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(At Least) Five Fun Tricks That'll Get You in Dutch with the CFPB

The phrase "substantially similar" sounds both definitive and amorphous, like a social media influencer's business plan, or any conversation about cryptocurrency.

Regulation F includes a model validation notice and the admonition that your validation notice needs to be substantially similar. (Start at page 348 in Part II of Regulation F for more info on "substantially similar.") Here are 5 things you might think will keep your validation notice substantially similar, but may, in fact, [some pun, like sue-milar].

1. "I'm just gonna bold a few things."

Don't. You should only bold section headings. Don't bold the amount due. Don't bold the ways to pay. Many agencies have done this in the past, when we were all much younger, and had no concept of "business professional face mask." ("Can I wear this to work?" my brother asked, wearing a face mask that had the Kool-Aid man bursting through it.) But that isn't substantially similar and it could hit you with an overshadowing claim later because the consumer was urged to actions they otherwise would not have taken. Don't bold things except headers.

2. "Okay, I'll just throw some fun icons on the form, for visual interest."

No.

But--

I said no. Icons are the bold of pictures, are not substantially similar to the CFPB's MVN, and, again, have the effect of drawing the consumer's attention to something that seems to imply an action is required. People know what a phone number looks like. They know what a web address looks like*. Do not use icons in your validation notices.

[* And friendly reminder: if your business name suggests you're in the collection industry, and your website is your business name plus .com or .biz, or .cnbc, you want to be well into the process of getting a dba.]

3. "What about a splash of--"

Don't say color.

"--c...olor"

Uh-uh. That's not substantially similar. The CFPB's MVN is entirely in black and white*. Anything you do within your validation notice that emphasizes just about anything is going to be Exhibit A in the case against you brought by a consumer attorney. And no color paper, either. I can see your wheels turning and you need to gear down, big shifter. And besides: colored ink and colored paper are both expensive, and you have far better things to spend the money you're going to save not getting sued on. Do not use color anywhere on your validation notice.

[* But what if you're emailing your validation notice? What happens if your email client turns an email address blue, the way that email clients do? That's a very interesting question! I am only a Baby Genius, so take my advice with a grain of salt: I think you might be fine. But! You can also change link colors. If you're able to do that and you're emailing your validation notice, why not just make your hyperlinks black?]

4. "We just spent a lot of money on an amazing logo that's all the colors of the rainbow with sparkles and we want to put that on the validation notice."

I'm sure you do. And I would love to get a notice from you with that logo. But Reg F only explicitly allows for the use of "the merchant brand, affinity brand, or facility." (See pages 351-352 of Part II of Regulation F.) It does not mention an agency's logo.

"I don't think you heard the part about how much money we spent?"

I did. And I'm sorry. Life has lessons both free and expensive. Don't use your logo.

- For one thing, you don't have a lot of real estate on that validation notice. A logo is going to take up space and push information down. A logo is also an additional printing expense. (Sorry, letter vendors. This has not been an easy month for you.)

"How are they going to know it's from us?"

That's actually not a problem you need to worry about! This is an opportunity to not solve something! All you need to do is send the validation notice. Which brings us to the final don't:

5. Don't think about the Validation Notice in terms of ROI.

There was a time, ages ago, where agencies did a lot of ROI studies on their validation notice. The idea being: here is our first chance to get the consumer to pay their debt.

With the model validation notice, and the direction the CFPB is going, you can't do that any more.

The validation notice is a compliance requirement and not a collection attempt. Is your notice many pages? As long as the pages are substantially similar to the MVN, thats fine. Spendy, but fine. Is your itemization list very long? I hear you -- especially my healthcare collections brethren and sistren. That's fine. You just have to get the information the CFPB wants, in the format it wants it, on white paper, in black ink.

Want to hear some smart people say wise things about the CFPB's Model Validation Notice? Head on over to the replay of our Model Validation Notice webinar:

iA: Regulation F's Model Validation Notice

 

 

 

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