A Closer Look At This Amendment to the Fair Debt Collection Practices Act (FDCPA)
Despite years of debate and a looming November 30, 2021 deadline, there’s still an abundance of confusion throughout the debt collection industry – and among consumers – as it pertains to the new Regulation F. To clear the air, we’re taking a look at what Reg F (mostly) means for all parties affected.
What The Exact Law States
This amendment is broken up into two parts – Communications and Disclosures. And we’re going to outright say it: this stuff is dense, confusing and pedantic. To start, let’s look at the summary of each part before digging into what this all actually means.
Part 1: Communications
“The Bureau is finalizing Federal rules governing the activities of debt collectors, as that term is defined in the FDCPA. The Bureau’s final rule addresses, among other things, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection.”
Part 2: Disclosures
“Among other things, the final rule clarifies the information that a debt collector must provide to a consumer at the outset of debt collection communications, 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.”
What Does This Mean for Debt Collection Agencies
- Collectors will have to wait one week – per debt/account – between communications with the debtor.
- Collectors must include more information surrounding the debt (including debt collection rights, more details about the debt, etc.) in order to help inform the consumer of what they owe and what they can do about it.
- Collectors can provide the now-required validation notices via electronic messaging in initial communications without having to comply with the federal E-SIGN Act.
- Collectors can use emails, e-messaging and other electronic communications to contact consumers – unless the consumer opts out (instead of having to first obtain permission for contact). However, they must provide the option to opt-out.
- Collectors cannot bring prospective legal action against a consumer to collect a time-barred debt.
- A collector can 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.
- If a collection agency opts to use the new “limited content message” option, they must test their methods and the collection agency’s name to ensure that any message left to a debtor, using that agency name, will be compliant and not reveal that the call is specifically from a collection agency.
What Does Regulation F Mean For Debtors
- Consumers now have the right to request the stoppage of specific types of communications (calls and texts) but they must at least orally profess this request for it to go into effect.
- They will now receive some sort of request (call, letter, electronic message, etc.) regarding their debt(s) before it is passed along to a credit bureau for reporting purposes.
- Debtors will be shielded from a harassing amount of collections calls per account.
The Potential Negatives of Reg F for Consumers
From our perspective, some of the changes presented are designed to meet the modern moment. We communicate differently now – that evolution should be addressed. That’s not an issue! However, there are certain modifications that were made that could hinder consumers despite being made to help all parties.
For example: the new emphasis on electronic messaging for initial communications could result in missed alerts because of a lack of internet access or technological knowledge. American Collection System believes in taking an empathetic and results-driven approach to collections, so we will create our own internal mechanism to ensure these folks are well-informed of all notifications.
Another issue: collectors are not required to communicate with consumers in their specified language, meaning if a debtor asked for communications to be in Spanish, the agency can ignore that request. Again, we understand that this is both unpragmatic and unempathetic so we will continue to work with those that owe with their best interests in mind.
It’s Safe To Say That This Regulation Is Robust
There will undoubtedly be growing pains for both debt collection agencies and consumers moving forward to comply with these new amendments due to the implementation of Regulation F. For collectors, that means reviewing just about every facet of their communications methods and tools to maintain compliance. For consumers, that means knowing their rights and being eagle-eyed for any debt collection notices that may come their way.
We didn’t cover every facet of this regulation, rather the biggest changes that are most likely to impact the industry the hardest. If you have additional questions about Regulation F or want to work with a debt collection agency that is compliant with Reg F, we invite you to get in touch with us today!