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The ARM industry and consumers see the CFPB’s proposed rules through very different lenses. Collection agencies are trying to get ahead of what may be the final rules so they’re ready to comply, while consumers are demanding clear, unequivocal protection from potential harassment and abuse.
Despite the CFPB’s best intentions and the commendable work it has done, its interpretation of the Fair Debt Collection Practices Act (FDCPA) isn’t exactly as either group had hoped.
For agencies, there are still open questions about how and when they can communicate with consumers across multiple channels without triggering complaints and legal action. For consumer advocates, the rules provide little reassurance and, if anything, give them new reasons to worry.
Consumer expectations alone do not create new legal requirements under the law, but creditors expect the agencies they enlist to treat consumers fairly.
For ARM businesses looking to become customer service and industry leaders, understanding how consumers view the proposed CFPB rules and why should be of utmost importance.
I recently sat down with my longtime friend Margot Saunders, senior counsel for the National Consumer Law Center and a former managing attorney for the NCLC office in Washington, D.C. We shared our perspectives on the CFPB’s proposed rules, and Margot raised a number of issues she believes the rules fail to address or, in some cases, create on their own.

1.  Confusion Over the Need for E-Sign Consent for All “Required Disclosures”

Consumers do not oppose the use of electronic delivery of written communications per se, but they do expect E-Sign to be followed, particularly when it comes to the electronic delivery of required disclosures.
This is a big point of contention for consumer advocates, who argue that sending writings to an email address previously used without having to verify consent or receipt of the message is wildly unfair. They hope the CFPB addresses the apparent E-Sign loophole that allows collectors to choose whether to comply, even when emailing validation notices.
“The new rules should not deviate from the statutory requirements of E-Sign. Regardless of what the statute says, you always must make sure that validation notice is sent either in paper form by snail mail or by email after receiving some kind of E-Sign consent from the consumer.” – Margot Saunders

2.  Excessive Calling, Unlimited Texting

The proposed rules allow for a high number of calls, as call caps are per debt (not per consumer), and there is no limit to the number of texts an agency can send. The rules appear to grant ARM businesses safe harbor from legal claims as long as they don’t exceed call caps—even if they place dozens of calls per week to a single consumer. To Margot and others, the CFPB has failed consumers in this regard.
“The rule does permit consumers to say, ‘Stop calling or stop texting or stop communicating with me via any particular medium,’ and we think that’s good. We’re a little disappointed there’s not some requirement to tell consumers they have that right.” – Margot Saunders

3.  Sending Emails and Hyperlinks Without Taking Internet Access Into Account

Millions of families access the internet only through their smartphones and have limited Wi-Fi access. For consumer advocates, this raises concerns about whether emails are received, hyperlinks are accessible, and information can be read on a small screen.
Consumer advocates believe the proposed rules effectively treat a lack of response to an email as consent, which Margot calls “an absurd proposal,” since emails are presumed received when they may not be.
“Tricking the consumer into paying something or having to respond to a garnishment notice because they missed all the prior notices isn’t good policy.” – Margot Saunders

4.  Texting for Non-Writing Communications

Consumer advocates fear collectors will send texts, and communicate back and forth, without knowing whether they’re engaging the right consumer. If the wrong consumer responds with a request to verify the debt, collectors may reveal personal or account-related information and violate consumers’ privacy.
“We’re proposing in our comments that for the original communication . . . texts comply with the reassigned number database to ensure they are actually dealing with [the right consumer].” – Margot Saunders

5.  Sending Limited Content Messages

The concept of a limited content message—a voicemail message, for example, or even a message left with a live person—is, to Margot and others, “nonsense.” Not only do consumer groups believe these messages go far outside of legal bounds, but they wonder why voicemails are even necessary in an age of smart phones and electronic communications.
“In my opinion, and the opinion of my colleagues and a lot of other people, there is no statutory authority for the Bureau to authorize communication that is not covered under the rules for all communications.” – Margot Saunders

6.  Threatening to Sue to Recover Out-of-Statute Debts

There is a possibility under the proposed rules that consumers could be persuaded to revive an old debt and then be threatened with a lawsuit (despite existing laws against such behavior), as the proposed CFPB rules don’t require agencies to notify consumers of their rights/risks related to out-of-statute debt. In addition, consumers would have a hard time proving that a years-old debt had, in fact, been paid off.
“We think it’s very hard to imagine why the new rules do not contemplate a disclosure that appropriately apprises the least sophisticated consumer of the risks of paying an out-of-statute debt. This proposed rule goes backwards in allowing threats of litigation or actual litigation.” – Margot Saunders

Tune in to Hear Both Perspectives

During my conversation with Margot, I shared my own legal and practical interpretations. At times, we engaged in a healthy debate. But Margot and I were in complete agreement that agencies must protect consumers from unfair practices. Where clear boundaries and directives are lacking, we’re both actively advocating for change.
If you want to better understand what consumers expect, and reevaluate your communications strategy in that light, I encourage you to take a listen to this informative discussion. You can download the free webinar here.


Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies.

© 2019 Ontario Systems, LLC. All rights reserved. Information contained in this document is subject to change. Reproduction of this publication is not permitted without the express permission of Ontario Systems, LLC.

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Posted by Rozanne Andersen

Rozanne Andersen, J.D., serves as Ontario Systems’ Vice President and Chief Compliance Officer. She is responsible for leading Ontario Systems’ corporate efforts and response to the CFPB’s launch of compliance examinations in the ARM industry. Rozanne's advocacy work on behalf of the credit and collection industry has resulted in landmark legislation and regulation at both the state level and the federal level with regard to the FDCPA, FCRA and HIPAA. In 2020, Rozanne was named Chief Compliance Officer of the Year (Large Company) by the international Women in Compliance Network.
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