The recently proposed CFPB rules for debt collection have left many in the ARM market scrambling, or at least feeling anxious and uncertain about the future. But take heart: the CFPB recognizes your challenges and concerns. Overall, they’ve done a commendable job outlining limits and safeguards agencies must adopt to comply with the Fair Debt Collection Practices Act (FDCPA) in the digital era.
Even so, those 538 pages raise a fair number of questions. Many ARM leaders, legal experts, industry organizations, and business owners continue to weigh in on collection agencies’ behalf as we near the close of the comment period (September 18, 2019) for the Notice of Proposed Rulemaking (NPRM).
Recently, I sat down with two ARM industry leaders to discuss the NPRM for the CFPB’s proposed rules.
Joining me for the webinar were:
- Stephanie Eidelman, CEO of insideARM and the iA Institute; and
- Michael Kraft, General Counsel at The CCS Companies and a creditors’ rights attorney for 25+ years.
Moderating the panel was Mike Bevel, Director of Education for the Compliance Professionals Forum and an editor at insideARM.
Our discussion centered on four major areas addressed by the proposed CFPB rules: call caps, electronic communications, limited content messages, and validation notices/required disclosures. Here’s a brief recap of our discussion (you can access the free webinar recording here).
The prospect of call caps, as addressed in the CFPB’s proposed rules, is worrisome for many consumer advocates and ARM agencies. Both camps have expressed confusion and unease about how limits will be defined and applied going forward.
Agencies can make up to seven calls per debt before reaching a consumer, including leaving voicemail messages. Once contact is made, only one call can be made per week (with some exceptions, including a consumer’s callback request or a consumer initiating a call). This rule would not supersede state law rules.
While attempting to connect with a consumer using any of the phone numbers on file, the debt collector may take advantage of the seven calls per week restriction on a per-debt basis only if the collector can prove the attempted contact was with respect to a particular debt rather than all the active accounts in its inventory.
Agencies with more than one phone number for a consumer might struggle to reach him/her in a timely manner, fearing that dialing within the limits but on multiple accounts could still constitute harassment. In addition, the proposed rules don’t define a “connected call,” leaving debt collectors with more uncertainty.
Consumers are concerned about the per-debt standard (versus per consumer); an individual with multiple accounts could receive dozens of calls per week. Even so, it’s reasonable to assume agencies would take more care in trying to reach these consumers, and consumers could simply reach out to agencies to put a stop to excessive calls.
Many agencies keep an individual consumer’s accounts completely separate from each other, as required by clients in the financial and healthcare arenas (e.g., credit card accounts, ambulance bill/hospital bill/medical specialist bill). When no one has an overall view of a consumer’s account statuses, building internal controls to ensure compliance and achieve the ideal call frequency could be a Herculean task.
Since the FDCPA was signed into law in 1977, new communication technologies have introduced new complications for third-party agencies looking to move beyond phone calls and printed letters. For the most part, the proposed CFPB rules regarding email and text messaging offer clear directives regarding consumer consent and consumer privacy.
Many agencies shy from email and texting due in part to the risk of unintentionally disclosing consumer debts to third parties. This is a major concern for consumers as well. The CFPB addresses various scenarios related to selecting an email address or mobile number to use for consumer communications.
The proposed rules will provide debt collectors with protection from the unauthorized disclosure of a debt to a third party when engaging in email or text communications so long as specific procedures are maintained regarding the selection and use of a mobile number or email address. The protections afforded debt collectors when communicating with consumers using mobile numbers and email addresses vary depending upon whether the collector uses a number or address the consumer used to initiate communication with the collector; provides the consumer with 30 days’ notice of its intent to use a particular non-work mobile number or non-work email address to communicate with the consumer; or uses a non-work mobile number or non-work email address the consumer recently used to communicate with the creditor or a prior debt collector about the particular debt.
When agencies use electronic communications, their responsibility doesn’t end when they hit “send.” They will need to monitor delivery of email and text messages carefully by way of notifications from communication providers. If emails bounce or links aren’t opened, legally required disclosures must be resent through a different channel.
The proposed CFPB rules would allow debt collectors to use digital delivery options for required notices such as the validation notice, verification information, or the name of the original creditor. Specifically, the required disclosures may be included in the body of an email or accessed via e a hyperlink that directs consumers to a secure website. Recognizing the risks associated with hyperlink usage and the reluctance on the part of consumers to click on hyperlinks, the proposed rules include conditions that must be met before using a hyperlink to provide a required disclosure.
Consumers fear the prospect of being flooded with emails and texts. They also fear that collection agencies will make it difficult for them to opt out. But these fears may be overblown. Aside from existing laws against harassment and abuse (and the fact that electronic communications are not cost free), agencies will be inclined to limit email use to avoid being shut down by their ISPs due to spam behavior.
“We take the position with most things that are consumer oriented, especially when it comes to electronic and alternative communication, that they have expressed a preference at some point that they be communicated with through some means, and to ignore the fact that they have . . . does a disservice to that consumer.”
Michael Kraft, General Counsel, CCS Companies
Limited Content Messages
For many years, collectors have been skittish about leaving messages for consumers who can’t be immediately reached. The CFPB has addressed this issue specifically, first by defining limited content messages as attempts to communicate for purposes of the frequency of calls requirements, while at the same time declaring a limited content message to not be a communication in connection with the collection of a debt as that term is defined in the FDCPA.
Limited content messages can be relayed via voicemail, text, or live communication with a third party as long as the message contains the following:
- The consumer’s name;
- A request that the consumer respond to the message;
- The name or names of one or more natural persons the consumer can contact;
- A callback number; and
- If the message is delivered electronically, a disclosure explaining how the consumer can stop receiving messages through that medium.
Limited content messages may not be delivered via email, as an email address would reveal the sender—thus rendering the email an actual communication per the FDCPA.
For prerecorded voicemail messages, agencies should review TCPA regulations and verify appropriate consent (as would be required for auto dialing cell phones).
While collection agencies are bound to protect consumer privacy (and consumer groups see limited content messages as obvious debt collection attempts), consumers are increasingly demanding transparency from businesses upfront. They want to know who’s trying to reach them and why. These two imperatives are somewhat in conflict, and the CFPB has yet to find a way to ease the tension.
The CFPB’s proposed natural person requirement might pose problems for larger agencies whose call centers lack the ability to transfer calls to specific agents. One simple fix, if the CFPB sees fit to institute it, would be to require agencies to request that consumers call a particular department and speak to any available agent.
“Personally, I don’t find the message as proposed to be super useful to the consumer. I think it sounds shady. I’m not sure who would respond to it—just saying ‘Please call me; this is about an account.’ I think if collectors would simply say, ‘This is about a [specific company] account, at least the consumer . . . could make a more educated decision about whether or how to respond.”
Stephanie Eidelman, CEO, insideARM/iA Institute
Don’t Miss Part 2 of the Panel Discussion
In my follow-up post, I’ll cover the most important aspects of the CFPB’s proposed rules regarding validation notices/required disclosures. I’ll also share new business imperatives that could require fundamental change, along with the most important takeaway for ARM agencies.
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