Bankruptcy protections such as the automatic stay, the right to a partial or full discharge also play a significant role to protect a consumer. All of these laws don’t merely regulate behavior, they also define the boundaries of communication. For instance, a U.S. consumer must be told who is collecting the debt, how much is owed, and how to dispute it. Harassment or misrepresentation is strictly prohibited. Private attorneys act as mini attorneys general in that if a consumer wins, that consumer can obtain his or her attorney’s fees from the debt collector. That is what fuels a contingency case and tries to keep debt collectors honest.
How will an AI debt collector fit into this system? Almost certainly, an AI agent would be required to not only disclose that it is a debt collector, but also that it is an artificial intelligence system per the FDCPA. Not doing so, would likely be a false, deceptive or misleading representation which is prohibited by the FDCPA.
I am very curious if we will continue to see AI debt collectors citing the same mantra that human debt collectors have done for years. That is, telling consumers that a particular debt is not dischargeable in bankruptcy. Time after time, we have seen human debt collectors say that — and usually it is simply not true. But consumers believe their debt collectors. No one ever should, but they do.
If you take nothing else from this blog, please know that debt collectors are usually the enemy. There are many that will follow the law, be supportive and helpful, and tell you what you need to know to get out of debt. But there are many more who will not tell you the truth. They represent the creditor, not you. There is no duty to you. You don’t pay their salary. You don’t know what incentives exist for the debt collector (things such as short call duration bonuses, end of week, month or year bonuses for collection). Bottom line, don’t take what a debt collector says at face value. Fact check everything.
A new study by the National Bureau of Economic Research addresses some differences between Chinese and U.S. based debt collection, bankruptcy, and the role AI will likely play if you’d like to know more.