The landmark rule is complete, and complex, but reflects ACA’s advocacy on behalf of members and the industry since the bureau’s inception. Here’s what members are saying. Editor’s note: This article is available for members only.
11/3/2020 9:00
It’s been just a few days since the Consumer Financial Protection Bureau released its long-awaited rule to update the Fair Debt Collection Practices Act and, after a little light weekend reading, a few ACA International members shared their initial analysis with ACA.
In ACA’s review to date, it appears that the rule supports several key issues the association has long sought clarity on, including safe harbor procedures for the use of voicemail messages and the ability to use modern forms of communication, such as text messaging and email (although with some arguably complex compliance burdens). It also shows advocacy by ACA and its members paid off.
“The updated final rule is a step forward in updating outdated collections practices that hurt small businesses and left consumers in the dark. Collections professionals are uniquely trained to provide flexible payments schedules and emergency hardship assistance, and consumers will now reap these benefits more efficiently—especially during COVID-19,” said ACA CEO Mark Neeb. “The new rule will also allow individuals to safeguard their access to credit and services in the future.”
Here are some members’ thoughts on the rule and what’s to come over the next year before compliance takes effect:
“ACA and its members are pleased the debt collection rule has finally been released and now we can start to work on implementing its requirements that build on our mission to help consumers resolve their accounts in a compliant way and support our credit-based economy. Having more tools for businesses and consumers to accomplish this goal and guidance from a federal regulator is a benefit.”
– ACA International President G. Scott Purcell
“The debt collection rule significantly limits a debt collector’s ability to communicate with consumers by setting maximum call attempts and restricting the time and place at which they may communicate or attempt to communicate with a consumer. To remain compliant, it will be more crucial than ever to implement strategy and database technology to capture a consumer’s preference for when and how they want to be contacted.”
– Michele Shuster, partner, Mac Murray & Shuster LLP
“Overwhelmingly, the new rule should be seen as positive for the credit and collection industry as it provides meaningful guidance as to debt collection communications. While we still must wait for the second installment, the release of the initial portion of the rule provides a partial roadmap to a compliant collection system. Additionally, the CFPB’s final rule contains thoughtful reasoning as to its ultimate rationale for including, or excluding, particular regulation. The CFPB’s guidance on newer communication techniques (think, text and email) provides much-needed certainty as to utilizing these technologies in a compliant manner. For instance, the rule provides a limited content message to be used in voicemail messages, specific procedures for utilizing text message and social media, and guidance on call volume. While many of us are still digesting the rule, the industry received what it needed and wanted—increased clarity.”
– Nicole Strickler, partner at Messer Strickler Ltd.
“For years, the ARM industry has requested guidance on several issues plaguing the industry that have resulted in expensive lawsuits and inconsistent court decisions. Now, seven years after the CFPB issued its notice of proposed rulemaking, the long-awaited debt collection rule provides clarity on some, but not all, of these industry-plaguing issues. Even if the industry does not agree with or like some of the provisions in the final rule, at least now we have more clear guidelines with respect to leaving limited content voicemail messages, and what is considered presumptive compliance for the number of communications in a particular period of time. I also appreciate the CFPB's effort to modernize the FDCPA by specifically allowing communications, under the right circumstances, via electronic mail and text messages.
Given these new regulations, it will be even more critical for debt collectors to properly document, update, test and audit their processes and procedures. It is also paramount for debt collectors to work side-by-side with their vendors so their systems ‘talk’ to each other related to contact limitations. Creditors must review, understand and update their processes as well. Some of what debt collectors are allowed to do, and how they do it, hinges directly on their creditor-clients' processes. Strong relationships between debt collectors and their creditor clients, as well as clear and timely communication, will be increasingly important.
Fortunately, the industry has one year (from publication of the rule in the Federal Register) to comply with the rules. Whether or not that is enough time to determine what needs to change, update documentation, implement system enhancements, test those enhancements, and train staff, remains to be seen.”
– Wendy Badger, special compliance of counsel, Ovaile Law Group.
“In the first-ever federal regulation interpreting the FDCPA, the CFPB appears to have paid homage to consumers’ opportunities to control communications related to debt collection. Woven throughout these regulations are opportunities to conduct debt collection activities using modern methods for communication such as email and text messages in ways that are consistent with consumers’ preferences.”
– Leslie Bender, IFCCE, CCCO, senior counsel at Clark Hill PLC
“The road to these rules has been a long one with a lot of changes in directions from the general ideas that were rolled out during the SBREFA process years ago, to the notice of proposed rules, to what we got in the ‘final’ rules. I put final in quotes because there is still more to come with model validation notice and time-barred debt disclosures, and the CFPB has expressly stated that they will be reviewing these rules for further modification within the next five years.
I applaud ACA’s advocacy efforts during this process. The advocacy team and volunteer members have put in countless hours to advocate our position. While there are a few positives in the rules, including the limited content voicemail direction, the rules fall short in the modern communication tools. The rules place restrictions on a consumer’s ability to receive communications via newer communication methods such as text and email, while also acknowledging that this may be the preferred method of communication for some consumers.
There is still a lot to unpack, so I am coming to the realization that the release of these rules is more like a starting line than a finish line in the life of the debt collection rules.”
– Jack Brown III, president at Gulf Coast Collection Bureau
ACA’s panel of experts will be providing detailed analysis and compliance resources throughout a series of ACA Huddle webinars this month. Recordings of the webinars will be available for members and registration for the series, complimentary for members, is available here.
Thank you to the sponsors of the ACA Huddle series Hinshaw & Culberston LLP, Ontario Systems, RevSpring Inc. and Venable LLP.
Related Content from ACA International
A Closer Look at Communications Requirements in CFPB Final Debt Collection Rule
Compliance Complexities As Well As Clarity in CFPB’s Final Debt Collection Rule