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In May, the Consumer Financial Protection Bureau (CFPB) released its Notice of Proposed Rulemaking (NPR) for debt collection. The extensive document covered the use of text and email in debt collection, among other long-awaited topics.
As part of finalizing the rule, the CFPB requested public comments in order to better understand possible ramifications of the rule and how it might impact both the industry and consumers.
As a vendor partner to those in the Accounts Receivable industry for more than 15 years, we understand you ARM professionals are long overdue for a rule that offers direct guidelines for the use of digital communication technologies.
This is why we have filed a public comment outlining our opinions on how the Bureau’s proposed rule addresses text message and email communication. Our full comment is as follows:
Debt Collection NPR Comments
Dear Consumer Financial Protection Bureau:
As a service provider to many companies in the collection industry, PDCflow has seen the struggles our clients have faced in communicating, contacting and interacting with consumers. We enthusiastically applaud your efforts in meeting with both consumers and industry leaders to better understand the difficulties, weigh them against your mandate for consumer protection and propose an equitable solution.
At PDCflow, we have developed communication tools through email and text messaging which are intertwined with document delivery, wet signature acquisition and payments. The Proposed Rules will open these communication channels, provide consumers with their preferred methods of communication and significantly reduce expenses for our clients.
We understand that consumer advocates are concerned with the prospect of unlimited texting, emails and phone calls to consumers by using the limited content message. We would like to underscore that the Proposed Rule will not allow limited content messages via email, that there are still regulations limiting texting and calling through the TCPA and that the Proposed Rule will actually reduce communications with consumers who are legitimately taking responsibility for their debts. We strongly support this proposal by the CFPB.
It seems the CFPB’s goal is to open electronic communications between consumers and collection agencies to improve the ability of the consumer to resolve their financial situations. In order to accomplish that goal, the industry needs brightline regulations around the first communication with the consumer in electronic format. While the communication of the written Validation Notice required by 1692g of the FDCPA is detailed extensively in the Proposed Rule, there is no clarification on texting or emailing the Validation Information as a first communication. We believe that providing clear guidance on electronic delivery of Validation Information in the first communication would greatly benefit consumers as well as the industry’s ability to conduct electronic commerce. Having a safe harbor to email or text the Model Form B-3, or a link to the form, as the first communication would accomplish that goal.
Furthermore, Section 104(d) of the E-SIGN Act (15 U.S.C 7004(b)) authorizes federal regulatory agencies to “exempt without condition a specified category or type of record from the requirements relating to consent in [101(c)] if such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk of harm to consumers.” In the circumstance where a debt collector wants to send the Validation Notice (per Model Form B-3) in the initial communication, the E-SIGN requirements must be exempted.
First, the FDCPA does not mandate that a debt collector send a Validation Notice in the initial communication. It only mandates that it send a written Notice of Validation within five (5) days after an initial communication with a consumer. Section 101(c)(1) of E-SIGN only applies when a statute or regulation requires that the information be in writing. As such, Validation Notices sent as initial communications are not subject to E-SIGN and should be exempt. Second, as the CFPB has recognized in its analysis, the process to obtain E-SIGN consent is burdensome for debt collectors. PDCflow also believes that consumers will otherwise be confused and quite possibly intimidated by the E-SIGN process as well. Therefore, debt collectors should be able to send Validation Notices as an initial communication to a consumer as long as the requirement for consent as found in §1006.6(d)(3) and §1006.6(e) are met.
Again, we thank the CFPB for its efforts to update, clarify and modernize the Fair Debt Collection Practices Act. We look forward to seeing the Final Rule in the near future and believe consumers and the industry will benefit from these efforts.
Stay Tuned for Future NPR Related News
Of course, the end of the comment period doesn’t mean there will be no more developments concerning the NPR. After the comments have been considered, a final rule will be released.
If you want to be kept up-to-date on the CFPB’s NPR, subscribe to the PDCflow blog: