The change, which brings the decades-old Fair Debt Collection Practices Act up to speed with the digital age, took effect this past Tuesday, Nov. 30. While debt collectors were not previously banned from contacting consumers over text or on social media, per se — since, when the 1977 Fair Debt Collection Practices Act was first written, social media and text messaging didn’t exist yet — the revised rules in effect this week are intended to provide “clear rules of the road” in 2021 and beyond, the bureau says. 

The first rule, which was first announced last year, clarifies how debt collectors can use email, text messages, social media and other contemporary methods to communicate with consumers. The second clarifies the disclosures that debt collectors must give to consumers when they first make contact.

So with social media, for example, a debt collector can send you a friend or follower request — but they must identify themselves as a debt collector. And in each message, they must also provide a simple way to opt out of receiving further communications from them on the social media platform — although there isn’t a cap for how many messages they can send.

And you shouldn’t have to worry about your debts being broadcast to your friends and family, as debt collectors are not allowed to discuss your debt on your profile page, or in comments to your posts that can be seen by your friends, your followers, your contacts or the public. Any communication about debt must be made by private message. Read more here.

And while debt collectors can also contact borrowers by email and over text messages, they must still offer the chance to opt out or unsubscribe from receiving those messages, as well. 

As for debt collection calls, the new rules restrict how often collectors can ring consumers. The agencies are now limited to seven calls per week per account in collection. And if you have already engaged in a phone conversation with the debt collector, then they are prohibited from calling you about that particular debt again within seven days of your chat.

The revised rules also ban debt collectors from suing or threatening to sue consumers on time-barred debt. What’s more, debt collectors need to take specific steps to disclose the existence of a debt to the consumer before reporting information about the debt to a consumer reporting agency. These include speaking to you about the debt, either by phone or in person, or sending an electronic communication (including social media) or snail mail about the debt, and waiting about 14 days for a notice that the message or letter wasn’t delivered. Read more here.

“We are finally leaving 1977 behind and developing a debt collection system that works for consumers and industry in the modern world,” said Consumer Financial Protection Bureau Director Kathleen L. Kraninger in a blog post last year.

But consumer advocates have expressed concerns about these digital communication methods for debt collection. The National Consumer Law Center summed up some of its concerns here, such as the fact that collectors can use electronic communications like email to contact consumers without their consent; the onus is on the consumer to opt out of these messages. And requiring an opt-out, rather than requiring the debt collectors to get consumer consent, is more likely to result in missed messages, the NCLC says. 

What’s more, a person’s privacy may be violated if the text, email or DM is seen by someone else, including employers. And then there’s the possibility that debt collectors could message the wrong social media account. NCLC staff attorney April Kuehnhoff told CBS News that, “For example, if a debt collector wants to send a private message to John Smith on Facebook, the collector will need to select the correct John Smith so that it does not send private information about the alleged debt to the wrong person.” And approving a friend request or follower request from a debt collector could also give the collector access to private information that they share with their friends and family on social media.

This also opens up a new avenue for potential scammers to prey on consumers. 

What’s more, consumers could easily miss direct messages from debt collectors if they’re not active on those social media accounts, for example, or if their online accounts filter messages from people outside of their friends’ lists into a spam folder.  Or they might think this is a scam. “If you’re a debt collector and you’re trying to reach me by sliding into my DMs there is a 0% chance I’m going to believe you’re actually a debt collector,” mused one Twitter user in response to the updated rules.

So some social media users weren’t happy about the news, either. “This is absolutely terrifying,” tweeted one. “Having been on the bad end of debt collections in my life, I can attest to the anxiety around your phone or mailbox, so much that you don’t even answer/check them. This adds new avenues to terrorize people.”

The Consumer Financial Protection Bureau notes that debt collection is a multi-billion dollar industry, with more than 8,000 debt collection firms in the United States. 

