New rule will allow debt collectors to track you down on social media  (alexsl/iStock) | One byproduct of the pandemic has been more debtors, and now collection agencies have new ways to track down the people who owe them money. So watch out who you connect with on Instagram or befriend on Facebook. It could be a debt collector contacting you through a direct message. Debt collection rules that went into effect Tuesday have expanded the ways debt collectors can chase down debtors. In practice, it may mean millions of consumers can now be bombarded with email and text messages and requests to connect on their social media accounts. The changes to the Fair Debt Collection Practices Act (FDCPA), which is intended to eliminate abusive debt collection practices, were introduced during the Trump administration when the Consumer Financial Protection Bureau (CFPB) became friendlier to the business community. The CFPB director at the time, Kathy Kraninger, a Trump appointee who resigned at Biden's request, said the rules were intended to "modernize the legal regime for debt collection." But if left unchecked, this expanded access to consumers could very well contribute to new ways to harass struggling consumers. At the end of the third quarter this year, 77.6 million consumers had at least one debt in collections with $188 billion in outstanding balances, according to a report by TransUnion. The collection industry praised the update, arguing that text and email are now the preferred methods for communication for many people. "The CFPB's debt collection rule is a small step forward in modernizing communications with consumers," Mark Neeb, chief executive of ACA International, the association of credit and collection professionals, said in a statement. The rules establish certain contact limitations to protect people's privacy and spare them from harassment, abuse or unfair practices. If you're contacted on your social media account, the message has to be private. The debt collectors can't post something that is viewable by the general public or by your friends or followers. And no subterfuge is allowed. If a debt collector sends you a private message requesting to add you as a friend or contact, the company must make it clear they are attempting to collect a debt, according to the rule changes. They must also give you a way to opt out of receiving further communications from them on that social media platform. I've followed this issue for years, and while many companies operate within the law, illegal operations can do a lot of damage to innocent consumers. Debt collection isn't wicked. But it can lead to embarrassing, unethical and illegal tactics. Debt collectors have a limited number of years in which they can sue someone to collect. After the time runs out, unpaid debts are considered "time-barred." But unscrupulous companies try to revive this "zombie debt," as it's called. Many consumers aren't aware that their debt is no longer collectible. The statute of limitations varies from state to state. Debtors also don't know that many states allow the time-barred clock to reset if they make a small payment on the debt. Allowing companies to track down people on Facebook, Twitter or Instagram is risky given current illegal practices. Under the changes, telephone calls are limited to seven per week per debt. Last year, the Federal Trade Commission led an initiative with other federal and state law enforcement agencies against phantom debt collection, which is a practice of coercing consumers to pay debts that don't exist or that they don't really owe. The FTC alleges that one company collected more than $12 million from consumers through illegal debt collection practices. In most cases, the debts never existed or had been previously paid off. This summer, an Atlanta-based debt collection company, subsequently shut down by the FTC, threatened consumers with arrest and imprisonment to collect nonexistent debts. The collectors posed as law enforcement officers, attorneys, mediators or process servers, the agency said in its complaint against the company. Debt buyers, who pay pennies on the dollar for defaulted debt, often have scant information other than the person's name, last known address, Social Security number and debt amount. The records may contain little or no documentation at all — no bills or printouts showing purchases, or previous payments. This leads to mistakes and inflation of what folks owe, including exorbitant collection fees. The CFPB, now under new leadership, needs to watch debt collection companies like a hawk looking for its prey. "Too many people are hounded to pay debts they don't even owe," CFPB director Rohit Chopra said. "Abuse and harassment by debt collectors are strictly prohibited under federal law, regardless of whether consumers are being contacted in person, over the phone, or on social media. The new debt collection rules will be useless unless they're enforced." Chopra said the agency will be checking to see if the rules are working or need to be strengthened further. In the meantime, be forewarned: The person asking to "friend" you on Facebook may be no friend at all. Reader Question of the Week If you have a personal finance or retirement question, send it to colorofmoney@washpost.com. In the subject line, put "Question of the Week." Please note that questions may be edited for clarity. Q: My husband is 58 and I'm 57. We were raised that owning stock was "gambling." Throughout our working lives, we were very cautious buy-and-hold. Over 30 years, we accumulated almost $800,000 in 401 (k)s and IRAs. In March 2020, we watched as the stock market was in a free fall. In a panic, on March 23, we sold all of our stock. And we never got back into the market. Now that the stock market has done so well, we feel paralyzed. We know we should get back in, but we don't want to make another catastrophic mistake. We are feeling sick that we sold when we didn't need the money. What strategy should we