ACA members review practical tips on the validation notice and required and optional information to include. The ACA Huddle series on part two of the rule continues through Jan. 15. Editor’s note: This article is available for members only.
1/7/2021 14:00
In the latest ACA Huddle, which is part of the series on part two of the Consumer Financial Protection Bureau’s final debt collection rule, members discussed guidance on one of the most anticipated components of the rule: validation notices.
On Thursday, Jan. 7, Keith Kettelkamp, president and CEO of Remex Inc., Eileen Bitterman, compliance officer at Weltman, Weinberg & Reis Co., L.P.A., and G. Scott Purcell, ACA president and president of Professional Credit, reviewed long-awaited guidance on validation notices.
First, Bitterman reviewed a few outcomes of including the validation notice in the final rule:
- Whether consumers are better able to identify a debt when receiving validation information;
- Whether debt collectors are receiving higher or lower rates of consumer disputes; and
- Whether greater clarity about Fair Debt Collection Practices Act requirements helps reduce litigation related to the validation notice.
For quick reference, here’s a copy of the Model Form B-1, “Model Form for Validation Notice.”
The final rule provides a safe harbor for debt collectors who use the model form, which contains “validation information” and optional disclosures. Those who use the model validation notice or a “substantially similar form,” as permitted by the rule, will fall within the protections of this safe harbor, ACA previously reported.
Purcell and Kettelkamp reviewed itemization dates, definitions and general requirements on how to provide validation information.
As a reminder, ACA previously reported, a host of specific validation information will be required. A debt collector MUST provide in the validation notice all of the validation information listed below. Let’s call this the “required validation information.” This required validation information must be delivered in a “clear and conspicuous” fashion. Debt collector communication disclosure, such as the full mini-Miranda, is required.
Eight pieces of required information about the debt (plus one additional piece of information, if a debt arises from a consumer financial product or service) include:
- Debt collector’s name and mailing address where the consumer may send disputes and requests for original creditor information;
- Consumer’s name and mailing address;
- For consumer financial product or service debt – the name of the creditor to whom debt was owed on the itemization date, which can be a trade name;
- Account number (may be truncated), if any, associated with the debt on the itemization date;
- Current creditor (i.e., name of creditor to whom the debt is currently owed);
- Itemization date;
- Amount of debt as of itemization date;
- Itemization of current debt amount reflecting interest, fees, payments, and credits since the itemization date. (This itemization may be included on a separate page sent with the validation notice if the validation notice includes a statement, clearly and conspicuously placed where the itemization would have appeared on the validation notice, that refers to that separate page); and
- Current amount of debt.
Use of the model validation notice should be a focus of business decisions and goals before the Nov. 30, 2021, compliance date, Purcell explained, adding that pages 324-354 of part two of the rule are helpful to read for guidance on the validation notice.
In their closing remarks, Bitterman recommended updates to compliance management systems based on the validation notice requirements and Kettelkamp said a main takeaway is that the model validation notice presents an opportunity to take a step forward.
ACA Huddle CFPB Rule Series Webinars Continue
ACA’s panel of experts continues to review the comprehensive rule and will be providing detailed analysis and compliance resources throughout this series of complimentary webinars, which continue through Jan. 15. Log on to acainternational.org and select My ACA to subscribe to Member Alerts under email subscriptions.
On Friday, Jan. 8, validation notice discussions will continue with Rick Perr, co-managing partner at Kaufman Dolowich Voluck, Kelly Knepper-Stephens, vice president of legal and compliance at TrueAccord, and Dennis Barton III, owner and managing attorney at The Barton Law Group LLC.
On Monday, Jan. 11, Mike Etmund, attorney at Moss & Barnett, Lauren Valenzuela, corporate counsel at Performant Recovery Inc., and John Bedard, owner of Bedard Law Group, will dive more into electronic communication requirements in the rule from a legal perspective.
Read more on all the upcoming webinars and register here.
ACA members can also download the ACA Mobile app for reminders on the upcoming ACA Huddle webinars and listen to the presentations, live or recorded, on the go.
Thank you to the sponsors of the ACA Huddle CFPB Rule Series, Neustar and Ontario Systems.
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