The CFPB’s new rules concerning debt collections, specifically Regulation F, 12 C.F.R. part 1006, go into effect on the 30th of November. While these rules mostly impact third-party collection partners, we thought it would be helpful to post a brief review of the changes that may have an impact on services going forward— specifically when it comes to electronic communications.
Regulation F has finally provided some clarity on electronic communications, something not included in the Fair Debt Collection Practices Act (FDCPA) language that was created in 1977. The new guidance for electronic communications, such as email or text messages, provides parameters for utilization with special consideration of consumer privacy and preferences. For example, all communications must include a clear and simple method for the consumer to opt-out of receiving messages via that channel. The new rule also allows collection partners to use texting and email if proper permissions are sought and good documentation is kept for these kinds of communication attempts. Additionally, the rules for electronic communications resemble those for voice calls in that a reasonable effort must be made to avoid times that would be inconvenient, allowing for electronic messages between the hours of 8 a.m. and 9 p.m.
Other notable points…
Agencies cannot participate in credit reporting prior to communicating with the consumer about the debt, though the 180-day waiting period for medical debt reporting remains unchanged. Some changes need to be made to validation notices in order to meet the nuances of Regulation F. Primarily, as a client you will need to supply more data when transferring your accounts, such as the date you sent the last statement or the original due date. The new rules require that your final notification to consumers includes an option to opt-out of further electronic communications from a collection partner. If a third party has been regularly sending notices to consumers on your behalf, then they can send these final notifications as well. Please see our recommended opt-out language below.
While this requirement does drive changes to your notices, it will also drive better consumer engagement from your collection partner. This is great news for consumers, collectors, and their clients.
Established guidelines only make it easier for us to effectively implement our omnichannel strategy which creates a better consumer financial experience by honoring communication preferences and convenient self-service options— and gives us the ability to engage faster and more efficiently leading to better liquidation.
If you have questions about the changes to the FDCPA that might impact how your accounts are managed please get in touch with your client success representative.
SAMPLE OPT-OUT GUIDANCE
Written notices:
“Please be advised that we have not received payment on your account(s). As such, we are transferring your account(s) to [collection partner name(s)]. We are providing [collection partner name(s)] with the following email address for you: [email address]. [Collection partner name(s)] may use this email address to communicate with you about the account(s). If others have access to this email address, then it is possible they may see the emails. If you would like to opt-out of communications by [collection partner name(s)] to [email address], please fill out the enclosed form and return it in the enclosed envelope so that we receive it by [date].”
Note: “Reasonable and simple opt-out method” for written notice includes providing a reply form and pre-addressed envelope w/ the opt-out notice. Requiring a call or written request to obtain the form does not meet the requirement.
Electronic notices:
“Please be advised that we have not received payment on your account(s). As such, we are transferring your account(s) to [collection partner name(s)]. We are providing [collection partner name(s)] with the following email address for you: [email address]. [Collection partner name(s)may use this email address to communicate with you about the account(s). If others have access to this email address, then it is possible they may see the emails. If you would like to opt-out of communications by [collection partner name(s)] to [email address], please click here by [date].”
Note: “Reasonable and simple opt-out methods” for electronic notice include providing electronic means to opt-out (e.g., hyperlink) or allowing consumers to opt-out by replying to communication w/ word “stop”. Requiring opt-out by postal mail, phone, or via a website w/out providing a link does not meet the requirement.
LEGAL DISCLAIMER
The materials available on this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular question or issue.