Compliance Roadmap: FDCPA Laws & Regulation F

Compliance Roadmap: FDCPA Laws & Regulation F

The implementation date for the CFPB’s Regulation F was November 30, 2021. By now, debt collection agencies should be fully compliant with this long-awaited rule.

Despite this, many agencies are still struggling to modernize out of fear of being non-compliant.

To help agencies prepare for these compliance challenges, PDCflow and financial services attorneys Joann Needleman and Leslie Bender, presented a one-hour webinar, “Regulation F Implementation Challenges: Ask the Regulatory and Compliance Experts.”

During the presentation, they addressed actual concerns and implementation struggles submitted by webinar attendees.

What Does FDCPA Stand For?

The Fair Debt Collection Practices Act (FDCPA).

This law became effective in March 1978 and was designed to eliminate abusive, deceptive, and unfair debt collection practices.


Opening Thoughts on FDCPA and Regulation F

Before addressing the questions and concerns from attendees, Needleman and Bender discussed their thoughts on both the positive and negative aspects of the Consumer Financial Protection Bureau’s rule and its impact on debt collection.

This has been a decade or more in the making,” said Needleman. “I think we have to feel positive about the rules. We have wanted a road map of what a regulator would feel is appropriate conduct for us, to communicate to consumers and collect debt.

Joann Needleman, Clark Hill Law

Joann Needleman

Member, Clark Hill PLC

Joann Needleman leads the firm's financial services regulatory and compliance practice and advises banks, financial institutions, and financial service entities on regulatory compliance matters.

A former member of the Consumer Financial Protection Bureau’s (CFPB) Consumer Advisory Board, Joann provides her clients with useful strategies and common-sense solutions in order to prepare for areas of regulatory scrutiny.

Preparation and compliance haven’t stopped being concerns for collectors since the rule was implemented.

“It is a sea change, and it’s going to require a lot of work, a lot of communication with your clients and a lot of communication internally. But we will get through it.”

Overall, Bender feels the use of new communication channels in debt collection is a positive step for the industry.

“One of the things that we love about Reg F is that it does make it clear that it would be acceptable to communicate with consumers in innovative digital ways,” says Bender.

Leslie Bender, Clark Hill Law

Leslie Bender

Senior Counsel, Clark Hill PLC

Leslie C. Bender counsels financial services and healthcare clients on a broad range of privacy, data security, and consumer financial protection laws relying upon her strategic and legal experience as a general counsel.

As a corporate trainer, Leslie has more than 30 years of experience working with financial institutions, collection agencies, and as a compliance consultant and trainer for hospitals. Recognized as a national authority on information privacy and security law, she was one of the first privacy officers accredited by the International Association of Privacy Professionals as a Certified Information Privacy Professional.

“It carries forward this interpretation of the FDCPA that our job as debt collectors is to collect the right amount from the right consumer, honoring that consumer’s communication preferences. While that may seem a small thing, there are a lot of folks in the industry who have been uncomfortable embracing digital ways to interact with consumers or have been unclear about how to manage consent preferences.”

Credit Reporting Challenges

Handling credit reporting changes has been a big concern within Regulation F. Many people are worried about compliance, debt parking, handling previously unreported accounts and more.

Needleman says that for those credit reporting at present, you may continue to do so. However, when new accounts come in, a written notification will be necessary before credit reporting these new accounts.

Limited Content Message

Limited content messages (LCMs) are the Bureau’s solution to the risk of third party disclosure while leaving messages. Limited content messages are a good way to encourage callbacks. However, there is confusion over:

  • addressing consumers who return calls
  • what your agents can say to third parties during a callback
  • how to present your company’s name without revealing you are a debt collector

Needleman says to continue using the procedures you already take to avoid third-party disclosures and to comply with other rules during a callback. Be sure to track LCM callbacks if you can. This will help you decide whether it is an effective practice long-term for your agency.

Dispute Challenges

Handling disputes is nothing new to debt collection but some agencies are trying to understand how to best move forward with dispute collection under Regulation F.

One topic of discussion is the best practices for managing electronic disputes and how they can improve your work processes.

The panel believes the more information you can collect regarding a dispute, the better for your business. Allowing consumers to file electronic disputes can also boost consumer satisfaction and help you handle issues faster.

Regulation F FDCPA Validation Notice

One of the biggest challenges presented within Regulation F is how to comply with the FDCPA validation notice. Many attendees wanted to know more about the changes, how state laws interact with the notice and other details to help agencies maintain FDCPA compliance.

Along with their advice, Needleman and Bender want debt collectors to understand: Regulation F’s validation form is not a letter.

“There’s no date, there’s no signature block, there’s no salutation,” says Needleman.

They warn against viewing this document as a letter, as that may have further implications during litigation. The panel also advises agencies not to stray from the model validation form.

The model is intended to guide collectors in giving compliant notices to consumers. Any changes you make to the form may later require you to prove your notice is substantially similar to the model. To avoid these headaches, it’s best to comply as fully as possible.

Bender and Needleman have been working hard for years to help debt collection professionals comply with FDCPA laws and Regulation F.

You can learn more about the validation notice and their ten step compliance checklist through our on-demand videos.

PDCflow has also been following the developments surrounding FDCPA laws and compliance and working to ensure our software helps you comply with electronic communication rules within Regulation F.

Our Flow Technology:

  • Allows consumers to opt out of text messages

  • Honors opt-outs, preventing further SMS messages from being sent to the number in question unless the recipient opts back in

  • Displays a message letting collectors know that a consumer has opted out so a consumer communication preference can be updated in your ARM system

  • Allows opt-out of Flow emails for your organization

  • Gives you access to an email opt-out report

Use our ready-to-deploy front end today to start sending validation notices and payment requests via email or SMS.

Need communications and payments to update in real-time to your account management system? Our open APIs are configurable to your needs.

Integrate to our APIs so all completed transactions are updated into your software or control the user experience by adding any or all components–emails, SMS, payments–into your application.

We also have existing partnerships with many of today’s top ARM software systems.

Set up a call with a PDCflow digital communication and payment expert today to find out how to get started.

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Hannah Huerta - PDCflow Marketing Specialist
Hannah Huerta, Marketing Specialist

Hannah Huerta is a Marketing Specialist at PDCflow. She creates content for the accounts receivable and payment industry.

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