The implementation date for the CFPB’s Regulation F is coming. On November 30, 2021, debt collectors are expected to be fully ready to comply with this long-awaited rule.
To help agencies prepare, PDCflow and financial services attorneys Joann Needleman and Leslie Bender of Clark Hill Law, recently put on a one-hour webinar, “Regulation F Implementation Challenges: Ask the Regulatory and Compliance Experts,” addressing the concerns and implementation struggles submitted by webinar attendees.
Opening Thoughts on Regulation F and FDCPA Compliance
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 how they may impact debt collection after November 30.
“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 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.
However, she acknowledges that preparation and compliance won’t stop being concerns for collectors the day the rule applies. “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 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. Right now, limited content messages appear to be 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 call back. Be sure to track LCM call backs if you can. This will help you decide whether it is an effective practice long-term for your agency.
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 was best practice 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.
One of the biggest challenges presented within Regulation F is in how to comply with the validation notice. Many attendees wanted to know more about the changes in the new rule, how state laws may 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 was intended to guide collectors in giving compliant notices to consumers. Any changes you make to the form may later require you to prove that your notice is substantially similar to the model. To avoid these headaches, it’s best to prepare to comply as fully as possible on November 30.
Bender and Needleman have been working hard to help debt collection professionals be ready to comply with 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 compliance and working to ensure our payment communication tools help 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 to be 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