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Updated September 20, 2019
Consumer habits are hard to change. Think about when you first were introduced to online banking or online shopping. Were you hesitant? Now, think about how commonplace online banking and shopping have become.
In fact, once people adopt new technologies, their behaviors become so automatic, they barely remember how foreign their actions once seemed.
As with online banking and shopping, electronic signatures have become standard for payment authorizations, loan contracts and medical documents. Each signed debit or credit purchase signifies a signed contract by the customer, who does not actively think about their obligation for repayment. It’s just automatic.
Now, companies can capitalize on customers’ comfort levels with eSignatures while remaining compliant with Regulation E – provided they use software that follows the CFPB’s requirements.
CFPB Regulation E Compliance Bulletin
Due to the increased popularity of electronic signatures, the CFPB issued a bulletin in November 2015 clarifying steps required to remain compliant with Regulation E statutes concerning debt collection activities.
The November bulletin reiterated that Regulation E compliance includes payment authorizations accepted through electronic means, such as the phone and computer.
Preauthorized payments require:
- Authentication of the customer
- A copy of the authorization must be provided to the customer either in paper or electronic form
- The company shows evidence of the customer’s consent
Verbal authorizations do comply with Regulation E as long as:
- It is an electronic sound, symbol or process that is attached or associated with a contract
- The customer has intent to sign the contract
- The contract is created, generated, sent or communicated electronically
Recording a code into a telephone keypad can satisfy Regulation E compliance based on the electronic signature guidelines.
Payment Consent on Recurring Payment Schedules Made Easy
In debt collection, it can be a challenge to get the consumer on the phone. Once your collector makes a right party contact, they should either take a payment while speaking with the consumer or set up a recurring payment schedule that works for the consumer.
Your collector knows to meet Regulation E compliance guidelines on any debit card or ACH payment, the consumer needs to provide consent with a signature. In the past, that meant:
- Printing out the schedule and the authorization language
- Putting the schedule and authorization request into an envelope
- Sending the envelope out with the day’s mail
- Waiting for the consumer to receive the schedule, sign the consent form and send the authorization back through the mail
- Receiving the authorization and then returning to your software system to activate the payment schedule
That is a lot of steps and a lot of waiting. And many times, the consumer never returns a signed authorization.
So how can you speed up this process while still ensuring compliance to laws and regulations?
Better yet, how can you accelerate this process to take minutes instead of days or weeks?
PDCflow Simplifies Staying Compliant with Regulation E
With PDCflow, once your collectors have a consumer on the phone they can:
- Negotiate a payment plan with our flexible schedule terms. Set up a schedule based on balanced owed.
- Send the payment schedule, terms and payment consent form to the consumer either via text or email.
- Ask the consumer to authenticate their identity, review all the information, sign, enter their payment information (card or checking info) and send it back - all within minutes.
For PDCflow client Recovery Management Solutions, using the FLOW + Payments software has become an integral part of their daily operations.
“We want to make sure we’re following Regulation E as best we can, and we want to make sure consumers are aware of what payments are going to be debited from their account. We will not process any payments from a consumer unless they first sign the eSignature.”Liz Colwell, RMS
RMS sends an anywhere from 1100 - 1400 Flow requests for signature and payment consent (Regulation E consent) each month with an average success rate of 74 - 76%.
That means signed and returned payment agreements and more completed payments!
For more information on how Recovery Management Solution uses PDCflow to maintain their compliance while increasing completed payments, download their case study.