The questions, submitted by the Consumer Relations Consortium and shared with ACA International, provide informal, non-binding answers about S.B. 248. Editor’s note: This article is available for members only.
7/9/2021 9:00
As discussed in ACA’s International’s breakdown of Nevada S.B. 248, which took effect on July 1, many in the accounts receivable management (ARM) industry remain unclear as to how they should attempt to implement this vague, poorly-written statute given their other state and federal statutory and regulatory obligations.
To help shed some light, we’re sharing the informal, non-binding answers that Nevada Financial Institutions Division (NFID) Deputy Commissioner Mary Young provided to Missy Meggison, general counsel at the Consumer Relations Consortium (CRC).
Note: As a litigant in the lawsuit challenging S.B. 248, ACA has not submitted its own questions to the NFID. ACA appreciates Meggison’s and CRC’s willingness to share the information the CRC received from the NFID on June 25.
To be clear, ACA has some hesitation about sharing the answers NFID provided, because:
(1) It’s necessarily preliminary—the law’s only a month old;
(2) It’s necessarily non-binding—it has not been adopted pursuant to any rulemaking process; and
(3) It’s necessarily unreliable—the NFID has changed positions on informal “guidance” like this in the past.
With those caveats all in mind, here is what the NFID, via Young, told the CRC. (Editor’s note: The questions below have been lightly edited; the responses are verbatim from the NFID’s response.)
Question: What does "taking any action to collect a medical debt" mean?
NFID Answer: “Any action would include any communication via telephone or mail, not initiated by the medical debtor, reporting to credit reporting agencies any part of the collection process. An agency cannot communicate with a medical debtor orally or in writing until the notification letter required by SB248 is sent. The process would be: you are assigned the debt, you mail out the notice required by S.B.248, you must wait 60 days, and then you can proceed to attempt to collect the debt as you normally would and in compliance with all other provisions in S.B. 248, NRS and NAC 649, and FDCPA.”
Question: Does responding to a medical debtor’s non-payment-related inquires (e.g., about billing, service, or insurance questions) during the 60-day notice period constitute “an action to collect a medical debt” under S.B. 248? How should an agency respond if a consumer asks about the collections process that may ensue once the 60-day period has expired? If an agency intends to begin collections and/or credit reporting after the 60-day notice period, may it explain that process to the consumer? Or must the agency instead refuse to discuss what will happen after the 60-day period?
NFID Answer: “A debtor may initiate the contact for validation and/or to make voluntary payment or to ask questions. All provisions of S.B. 248 [apply], including any disclosures required.”
Question: Does providing a mini-Miranda in the 60-day notice constitute “an action to collect a medical debt" under S.B. 248? Can collection agencies include the mini-Miranda in the 60-day notice? Can they recite the mini-Miranda on telephone calls (as required by the Fair Debt Collection Practices Act) that the consumer initiates during the 60-day waiting period?
NFID Answer: “The FDCPA language and S.B. 248 language may be combined in the 60-day notification letter. Suggested language for the letter, in addition to the requirements in S.B. 248 and FDCPA:
This is a notification that ABC Collection Company will not take any actions to collect this debt within 60 days from the date of this letter. Any payments made toward the debt during this timeframe are considered voluntary and will not void the 60-day notification period described above. We will take no other action to collect this debt until 60 days from the date of this letter.
All notifications to Nevada consumer need approval from NFID.”
Question: Can the 60-day notice include the validation notice required by FDCPA Section 809 (15 U.S.C. Section 1692g), which requires certain disclosures to be sent within the initial communication about a debt or within five days of that initial communication? If not, is the 60-day notice not considered an action to collect a debt? How can a debt collection agency reconcile federal requirements with the requirements of S.B. 248?
NFID Answer: S.B. 48 does not replace FDCPA. S.B. 248 is in addition to FDCPA. The FDCPA language and S.B. 248 language may be combined in the 60-day notification letter.
Question: Can the 60-day notice be included in the new model notice published by the Consumer Financial Protection Bureau in Regulation F, which goes into effect on Nov. 30, 2021?
NFID Answer: “Yes.”
Question: What should a collection agency do if a voluntary payment is mailed during the 60-day period? Must the disclosures of Section 7.5 be provided via letter? Can the agency call the debtor to provide those disclosures? Must a collection agency wait for any period before depositing a medical debtor’s voluntary payment?
NFID Answer: “A medical debtor may make a voluntary payment. S.B. 248 must be complied with regarding the disclosures. Suggestion to add S.B. 248 voluntary payment verbiage on the agency’s website and to mail a letter confirming receipt of a voluntary payment with the required language and the required disclosures.”
Question: Can a debt collection agency that will not report the medical debt to a credit bureau comply with Section 7.5 by stating that the debt will not be reported or omitting that disclosure instead of saying the debt "will not be reported to any credit reporting agency during the 60-day notification period"?
NFID Answer: “Pursuant to Section 8.5, the protections set forth in sections 7, 7 .5 and 8 of S.B. 248 are for the benefit of medical debtors and cannot be waived. The disclosure must be made to the debtor. Suggested language:
Pursuant to NRS 649, medical debt cannot be reported until 60 days from the date of the letter. However, ABC Collection agency does not report to credit reporting agencies.”
Question: Does S.B. 248 apply only to accounts placed after July 1, 2021, with letters sent on or after the effective date? Is an agency required to send a 60-day notice for accounts that were placed and worked prior to the effective date?
NFID Answer: “S.B. 248 becomes effective July 1, 2021. NFID cannot provide legal advice, however, NFID will not enforce S.B. 248 on accounts that existed prior to the effective date.”
Question: If a debtor disputes the debt or requests validation within the first 30 days, the FDCPA requires an agency to provide validation before resuming collections. Can the agency provide the validation within the first 60 days, or should they wait until after the notice period has expired before validating?
NFID Answer: “S.B. 248 does not replace FDCPA. S.B. 248 is in addition to FDCPA. If the medical debtor initiated the communication, the validation can be mailed.”