This article previously appeared on the Ontario Systems Blog and is republished here with permission (and with additional information from insideARM at the bottom).

Text messaging, like any other consumer communications technology, comes with its compliance challenges – especially for the third-party debt collector. Character limitations; consent, revocation, opt in and opt out requirements; along with the requirements of the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA) make many organizations reluctant to engage. But it’s time to engage. Consumers want to text; debt collectors need to text; and fortunately, informal conversations with the Bureau of Consumer Financial Protection (BCFP) suggest the Bureau has an appetite to find a legitimate way for debt collectors to text.

Unlike person to person texting, commercial text messaging is complicated. It’s a heavily regulated practice controlled by a self-regulatory association called the Cellular Telephone Industry Association (CTIA). This means any commercial text messaging service begins with a solid understanding of the compliance requirements associated with text messaging, and the risks, the benefits and the legal liability associated with this form of communication. Let’s begin with the basics. 

What is a text message?

An SMS or “short message service” is a communication distributed over the cellular phone network and is considered a voice call. For this reason, text messages fall subject to many of the rules and regulations that govern the wireless industry including the TCPA, the nation’s primary anti-telemarketing law. The organizations that regulate and support the text messaging industry include:

  • CTIA Wireless Association is the trade group that represents a wide variety of interests on behalf of telecom carriers and is a self-regulatory body which sets and enforces text messaging requirements.
  • Federal Communications Commission (FCC) regulates interstate and international communications by radio, television, wire, satellite and cable in all 50 states, D.C. and U.S. territories. They’re here to protect the integrity of all mobile communications, including text messaging.
  • Federal Trade Commission (FTC) is the nation’s consumer protection agency. It collects complaints about companies, business practices, identity theft, and episodes of violence in the media. Its main function is to ensure text marketers adhere to proper business rules and conduct.
  • Mobile Marketing Association (MMA) The Mobile Marketing Association is the leading global non-profit trade association established to foster growth of all areas of mobile marketing.
  • Mobile aggregators maintain direct connections to the wireless carriers. They deliver their customers’ text messages, which they aggregate through their gateways. An aggregator enables a brand’s message to be delivered by you to go to one mobile service provider who then connects and sends to all the wireless carriers.
  • Wireless Service Providers (Carriers) are the major carriers providing wireless services in the United States. Coordination must be set up with each of these carriers to be sure that your messages are delivered to the proper mobile user.
  • Text Messaging Platform Providers enable businesses to send text messages to their customers. Top providers will “bake in” the best practices and compliance with regulations and carrier requirements.

Why is it important to understand the nuances of text messaging?   

The answer is simple. Until you understand the ins and outs of text messaging, you can’t embrace it and if you don’t embrace it your business is at risk of becoming a collections dinosaur.  Think of it this way. Text messaging is to the traditional phone call as the rotary phone was to letters. It represents immediate and direct communication with the consumer at a relatively low cost. It is permission-based which means you are only dealing with consumers who have indicated a willingness to communicate. At the end of the day, that kind of consumer engagement is invaluable. 

What does the data tell us?

According to the CTIA, 95% of text messages are opened within just a few minutes of receipt and virtually every phone manufactured worldwide has the capability to send and receive SMS. The CTIA’s 2018 study noted the following wireless trends:

Mobile data continues to skyrocket. Americans used a record 15.7 trillion megabytes (MBs) of mobile data in 2017 — nearly quadrupling since 2014 and representing 40 times the volume of traffic in 2010, according to the survey. That is equal to nearly 250 million people simultaneously binge-watching every episode of Game of Thrones in HD.


The shift to full device connectivity has taken hold and wireless connectivity is evolving with 5G on the horizon. The CTIA survey captures the beginning of the shift from the 4G era to the 5G-connected everything-era. Data-only devices — such as connected cars, IoT devices and wearables — rose to 126.4 million in 2017, up nearly 20 percent year-over-year and 147 percent in the past five years.

It should therefore be no surprise that text messaging is becoming a quick and effective way for members of the financial services industry to communicate with a mobile user to notify them of a payment, allow them to access information about their account, and even deliver legally required disclosures and notices.

insideARM Perspective

Because there are so many legal and regulatory restraints placed on debt collectors, the industry often appears behind the technology curve. The desire to move foward with modern communication channels is definitely there; the data highlighted above shows the great opportunity that text messaging provides for debt collectors to interact with consumers in their preferred method. Unfortunately, in an era that offers innovations such as ehanced caller ID displays, the only real tried-and-true methods of "safe" communication for debt collectors are still landline telephone calls and letters sent by mail. The industry only recently started to experiment with the "modern" channel called email; many still won't use it because of the potential liability. This leaves the collection industry decades behind the rest of the world.

In order for the industry to scale its use of text - by far the preferred channel of most younger consumers - the legal and regulatory requirements of this channel must be fully appreciated.

Also, in addition to the many organizations listed above that regulate text messaging, Rozanne probably should have included the Bureau of Consumer Financial Protection (BCFP) because it has jurisdiction over the Fair Debt Collection Practices Act (FDCPA) and its state-equivalent laws. One important issue, for example, is how a debt collector can fit all required federal and state disclosures into the character limit of a text message? The good news is that regulators have signaled that they are taking interest in modern communication technology. Perhaps the future will hold some clear direction and a way forward for the industry.

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