THE NEW CFPB PROPOSED REGULATIONS ARE A GREAT THING FOR CONSUMERS AND DEBT COLLECTORS
By: Tom Gillespie – President, Access Receivables Management
Over the last twenty years, Access Receivables has believed in better communication. Even our name was chosen to give the consumer access to us. We realized over twenty (20) years ago that the web and other communication channels would be the standard for communication, and we designed many strategies to increase our friendly approach. We call it, “Nice People Collect More”. We have also been operating without any real regulatory guidance as it relates to providing an online payment portal (2mybill.com), virtual collector (askzoey.com), interactive chat, and even a consumer education website (whycreditmatters.net). The problem with the existing laws that govern our industry is that there have not been any major amendments since inception in 1978. There were no cell phones, no email, no text messaging, no online payment portals and no internet with which to communicate effectively. Back then, the US postal service was the standard for official communication. Snail mail was the predominate method of communication as it was less expensive than a phone call. Back then, people opened their mail. They did not just discard everything because they thought all mail was junk. Once they opened it, they called the debt collector, were advised of their rights under the law (validation statement) and could then respond accordingly. If the consumer wanted to dispute the bill, they had to detail their dispute in writing and mail it back to the agency within thirty days of assignment. That was then.
Over many years, electronic communication has taken the place of written correspondence and texting has taken the place of phone calls. Yet, our industry has lacked the clear guidance and protections necessary to communicate effectively with consumers. Even leaving messages on answering machines has become a large issue. Do you leave a message or not? Also, what message should you leave? There have been numerous conflicting court cases like Zortman, Foti and the like that have had unintended consequences. The unintended consequence has been that an agency that does not leave a message may call a consumer numerous times per day. You then add even more complication when you consider cell phone calls which must be made manually and numerous other complications to a simple issue. WE NEED TO ADVISE CONSUMERS OF THEIR RIGHTS UNDER THE LAW as the initial part of the collection process. We need to give them an opportunity to dispute the debt within 30 days and attempt to collect a debt that does not have a valid dispute.
The other problem with our current regulations is the validation notice itself. It is a bunch of legalese that seems to intimidate rather than inform the consumer. Unfortunately, if the debt collector’s notice does not mirror the legal language, they are violating the law and open to lawsuits.
THE UNINTENDED CONSEQUENCE FOR CONSUMERS
Access Receivables has always taken the high road regarding handling consumer collections and truly believes that the best approach is an informative and friendly approach. We have invested heavily on compliance and technology. Frequently, we are not able to speak with or notify a delinquent consumer of their rights under the law within the 30-day validation period because the consumer does not open their mail, never sees their notice and subsequently does not answer the phone. They may think it is a nuisance call from a telemarketer or simply want to ignore the problem and it will go away. That is the furthest thing from the truth. In truth, if we send a letter and make phone calls weekly for months with no response, there are several things that can happen which make matters worse for consumers once we close an account as “no response”:
1. The account gets reported to a credit bureau by the agency and/or the client.
2. The client recalls the account and places it again with a 2nd, 3rd or 4th agency over time.
3. The client sells the debt to a debt buyer who may send another letter that goes unopened and then file suit.
All these steps can be avoided if the agency can inform the consumer through modern communication like email and text messages that a letter is in the mail and that they should read it or go to a link to investigate their rights and options.
This issue, by itself, is the single most important reason why consumer advocates should be excited about the new proposed rulemaking. It increases the likelihood that the consumer who is wrongfully placed for collection can resolve the issue before it creates problems for the consumer.
The new CFPB rulemaking proposal does just that among other enhancements and clarifications:
Here are just a few things that will apply if these proposed regulations are adapted:
1. The proposal would identify safe harbor procedures for debt collectors who unintentionally communicate with an unauthorized third party about a consumer’s debt when trying to communicate with the consumer by email or text message.
2. The proposal would require a debt collector to include, in emails, text messages, and other electronic communications, an option for the consumer to unsubscribe from future such communications.
3. The proposal would prohibit a debt collector from communicating or attempting to communicate with a consumer through a medium of communication that the consumer has requested the debt collector not use, such as a specific telephone number or email address.
4. The proposal would clarify that calls to mobile telephones and electronic communications, such as texts and emails, are subject to the FDCPA’s prohibition on communicating at unusual and inconvenient times and places.
5. Unless an exception applies, the proposal would prohibit a debt collector from contacting a consumer using an email address that the debt collector knows or should know is provided by the consumer’s employer. For example, if a debt collector knows that the consumer works at Example Mortgage Company and the email address is examplemortgagecompany.com or exmoc.com, the debt collector knows or should know the email address is provided by the consumer’s employer.
