On the Money: How new rules for debt collectors affect you

The next text message you receive may not be a funny picture from your mom, or an update on how late your friend will be to brunch.

It could be a debt collector.

The Consumer Financial Protection Bureau has proposed new rules to govern how third-party debt collectors contact borrowers. The rules are expected to accelerate the industry's switch from insistent phone calls to emails and texts.

Under the new rules, third-party debt collectors would only be able to call a delinquent borrower seven times a week — currently they can call as often as they want. And once they reach a borrower by phone, they'll have to leave them alone for at least a week.

The CFPB is proposing no cap on the number of texts or emails a collector could send. This has drawn the ire of the consumer advocacy groups who say it opens the door to allowing debt collectors to use text messaging, WhatsApp, Facebook Messenger or other text-based messaging services.

"Collectors will be able to use these types of messages without getting borrowers to agree to them," said April Kuehnhoff, a staff attorney with the National Consumer Law Center.

The CFPB has pushed back on the criticism, saying the rules require giving borrowers an opt-out from bill collectors' texts and emails. Debt collectors will also be banned from posting public messages on a person's Twitter, Facebook or other social media accounts.

Americans have little love lost for the debt collection industry. Roughly 25 million Americans have debts in collections, according to the Federal Reserve.

The CFPB received more than 80,000 complaints about debt collectors last year, and the industry typically ranks high in complaints to other federal and state agencies like the Federal Trade Commission. The rules proposed by the CFPB impact only what's known as the third-party debt collection industry - those who typically buy old debts at pennies on the dollar or are contracted by another lender like a bank to collect on an old debt.

The changes the CFPB has proposed are a reflection of how many Americans communicate. Fewer Americans have landline telephones, and they speak on the phone less frequently than 10 years ago. Texting and email have become more common ways of communicating with friends or family.

The debt collection industry has long used email and texting to reach borrowers, but the industry says it was operating in a legal gray area. It isn't illegal for a debt collector to text or email you presently, it just wasn't as clearly defined as the rules for phone calls or letters.

"Using email or text messages was 'use at your own risk,'" said Mark Neeb, chief executive of ACA International, the lobby group for the debt collection industry.

TrueAccord is one California-based debt collector that has focused almost all of its efforts on reaching debtors through email or other forms of digital communication.

"(The CFPB's proposals) are a vindication of our business model," said Ohad Samet, CEO of TrueAccord.

As debt collectors rely more on email and texting, expect phone calls to wane in use. The CFPB's rules would cap the number of calls per account to seven a week. Consumer advocates argue that figure is still too high and the "per account" part of the rules mean that collectors could call a person with eight delinquent accounts a maximum of 56 times per week.

The cap will still somewhat limit debt collectors' phone calls going forward. Even debt collectors like Samet say it's a good thing there's a cap.

"This will cause the companies who rely too heavily on calls to change their business model. It's nothing less than an earthquake in the industry," he said.

One concern for advocates is how the changes will impact consumers who have limited access to the internet. Reading documents or disclosures on a cell phone screen can be difficult, and those in debt collections may not own a home computer.

"People may have old email addresses, or be unaware on how to read and reply to text messages," Kuehnhoff said.

The rules aren't finalized. The CFPB is currently in its 90-day comment period and is expected to finalize the rules some time later this year or early next year. Traditional debt collectors are lobbying the agency to raise or remove the cap on calls altogether.