The Fair Debt Collection Practices Act (FDCPA) has been in place since 1977, but the new CFPB debt collection rules mark a major turning point. This is the first time in the history of debt collection in the U.S. that we’ve had a regulatory body create rules to interpret the FDCPA.
The CFPB new rules have big implications for ARM businesses, but they needn’t wreak havoc on yours. You just need to understand where to focus your efforts between now and December 2021 and then get to work preparing in an organized fashion.
Below are the five objectives you should start pursuing today, along with some tips that can help make this process an easier lift. I also recommend downloading our free CFPB Action Timeline, a handy month-by-month to-do list that can help keep you on track.
1. Familiarize Yourself with the New Rules
Not only do you need to read all 650+ pages of the CFPB new rules for debt collection, but you also need to screen third-party sources carefully. I’m seeing a lot of misinformation out there about what the rules say and what they actually mean. My previous post tackles some of the most egregious CFPB debt collection rule misstatements circulating out there.
In addition, you’ll want to map the new CFPB rules to your operations and your business model. Determining which sections are relevant to you is a crucial exercise. For example, if you don’t use email, or you don’t collect time-barred debt, you don’t need to spend time worrying about those sections.
2. Get Your Policies and Procedures in Order
To ensure consistent, universal compliance with the new CFPB rules across your organization, your policies and procedures must document how you’ve interpreted the new CFPB rules and how they apply to your operation. In other words, you need a handbook that explains what you’re doing and why you’re doing it.
Having a comprehensive, detailed set of policies and procedures is especially important now that the costs and stakes of litigation are higher. Because the new CFPB rules provide much more specific guidelines, there’s less ambiguity surrounding the FDCPA—leaving more opportunities for collectors to make mistakes, miscommunicate, misapply the new calculations for waiting periods, and generally misunderstand the consumer’s rights under the new rules.
3. Align with Your Clients
Many collectors assume that, with regard to the new CFPB rules, their clients will or won’t want them to do certain things. But you can’t afford to make assumptions. You need to have a conversation with your clients to find out how, as an example, they would like you to communicate with their consumer or patient base depending on the type of debt.
This new alignment spurred by the new CFPB rules can help you to boost the collectability of your creditor clients’ debts. If a client is willing to introduce consumers or patients to your agency in a handoff letter, you are a long way towards using email to communicate with consumers. If your clients are able to support one of the five itemization dates more easily than the others with add-on charges, fees, and interest, you will be well positioned once the new rules take effect.
4. Update and Test Your System
If you’re looking to update to omnichannel communications (these days, it’s a necessity for ARM agencies), there’s a lot that needs to happen to ensure compliance. The new CFPB rules work in concert with one another; as a whole, they’re designed to control the consumer/patient experience. The rules provide explicit guidelines, including limits on communication attempts, where none previously existed.
A piecemeal setup with multiple vendors offering various communication tools (letters, autodialed texting, calls, etc.) has always had compliance gaps; now, those gaps will expose collectors to even greater risk. Not knowing when or how many texts, prerecorded messages, or phone contacts have occurred at any given time will make it dangerously easy to fall out of compliance.
Even if you technically comply but your timing seems too aggressive, you could still be held liable. This is why having a collection platform that functions as an ecosystem is so important: it will reduce your risk of noncompliance by empowering you to manage the consumer/patient experience holistically.
To be clear, only an integrated system allows you to see and manage the entire consumer/patient experience in real time—which is key—from the moment an account hits your system until the expiration of the three years of record retention.
Once you’ve implemented your system updates, you need to begin testing. Imagine if, on November 30, 2021, you find out your validation letters don’t populate, your system will not support the record keeping you need, or your system won’t manage attempts to call. You don’t want to be addressing these issues this late in the game.
Work with your software providers early and often to make sure you have a test database that you can begin to run certain workflows through to see how it’s responding. Then you’ll know if your system is actually providing you with the data you need to understand the consumer/patient experience. I recommend starting on this very soon.
5. Bring Your Staff Up to Speed
Your collectors need to understand the new CFPB rules to effectively respond to consumer/patient demands and communicate within the confines of the new rules. Equally important, your team must be well trained on the interface updates that will be needed to ensure all necessary CFPB compliance guardrails are in place.
Your collection agents are your agency’s most valuable assets. It’s important to invest the time it takes to properly train and equip them for this new way of operating. If your collectors can’t immediately identify special language requirements, the date the validation period expires, the status of both FDCPA ad FCRA disputes, or time, place or medium, your litigation exposure increases exponentially.
Get the CFPB Action Timeline—Your Roadmap to CFPB Compliance in November
The prospect of preparing to comply with the CFPB new rules can seem overwhelming. But the journey to compliance is manageable if you take it step by step and chart your progress along the way.
Our CFPB Action Timeline can help. You’ll find a complete list of 2021 compliance tasks, broken down month by month, all in one place. Get your free copy today!
Get Your Free CFPB Action Timeline for 2021
Feeling unsure about how to prepare for the CFPB new rules? Stay on track and on target with this handy resource.
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During this 90-minute session, Rozanne Andersen and co-presenter John Bedard, attorney at Bedard Law Group, P.C. will provide practical answers to your questions about the CFPB final rules. They will also address some of the erroneous claims and tips that are putting ARM agencies at risk.
During this 60-minute webinar session, Rozanne Andersen and co-presenter John Bedard, attorney at Bedard Law Group, P.C. will recap the content presented in “Rozanne on Demand” videos 1-3 and provide practical answers to your questions about the CFPB final rules.
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