consumers a clear and conspicuous opt-out notice and offer them a reasonable and simple method to opt out of text messaging or other electronic communications. Debt collectors must identify when they receive an opt-out request, even if the request doesn’t follow their specific instructions. For example, if a consumer sends “end,” you may need to recognize that as an opt-out even if your opt-out instructions tell them to send “stop.”
  • Continue complying with FDCPA harassment guidelines. There’s no specific federal limit on how often you can text consumers. However, you’ll still need to comply with the FDCPA’s general rules regarding harassment and contacting consumers at convenient times. In general, you may want to send texts between 8 a.m. and 9 p.m. local time (for the consumer), unless they request a different time. Limiting how many texts you send can also improve consumers’ experiences and may lead to better long-term results.
  • Reconfirm consent every 60 days. Even if consumers don’t opt out, the implied or expressed consent you received could only be valid for 60 days. To continue texting a consumer, you may need to have them reconfirm their consent or use a complete and accurate database to confirm that their phone number was not reassigned.2

You may also be subject to more stringent state or local laws. For instance, Washington State laws might prohibit debt collectors from sending more than two texts in a day.3 And Washington, D.C. forbids debt collectors from initiating communications with consumers via written or electronic communications (including text messages) during and for at least 60 days following a public health emergency.

READ: A Digital Debt Collection Future: Maximizing Collections and Staying Compliant

Partnering with Experian

Experian offers access to vast data sources, skip tracing tools for collections and advanced analytical capabilities that help debt collectors move into the digital age.

From optimizing outreach with the AI-driven PowerCurve® Collection to verifying real-time phone ownership using Phone Number ID™ with Contact Monitor™, you can integrate the latest technology while remaining compliant. You can then decide the best ways to use text messages, or other electronic communication methods, to make profitable decisions and maximize recovery rates.

Learn more about Experian’s debt collection solutions.

¹Experian. (April 2022). Experian 2022 Global Insights Report
²Consumer Financial Protection Bureau. (2023). 1006.6 Communications in connection with debt collection.
³Washington State Legislator. (2023). RCW 19.16.250 Prohibited practices

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