As a passionate advocate for the accounts receivable management (ARM) industry, I have a growing concern about the misinformation flooding the marketplace related to the requirements of Regulation F in the final Consumer Financial Protection Bureau (CFPB) debt collection rule. Frankly, I’m shocked and dismayed by the ads, blogs, and webinars I’ve encountered that are proselytizing bad information about the most important, game-changing document to impact the third-party debt collection industry since 1977.
Today, in the interest of helping protect your business from potentially severe legal missteps, I’m going to tackle some of the falsehoods I’m seeing and set the record straight. As always, be sure to consult your legal counsel for specific advice related to these and other aspects of the final CFPB debt collection rule.
11 Examples of Misstatements About the CFPB Debt Collection Rule (Regulation F)
On the surface, some of these erroneous claims seem more harmful than others. But all of them are causing collectors undue anxiety or undermining their efforts to properly prepare for the final CFPB debt collection rule.
Issue #1: When the final CFPB debt collection rule takes effect
Bad info: On October 30, 2020, the CFPB published new debt collection rules exclusively for debt collectors. The rules are slated to go into effect on October 30, 2021.
Truth: On October 30 and December 18, 2020, the CFPB announced part I and Part II of Regulation F. Part I of the Rule was published in the Federal Register on November 30, 2020. Parts I and II both take effect on November 30, 2021.
Issue #2: When agencies should start complying with the final rule
Bad info: The sooner an agency begins to comply with the new Regulation F, the better.
Truth: No one will get an A for complying with the new CFPB debt collection rule before its effective date (November 30, 2021). Among the steps agencies need to take now to prepare for full compliance with the new rule is to make sure they have a test environment for the software releases required for compliance with Regulation F.
Issue #3: When a consumer’s express consent to communicate is needed
Bad info: Do not communicate with a consumer through any channel unless consent is first obtained from the consumer or from a court of competent jurisdiction.
Truth: There certainly are ways for a debt collector to initiate communications with a consumer without their direct consent. For example, debt collectors may call consumers at their residential land line without first obtaining their consent. Debt collectors may mail consumers letters by first class mail without first obtaining their consent.
With regard to email communications, debt collectors who seek safe harbor protection for the unauthorized disclosure of a debt to a third party may communicate by email with a consumer so long as they obtain the email address in compliance with one of the three methods detailed in Section 1006.6 (d)(4) of Regulation F.
Issue #4: Which records must be retained, and for what period
Bad info: Retain records showing evidence of compliance for three years after the last activity.
Truth: This advice is problematic because it lacks specificity. Debt collectors are required to retain evidence of both compliance and noncompliance with the FDCPA and Regulation F starting on the date collection activity begins on the debt until three years after the debt collector’s last collection activity on the debt and, with regard to any recorded phone call, three years after the date of the call. See Section 1006.100.
Issue #5: What’s required prior to sending an initial email
Bad info: Do send a written or electronic notice prior to your first email communication.
Truth: This makes no sense and should be disregarded. There is no such requirement in the new CFPB debt collection rule.
Issue #6: What collectors must do to obtain an email address
Bad info: Do not obtain an email address without consumer consent.
Truth: This statement also makes no sense. There is no such prohibition in Regulation F. A debt collector may certainly obtain an email address without the consumer’s consent. The question is what the debt collector may do with it once it is obtained.
Regulation F provides four ways a debt collector may enjoy a safe harbor from a claim the debt collector disclosed the existence of a debt to a third party without the consumer’s consent using an email:
- If the consumer used the email to communicate with the debt collector about the debt;
- If the consumer provided the debt collector with direct consent to use the email address to collect the debt;
- If the creditor sent the consumer a written or electronic notice (sometimes referred to as a hand-off letter) that meets the requirements of Regulation F Section 1006.6; or
- If the immediately prior debt collector used the email to collect the particular debt and such email was obtained by using one of the previously listed three methods. See, 1006.6 (d)(4).
Issue #7: How many messages a collector many leave in a seven-day period
Bad info: Do not leave more than seven messages within a seven-day period.
Truth: The calling restrictions in the new CFBP debt collection rule apply to attempted calls and conversations, not messages. The rule limits attempts to call any person (not just the consumer) and conversations with any person about a particular debt.
A debt collector may not attempt to call a person more than seven times in a consecutive seven-day period. The limited content message, voicemails, and ringless voice mails all count as attempts to call. In fact, any call placed to a person and that connects is an attempt to call.
A debt collector may not have more than one conversation with a person in a seven-day period about the debt. The date of the conversation is the first day in the seven-day period. Unless an exception to these requirements applies, Regulation F establishes a presumption of compliance with this section if a debt collector restricts calls and call attempts to these limits. See, 1006.14 (b).
Issue #8: When collectors are protected from harassment claims
Bad info: A debt collector is protected from a claim of harassment so long as the debt collector restricts communications to the call restrictions presented in Section 1006.14.
Truth: Compliance with the call and conversation limits presented in Regulation F does not insulate a debt collector from a claim of harassment. A debt collector can be held liable for harassment if/when communications, considered in their totality, violate the principles of the FDCPA and Regulation F.
For example, if the debt collector complies with the call attempt and conversation restrictions but pounds the consumer with five texts per day per debt during the same seven-day period, the debt collector could be held liable for harassment.
Issue #9: When digital communications can follow phone conversations
Bad info: Do not send emails or texts within seven days of a telephone conversation with the consumer without prior consent.
Truth: The call attempt and call conversation limits do not prohibit a debt collector from engaging the consumer using other types of communication methods. Although excessive communications can trigger a harassment suit, communication using channels otherwise permitted by the consumer may not give rise to liability if used within reason.
Issue #10: When social media communications are permissible
Bad info: Use social media addresses that are generally available to the public.
Truth: Regulation F does not prohibit debt collectors from using social media channels in connection with the collection of a debt. However, Regulation F does prohibit social media communications if they are viewable by the general public or the person’s social media contacts. See, 1006. (f)(4).
Issue #11: How collectors can obtain consent to text
Bad info: The only way debt collectors can obtain consent to text is if they comply with Section 1006. (d)(5).
Truth: Section 1006. (d)(5) presents debt collectors with two methods they may use to obtain a mobile number to use in connection with the collection of a particular debt. However, this does not mean these two methods are the only methods a debt collector may use to legally obtain a consumer’s mobile number to use in connection with the collection of a particular debt.
If the debt collector opts to obtain the mobile number under Regulation F, the debt collector will enjoy a safe harbor from a claim alleging the debt collector disclosed the existence of the debt to a third party without the consent of the consumer when using the mobile number.