Household debt in America hit a record $14.6 trillion in the spring of 2021, according to the Federal Reserve. And Americans racked up $17 billion in credit card debt in the third quarter of 2021.

President Joe Biden has yet to announce his replacement. Candidates under consideration include Richard Cordray, the former head of the Consumer Financial Protection Bureau.

Critics of Quarles argue that the banking sector was resilient during the financial crisis simply because the Fed bought trillions of dollars of Treasurys and set up emergency programs to keep the market functioning.

In his remarks, Quarles dismissed this argument, saying that it ignores that the Fed ran multiple stress tests throughout the pandemic. These tests assumed no additional fiscal or Fed measures to support the economy “and demonstrated that, even without such support, the banking industry would have fared very well.”

Quarles said he is leaving the Fed’s supervisory framework stronger than it was four years ago.

“I am quite proud of the improvements we have made in increasing the transparency and public accountability of our activities overseeing banks,” he said.

Critics say the “transparency” amounted to the Fed giving banks the answers to the stress-test exam before the tests took place.

Sen. Elizabeth Warren, the Democrat of Massachusetts who crafted the government’s rules for the biggest banks in the wake of the 2008 financial crisis, were so upset by Quarles’ agenda that she called Fed Chairman Jerome Powell “a dangerous man” for going along with them.

No matter who Biden picks to replace Quarles, big bank capital requirements will rise, said Jaret Seiberg, financial services and housing policy analyst for Cowen Washington Research Group.

Follow all the latest news and views on inflation on MarketWatch

That initial characterization of inflation earlier this year was understandable. From March to May, in particular, strong base effects were at work, because inflation in the year-earlier period had been suppressed by the lockdown of the global economy in response to COVID-19. In addition, policy makers hoped that markets would quickly resolve the initial mismatch between robust demand and lagging supply as the economy continued to open up.

Longer-term inflationary pressures

By summer, it was clear to some of us that such transitory factors were being accompanied by longer-term issues. Firms were detailing the persistent nature of the disruptions in their supply chains. Labor shortages were multiplying, adding to the cost-push drivers of inflation. Few, if any, companies expected these two issues to be resolved any time soon—and said so on one earnings call after another.

But, rather than revisit its initial inflation call in light of the data, the Fed doubled down. Transitory went from meaning a few months to a few quarters, with some commentators and officials even embracing the concepts of “extended transitory,” “persistent transitory,” and “rolling transitory.” In the process, they lost sight of the analytics of a transitory phenomenon.

Something transitory is widely regarded as temporary and quickly reversible. As such, economic agents—whether consumers, producers, or wage earners—see no reason to change their behavior. Instead, they “look through” the phenomenon.

But by the end of the summer, it became clear that behavior on the ground was changing, especially as inflation continued its steady ascent (to 6.2% for the headline consumer-price index in October and 4.1% for the core personal-consumption expenditures price index, the Fed’s preferred gauge). Yet, consistent with classic behavioral traps, the Fed remained wedded to a transitory concept, with Chair Jerome Powell insisting again in the last week of November that “inflation will move down significantly over the next year.”

Unanchored expectations

Many rightly note that the Fed does not have the tools to unblock supply chains or increase labor-force participation. But if the Fed had maintained even longer this transitory inflation mind-set, it risked unleashing another strong driver of future price increases—that of unanchored inflation expectations. And while this would not mean a return to the double-digit inflation rates of the 1970s, it would result in the persistence of inflation rates significantly above what the economy and financial markets are safely wired for.

The later the Fed is in reacting properly to inflationary developments, the greater the likelihood that—by having to hit the policy brakes hard—it will end up being the main cause of the transitory inflation pattern on which unfortunately it had bet part of its credibility. But in being proved right in this way, the Fed would risk a damaging domestic recession, market volatility, and destabilizing spillovers for the global economy.