6. The proposal would prohibit debt collectors from contacting consumers through social media platform except through a private messaging function.
7. The proposal would define, and provide example language for, a “Limited-Content Message” that a debt collector could send by, for example, voicemail or text. The content of a Limited-Content Message would not be considered a “communication” and, if heard or observed by a third party, it would not constitute a prohibited third-party disclosure.
8. The proposal includes a limit on the number of telephone calls a debt collector may place to a consumer about a debt within a seven-day period, subject to certain exceptions. The proposal would prohibit a debt collector from calling a consumer about a debt more than seven times within a seven-day period. The proposal would also prohibit a debt collector from engaging in more than one telephone conversation with a consumer about a debt within a seven-day period. A debt collector who stays within the proposed limits would not have engaged in repeated or continuous telephone calls or conversations with intent to harass, as prohibited by the FDCPA.
9. The proposal would clarify how and with whom a debt collector can communicate about a deceased consumer’s debt, as well as how the requirements regarding validation notices and disputes apply after a consumer passes away.
10. The proposal would prohibit a debt collector from suing or threatening to sue on a debt if the debt collector knows or should know that the applicable statute of limitations has expired.
11. The proposal would prohibit a debt collector from reporting collection items to consumer reporting agencies unless the debt collector has already communicated with the consumer, by, for example, sending a letter to the consumer.
12. Unless an exception applies, the proposal would prohibit a debt collector from transferring a debt to another debt collector if the debt collector knows or should know that: the debt has been paid or settled; the debt has been discharged in bankruptcy; or an identity theft report has been filed with respect to the debt.
13. The proposal generally would require a debt collector to provide required disclosures in a manner that is reasonably expected to provide actual notice and, in a form, that the consumer may keep and access later. A debt collector who provides the required disclosures electronically would need to comply with either the E-SIGN Act or a set of alternative procedures. The proposal also includes requirements relating to the delivery and format of required electronic disclosures.
14. The proposal would require a debt collector to include in the validation notice certain information about the debt including the account number and an itemization of the debt; certain information about consumer protections, including information about the right to dispute a debt; and a consumer response form that consumers could use to take certain actions, including submitting a dispute or requesting original creditor information.
15. The proposal would permit a debt collector to include statements in the validation notice informing consumers how they may request the notice in Spanish, if the collector chooses to provide a Spanish-language translation.
16. The proposal would permit a debt collector to provide a validation notice translated into any language, if the debt collector also sends an English-language validation notice in the same communication or if the debt collector previously sent an English-language validation notice.
THIS PROPOSAL PROVIDES NUMEROUS BENEFITS TO THE CONSUMER AS WELL AS THE DEBT COLLECTOR.
Consumer Benefits:
1. By allowing text messages and emails, it increases the likelihood of readership thereby enabling the consumer to get their validation notification within the first 30 days of collection.
2. The validation notice itself has been modified to enable the “least sophisticated consumer” the information they require to request validation of the debt if they feel the debt was placed in error.
3. The consumer will not receive repeated phone calls every day from a debt collector who is using the only means necessary to contact them because of the 7-day call maximum standard for phone calls.
4. The consumer will not have their debt reported to a credit bureau without advance notification thereby reducing the number of accounts reported to bureaus erroneously.
5. The consumer has protections in place so that debt collectors will not communicate during unusual times and can opt-out.
Creditors
For creditors, the more information you supply at placement, the better your chances for collecting your debt. It is important moving forward that you provide your debt collectors with up to date information, email addresses, cell phone information and your most current invoice information. Contracts and other account information to justify the debt should also be readily available in the event the consumer requests the validation in writing.
Final Analysis
This company applauds the CFPB for its well documented and thorough approach to modernizing the debt collection process. It will result in far fewer complaints and far more debt resolutions in cases where the debt is not owed or not correct. It gives the consumer ample time to dispute and gives them immediate access to communicate back with the debt collector is easy to understand language. We were fortunate enough to be invited to participate in the last SBREFA hearings in 2016 on this matter and recently invited CFPB officials to our headquarters in Hunt Valley, MD. During that visit, we were able to provide comment on the problems we face and provide helpful suggestions. We expect to provide additional comment in writing before the deadline for comment. We are grateful that they have listened to our industry, consumers and industry officials in order to make debt collection less stressful for the consumer and provide channels to make collections more compliant for the debt collector.