DEFINITION OF DEBT COLLECTOR
It is important to note that the rules will only apply to debt collectors as defined by the FDCPA, which does not include first-party creditors. However, as a matter of best practice, many institutions and creditors are applying these rules unilaterally in anticipation that they will eventually apply to first-party as well as third-party.
CALLS AND LIMITED-CONTENT MESSAGES
Debt collectors are presumed to comply with the CFPB’s telephone call frequency limitations if the debt collector places a telephone call or ringless voicemail neither more than seven times in seven consecutive days nor within a period of seven consecutive days after having had a telephone conversation with the consumer.
The CFPB also introduced the limited content message, which is a voicemail message for a consumer that does not convey information about a debt directly or indirectly to any person. This type of message is considered an attempt to communicate under the new rules and is included in the 7-in-7 call frequency calculation.
DIGITAL COMMUNICATION
Although the CFPB did not impose limitations on the frequency of utilizing electronic communications such as email and SMS, the cumulative effect of a debt collector’s conduct may be construed as harassment (i.e. combination of telephone calls, email, SMS, and letters). Debt collectors will be restricted to sending electronic communications between the hours of 8 a.m. and 9 p.m. local to the consumer and must provide consumers with a clear and conspicuous means of opting out of such communications. Unlike other provisions of Regulation F that apply only at the debt level, a consumer’s choice to opt-out of a particular method of electronic communication must be applied to all accounts for that consumer (and for that channel of communication). The rules provide various safe harbor procedures that a debt collector can follow to obtain a consumer’s consent to email. The rules also provide safe harbor procedures to follow to ensure the consumer and not a third party, receives an SMS from a debt collector.
The new rules also permit the use of social media to contact consumers provided it is through private messaging and not viewable by the public.
It is important to note that the rules will only apply to debt collectors as defined by the FDCPA, which does not include first-party creditors. However, as a matter of best practice, many institutions and creditors are applying these rules unilaterally in anticipation that they will eventually apply to first-party as well as third-party.
SERVICE PROVIDER OVERSIGHT
Although the amendments to Regulation F prescribe Federal rules governing the activities of debt collectors as defined by the FDCPA, the banks and nonbanks from whom they receive accounts must have appropriate oversight of their strategies. As stated in the CFPB’s February 2016 Compliance Bulletin and Policy Guidance on Service Providers, “The CFPB expects supervised banks and nonbanks to oversee their business relationships with service providers in a manner that ensures compliance with Federal consumer financial law, which is designed to protect the interests of consumers and avoid consumer harm. The CFPB’s exercise of its supervisory and enforcement authority will closely reflect this orientation and emphasis.”
WHAT DOES ALL THIS MEAN FOR YOUR ORGANIZATION?
All of these changes mean that current processes, procedures, and strategies must be reassessed to comply with Regulation F by its effective date. Although there is significant literature available to institutions to help understand and decipher the new rules, connecting with the right partner to assist with interpretation and applicability to your organization will help prevent misinterpretation that might leave you non-compliant.
M&G SOLUTIONS EXPERIENCE
M&G Solutions continues to invest in the area of compliance given the importance of these changes to our strategic partners. Please reach out to M&G Solutions to find out how we can help ensure your organization is ready for the new rules in advance of their implementation.