use to get back in the market? A: With so much money at stake, it's understandable that you panicked. Huge drops in the market can drive a lot of investors to call it quits. Throughout the pandemic, I've been writing about how to calm yourself when the market is down. Before you do anything else, read the advice I got from some financial experts. Stock market sell-off shouldn't change your retirement strategy Your retirement is close. Here's how to ride the stock market roller coaster. Here's some additional advice financial experts gave in a 2020 column about calming your investment nerves. Christine Benz, director of personal finance for Morningstar: 1. Put your retirement plan on autopilot. For people who were investing through regular paycheck deductions in a company retirement plan, 2020′s short-lived market crash was a nonevent. Data suggest that most 401(k) investors didn't flinch during this period, and that illustrates the virtue of putting in place a good, hands-off system. That way you don't have to worry about what to do during periods of volatility. 2. Play good defense. Research on brain functioning demonstrates that it's next to impossible to think long term if you're worried about your short-term well-being. To be a successful long-term investor, it's crucial to have enough liquid reserves set aside to carry you through unexpected events, whether a job loss or large medical expenses. That way you'll never be in the position of needing to raid your long-term investments when they're down. Holding three to six months' worth of liquid reserves is a good benchmark for most people, but those who should target an even bigger cushion include older employees, highly paid workers, contractors, or those who earn their living from the gig economy. These workers should aim to save a full year's salary of liquid reserves. Carolyn McClanahan, a certified financial planner who founded the fee-only Life Planning Partners based in Jacksonville, Fla.: You need a plan. People need an investment policy on how much to allocate to certain riskier assets (stocks, real estate) and safer assets (bonds, CDs and cash). By sticking to your allocation during times of market upheaval, you are less likely to sell out of the market in fear, which is what many people did during the market downturn in March. And they paid dearly for this mistake. Ric Edelman, founder of Edelman Financial Engines: Ignore predictions. With thousands of people offering predictions, it's likely that one of the predictions offered by one of them will come true — but it will be due to sheer luck, not brilliance, skill or talent. And the person who got it right last time will probably be wrong next time. Now as to getting back into the market, I would recommend you hire a fee-only financial planner to look at your entire situation, including assets and any anticipated income during retirement. You need a master plan, which hopefully will help you stay calm during times of market volatility. Here are some resources for how to find a planner. Finding a Financial Advisor or Planner How to Find a Financial Advisor if You're Not Rich 5 Questions to Ask a Financial Advisor In Retirement News Part of planning for retirement and then living on the money you've saved or invested is keeping up with the issues that you need to know. In this section, I feature blogs, news stories, new research, surveys, and government policy changes that could affect your retirement. If you see a news story or issue you think would help folks, let me know, and I'll check it out and share it with newsletter subscribers. Given the reader question this week, I suggest you read the latest column by Allan Sloan. Markets are shrugging off omicron worries. But the variant offers a lesson investors should heed. Sloan is the voice of reason. He writes: "Week after week, we've seen stocks make one high after another, and people who've put every dollar they could lay their hands on into stocks have done extremely well. But the market's drop last Friday shows why it's wise to keep a reasonable amount of cash on hand — "reasonable" being a flexible term — rather than putting every penny you own and can borrow into stocks." He goes on to say, "If you're going to own stocks for the long term, you need mental and financial staying power." Retirement Rants and Raves This is also your space to rant or rave about anything related to retirement. Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line, put "Retirement Rants and Raves." Responses may be edited for clarity. Considering all the bad news we hear and retirement worries, it was nice to get this rave from Barry Barnes of Reno, Nev. He wrote: "I quit working in my late 40s and have had 30 years of extremely active retirement. After retiring, I vigorously pursued my hobbies of home remodeling, woodworking, alternative energy systems, landscaping, classic car restoration, creative fabrication, art, and community volunteering. Additionally, my wife and I have done a lot of domestic and international travel. At almost 78 and 71, we still travel a good bit in our Class B motorhome. I've been actively retired for years, and my wife retired about five years ago. After over 38 years together, we still cherish each other and consider ourselves to be the best of friends. This makes for adventure, enjoyment, and satisfaction in retirement." Barnes says he had a great career as an executive in research, information systems, computer peripherals, survey research, publishing and software applications. He then spent 10 years consulting. "While I do believe my work life made a difference, I doubt there are any real lingering effects at this time so many years later," he wrote. "I have to say that I love retirement far more than I enjoyed my career." Barnes has given me another reason to finish up my pre-retirement planning. Want in on the great retirement boom? Here are the five things you should know. | 
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