Such a pattern is familiar to economic historians. Caught behind the inflation curve, the Fed scrambles to tighten monetary policy abruptly, hitting demand hard and pulling the rug from under firms that are looking to hike prices and keep them high. Many workers lose their jobs, robbing labor of its bargaining power. And markets go through bouts of destabilizing illiquidity, risking adverse spillbacks to an already struggling economy.

This risk scenario is particularly worrisome for more vulnerable segments of the population. Having already had to deal with higher prices that affect large portions of their weekly budgets, they would also face the risk of unemployment and the income loss that comes with it. Besides the unnecessary damage to economic well-being, there would also be negative sociopolitical and institutional effects.

It is therefore encouraging that, on the very last day of November, Powell made a sudden inflation U-turn and stated that it was time to “retire” the transitory characterization.

The Fed must now follow up by doing two things quickly. First, as part of an urgent effort to regain the credibility that is essential for its forward policy guidance and operational independence, it should publicly detail why it got its inflation call wrong and what is being done to avoid similar slippages in the future. Second, the Fed must move a lot faster in tapering its monthly asset purchases. Easing its foot off a stimulus policy accelerator that is still essentially in a “pedal to the metal” mode will help to mitigate the risk that the Fed will have to slam on the policy brakes in a disorderly manner in mid-2022.

Mohamed A. El-Erian, president of Queens’ College, University of Cambridge, is professor at the Wharton School, University of Pennsylvania, and the author of “The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse,” Random House, 2016.

This commentary was published with permission of Project Syndicate – Can the Fed Overcome Its Transitory Policy Mistake?

More on inflation

This former central banker says stop throwing fuel on the inflation fire with easy-money policies

The Fed should raise interest rates now to stop inflation, instead of relying on tapering the balance sheet to do the job

Why Biden’s $2 trillion spending plan won’t make high U.S. inflation much worse

In 2014, we were able to purchase our current home, but we had a sizable down payment and had to finance the balance through a private lender (individual) at 8% interest. The down payment was $50,000 (we worked hard to save) and we financed $105,000.

This went well until 2015, when I lost my job and we filed for bankruptcy. We paid the entire bankruptcy off, and were released in April this year. This prevented us from refinancing our home.

As we had a private mortgage, we did not include our home in the bankruptcy and continued to make our payment. We have no other debt and have an annual household income of $98,500. I’ve been in my current job for six years and plan to retire here (God willing).

Thankfully, the home has appreciated in value, and it is currently appraised at $205,000. Unfortunately, our financial struggles continue to challenge us and we have only set aside $40,000 in our 401(k). 

Recently, a close relative passed away and left my siblings and me her entire estate, estimated at about $1 million. I have three sisters and one brother.

After the estate settles, we anticipate receiving about $200,000 each. My uncle worked, saved and lived a frugal lifestyle for many years, and I want to honor this gift and use it wisely.

The question now: Do I pay off my home ($82,000 left on the mortgage) and invest the balance for retirement, or invest the entire amount and try to refinance my home? I’ve been told it could take two years to get a refinance after bankruptcy. 

Again, this is such a blessing for my family. I want to make the right choice. I’m planning to work until I’m 65 and will be contributing the max allowed to my 401(k) for the next five years.

Blessed, but Confused

Dear Blessed,

Your letter gives me hope.

Your thoughtfulness and calm recounting these various financial crises will, I hope, help to inspire other people to never give up, even if the odds seem stacked against them. I admire your determination to not give up, to keep saving, and to start again. You and millions of Americans have had to start from scratch. Bravo!

Here is my hot take: Pay off your mortgage, especially given that you have a loan with 8% interest (the sooner you get rid of that burden, the better); maximize your 401(k); and put at least six months of expenses aside in an emergency fund should you have any other unforeseen medical or financial events.

Your inheritance could have been at risk if you received it earlier. “The general consensus among the courts is that monies received by a debtor from a POD account during the 180 days following a bankruptcy filing are not to be considered property of the estate,” according to Foster Swift.

