QUESTION
We are a servicer in the northwest with a large portfolio. Our debt
collection procedures were recently cited by our state banking department for
violations of the FDCPA.
To find out more about what happened, we arranged for call calibration to be done. This review resulted in revisions to our policies and procedures. We now periodically use call calibration as part of our monitoring procedures for communications with borrowers.
In revising our policies, it was clear that we had not taken into consideration a number of scenarios involving collection communications with borrowers. We have hired a consultant to tell us about interactive technology.
So, we are writing you for further guidance. What are the important communication provisions that we should consider regarding technology with respect to debt collection?
ANSWER
Your question touches on two significant factors involving procedures
relating to the Fair Dept Collection Practices Act (FDCPA). First, how to
monitor communications with debtors? Second, what are significant provisions involving
technological requirements with respect to communicating with debtors?
Most communications – for instance oral, written, online, email, and text messages – between a financial institution and the public is a highly regulated activity. With regard to oral communications, a good way to monitor such interactions is through call calibration, which is the tracking and compliance evaluation of calls. We offer quality assurance Call Calibration in various settings, such as between online platforms and consumers, telemarketing initiatives, and call center marketing. We also provide a Call Center Manual and a plan for Call Calibration Methodologies. For information about Call Calibration compliance, click HERE.
With respect to the FDCPA and technology, examiners have been taking an active interest in technological advances as these relate to contact with the public. Since October 30, 2020, regulators have been particularly focused on how to ensure that technology does not get in the way of complying with the FDCPA mandates.[i] This is because on October 30, 2020 the CFPB issued a final rule to restate and clarify prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.
The compliance effective date is November 30, 2021.
The rule focuses on debt collection communications and gives consumers more control over how often and through what means debt collectors can communicate with them regarding their debts.
The rule also clarifies how the protections of the FDCPA apply to newer communication technologies, such as email and text messages.
The final rule has four subparts:
Subpart A contains generally applicable provisions, such as definitions that apply throughout the regulation;
Subpart B contains rules for FDCPA debt collectors;
Subpart C is reserved for any future debt collection rulemakings; and
Subpart D contains certain miscellaneous provisions.
I will provide a high-level overview. However, I urge you to review this regulatory framework in detail. Also, it is a good idea to seek guidance from a competent compliance professional, because the subject regulation is complex and nuanced, and knowing how to appropriately apply its many requirements entails a thorough knowledge of regulatory compliance.
Set forth here are the CFPB’s concerns about debt collection communications, along with a brief clarification of the application of the FDCPA to newer communication technologies that have developed since the FDCPA’s passage way back in 1977.
Generally, the final rule:
- Clarifies restrictions on the times and places at which a debt collector may communicate with a consumer, including by clarifying that a consumer need not use specific words to assert that a time or place is inconvenient for debt collection communications.
- Clarifies that a consumer may restrict the media through which a debt collector communicates by designating a particular medium, such as email, as one that cannot be used for debt collection communications.
- Clarifies that a debt collector is presumed to violate the FDCPA’s prohibition on repeated or continuous telephone calls if the debt collector places a telephone call to a person more than seven times within a seven-day period or within seven days after engaging in a telephone conversation with the person. It also clarifies that a debt collector is presumed to comply with that prohibition if the debt collector places a telephone call not in excess of either of those telephone call frequencies. The final rule also provides non-exhaustive lists of factors that may be used to rebut the presumption of compliance or a violation.
- Clarifies that newer communication technologies, such as emails and text messages, may be used in debt collection, with certain limitations to protect consumer privacy and to protect consumers from harassment or abuse, false or misleading representations, or unfair practices. For example, the final rule requires that each of a debt collector’s emails and text messages must include instructions for a reasonable and simple method by which a consumer can opt out of receiving further emails or text messages. The final rule also provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure if the debt collector follows the procedures identified in the rule when communicating with a consumer by email or text message.
- Defines a new term related to debt collection communications: limited-content message. This definition identifies the information that a debt collector must and may include in a voicemail message for consumers (with the inclusion of no other information permitted) for the message to be deemed not to be a communication under the FDCPA. This definition permits a debt collector to leave a voicemail message for a consumer that is not a communication under the FDCPA or the final rule and therefore is not subject to certain requirements or restrictions.
A word about consumer disclosures. The FDCPA requires that a debt collector provide certain disclosures to the consumer. The final rule clarifies the standards that a debt collector must meet when sending the required disclosures in writing or electronically.
On December 18, 2020, the CFPB issued further guidelines to the final rule that, among other things, clarifies the information that a debt collector must provide to a consumer at the outset of debt collection communications.[ii] As stated, the final rule’s compliance effective date is November 30, 2021.
Among other things, as amended, it provides a model notice containing such information, prohibits debt collectors from bringing or threatening to bring a legal action against a consumer to collect a time-barred debt, and requires debt collectors to take certain actions before furnishing information about a consumer’s debt to a consumer reporting agency.
Jonathan Foxx, Ph.D., MBAChairman & Managing Director
[i] Debt
Collection Practices (Regulation F), Final rule; official interpretation,
Bureau of Consumer Financial Protection, PDF
[ii] Amendment to Regulation F, issued December 18, 2020. This rule amends Regulation F, 12 CFR part 1006, which implements the Fair Debt Collection Practices Act (FDCPA). CFPB page: HERE