Also, $40,000 is a modest sum in your 401(k) for your time of life. But Lorraine Ell, chief executive and senior financial adviser of Better Money Decisions, a financial advisory firm near Albuquerque, says, “It’s never too late to save for retirement. The $200,000 is a windfall and he is right to respect the value of this gift.”

Greg McBride, chief financial analyst at Bankrate.com, recommends you set up a Roth IRA for yourself and your spouse. Contribute the maximum of $7,000 each — that includes a $1,000 catch-up contribution for each of you — this year and next. “In short order, you would each have a Roth IRA valued at $14,000,” he says.

Do you have health insurance through your employer? Is a high-deductible plan with a Health Savings Account an option? “If so, you can set aside $7,300 plus an additional $1,000 catch-up contribution for 2022 that will grow and can be used tax-free for future healthcare expenses,” McBride says.

The goal is to minimize your monthly expenses, maximize your annual retirement contributions and have a safe cash cushion. “Aim to pay current healthcare costs out of pocket — remember that plump emergency fund — so the money in the HSA can grow and compound for use in your later years,” McBride says.

Modest lifestyle in retirement

Ell also suggests working to 67 in order to maximize your full Social Security benefits. “A paid-for home will enable you to not only save more in retirement accounts … but will also enable you to live a modest lifestyle in retirement. Social Security benefits go a long way if you do not have to pay for housing,” she says.

This is the fun part. Start setting goals. “The remaining $120K needs to be invested in a joint taxable account; then every year, take some of the money and contribute to a Roth IRA,” she adds. “That money will be available in five years to withdraw tax-free and the growth, interest and dividends will also be tax-free when withdrawn.”

Leonard C. Wright, a CFP and current chair of the American Institute of Certified Public Accountants, also recommends the benefits of aggressively saving in your company 401(k) plan. “If the investments you have appreciated at 7% per year over the next 10 years, the $120,000 plus $40,000 may grow to $320,000.”

“This is a wonderful gift in your times of need — not to mention the impact of saving over the next five years with more discretionary income. A financial plan would clearly guide your peace of mind,” he adds. “Your resolve has held you through! Vision, values, and goals. I think you are better off than you give yourself credit for.”

Continue to display the discipline and patience you have shown thus far, and keep your eye on a modest, healthy and happy retirement.

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

More from Quentin Fottrell:

• My married sister is helping herself to our parents’ most treasured possessions. How do I stop her from plundering their home?
• My mom had my grandfather sign a trust leaving millions of dollars to two grandkids, shunning everyone else
• My brother’s soon-to-be ex-wife is embezzling money from their business. How do we find hidden accounts?
• ‘Grandma recently passed away, leaving behind a 7-figure estate. Needless to say, things are getting messy’

While Wall Street stocks were moving higher on Thursday, a wild session of trading saw sharp losses on Wednesday, following news of the first U.S. omicron COVID case.

“The World Health Organization said it expected to have more information on the Omicron variant within days, but up until we get an official and justified answer, market participants are likely to stay reluctant to massively add risk to their portfolios,” said Charalambos Pissouros, head of research at JFD Group, in a note to clients.

Just a handful of companies were in the black, including consumer goods group Unilever
UL,
+2.31%

ULVR,
+0.99%
up 1.1%, which was the best gain for any stock. International Consolidated Airlines
IAG,
+1.73%
rose 0.9%.

Mining stocks led the way south with Glencore
GLEN,
-4.65%
down 4%, Antofagasta down 2.8% and Anglo American
AAL,
-0.56%
down 1%. Oil stocks were among the few gainers, with Royal Dutch Shell
RDSA,
+1.59%

RDS.A,
+4.77%
up 1% and BP
BP,
+1.22%

BP,
+4.37%
up 0.5%. Oil prices were drifting lower, OPEC+ agreed to rollover its existing policy and lift output by 400,000 barrels per day in January.