The proposed debt collection rule released yesterday by the Consumer Financial Protection Bureau is 538 pages long, and getting through such a thick — and important — document will take everyone in the industry some time to fully digest. Interested in initial reactions, AccountsRecovery.net reached out to a number of industry professionals, seeking their perspective on what they have read and taken away from the proposed rule. They were given four questions and instructed to answer as many of them as they wanted. What follows are their unedited responses.
Manny Newburger, Barron & Newburger
Q. Why/why not is the proposed debt collection rule good for the credit and collection industry?
The rule would provide solutions to problematic interpretations of the FDCPA that have resulted from the lack of regulatory guidance and from the failure of Congress to update the Act to account for technological innovations since its adoption. In particular, the rule provides a clear path to leaving voice mail messages and provides guidance on the use of electronic communications.
Q. What is the most important provision/component of the proposed rule and why do you think that?
By providing reasonable procedures for electronic communications the rule would allow debt collectors to communicate through channels that are preferable to consumers.
Q. What surprised you most about the proposed rule?
The meaningful attorney involvement procedures are more consistent with the case law than have been the enforcement positions taken under the Cordray era of the CFPB.
Q. If you were to file a comment with the CFPB today about the proposed rule, what would that comment be?
I would seek further clarification on the interplay between the Act/Regulation and state laws that impair the effectiveness of notices required by the FDCPA.
Michael Lamm, Corporate Advisory Solutions
Q. Why/why not is the proposed debt collection rule good for the credit and collection industry?
Overall, the proposed rule changes should be seen as a positive step to modernize and transform the communication channels between the ARM industry and the consumer.
Q. What is the most important provision/component of the proposed rule and why do you think that?
Email/Text communication strategies
Q. What surprised you most about the proposed rule?
Still unclear on how they plan to handle out of statue collections.
Q. If you were to file a comment with the CFPB today about the proposed rule, what would that comment be?
Confirming the “game plan” for out of stat collections.
Kelly Parsons-O’Brien, Pacific Credit Services
Q. Why/why not is the proposed debt collection rule good for the credit and collection industry?
The way I am looking at this is that we all knew it was coming and I am sure the closer we look we will find things that are good and things that are bad for the collection industry. I have not read all 500+ pages, but in the fast facts documents it says things like “prohibition on communicating at unusual and inconvenient times and places” in regards to Time and Place Restrictions for Electronic Communications. My question to that is, how do you know it is an inconvenient time. How many times do we call someone, they answer their cell phone and then tell us they are at work and can’t talk. I am thinking that many consumers will use these vague restrictions to continue to avoid paying their bills.
I also think many agencies will have an issue with frequency of call limitations. It will be interesting how that effects our industry in the long term.
Q. What is the most important provision/component of the proposed rule and why do you think that?
I think the electronic communication, including the limited-content message will be a big help for our industry. Having some clear definition on how we can communicate with consumers without risk of being sued in this electronic climate is important.
Q. What surprised you most about the proposed rule?
I guess I didn’t anticipate it would restate the obvious so much. It seems to confirm over and over again the areas of the FDCPA that we already abide by. For example it says that we can only communicate with consumers on social media through private message, in my mind a post on a consumer’s “wall” then we would be violating 3rd party disclosure.
Q. If you were to file a comment with the CFPB today about the proposed rule, what would that comment be?
After more time to review this, I might have more to say but the thing that jumps out at me is the section on Transfers of Debts. It says that collector cannot transfer a debt is they know that an identity theft report has been filed. I have a ton of documentation how credit clean up clinics and people who are committing fraud re using the ID theft claims as a way to get collection agencies to stop reporting accounts and stop collecting on them. I would just hate for us to use the fact that the ID theft claim was filed and nothing about how we need to make sure it is accurate.
LaDonna Bohling, Contract Callers
Q. What surprised you most about the proposed rule?
The proposed change to notifying consumers prior to furnishing data to a CRA. I have never worked with a creditor that did not give ample and numerous notice to their customers regarding possible consequences for not paying their debt, e.g., this account will be referred to a collection agency; if unpaid this account may be reported to a CRA, etc. Evidently, the Bureau’s mindset is consumer’s are completely unaware that this could happen, they want to give the consumer an opportunity to dispute the debt before the reporting takes place. Personally, I believe if this passes we will see an increase in disputes. Currently, all a consumer has to do is “dispute” the debt, give no reason for the dispute and the account stays in dispute until the consumer says it is no longer in dispute. When the consumer doesn’t state a reason this leaves the collector without any recourse, no way to assist in resolving the dispute because the reason is unknown; we are all aware that we are not allowed to use common sense when determining the validity of a dispute. The positive side of me would like to believe that prior notice of credit reporting would motivate consumers to pay.
Q. If you were to file a comment with the CFPB today about the proposed rule, what would that comment be?
On page 34 of the proposal, it is noted that the Bureau will morph the term least sophisticated consumer to unsophisticated.
Please define what constitutes the unsophisticated -least sophisticated consumer. I have seen lawsuits alleging that agency actions were questioned for behaviors that the least sophisticated consumer could understand. This protection seems to embrace all consumers from the consumer with a PHD or the consumer without a high school diploma; the consumer making minimum wage or the consumer bringing in over 6 figures a year.
Gordon Beck, Valor Intelligent Processing
Q. Why/why not is the proposed debt collection rule good for the credit and collection industry?
I believe the overall feeling result of these potential rules is a positive one. Not only does is afford agencies the opportunity to modernized their communication practices, but if firmly outlines many of the previously undefined practices in the industry and provides us a clear cut way to operate. Yes, in some cases it can be more restrictive than what we are used to and I do believe that there are some flaws in the proposed rules, but we have wanted to modernize the FDCPA for years and I believe these propositions accomplish that.
Q. What is the most important provision/component of the proposed rule and why do you think that?
Besides the obvious, which is the creation of more modern communication techniques, I believe the rule that will prove to be very beneficial to the agency world is the requirement of notifying the consumer prior to reporting the debt to the credit bureau. As it stands, our agents aren’t even allowed to speak about it, but under these rules we will be required to do exactly that whether by letter or other means and I have reason to believe that this will drastically increase recoveries while also providing a proverbial “heads up” to the consumer and gives them a chance to resolve the account prior to those actions.
Q. What surprised you most about the proposed rule?
What surprised me most was the dialing restrictions limiting attempts to the account level and not the phone number level. I hope during the comment period we all can be heard as this will possibly negate any positive that the rulemaking does for the industry. Not only will these significantly decrease contacts, but liquidation as well. The number of FTE working on a portfolio will be drastically reduced and skip tracing providers will undoubtedly feel the heat as this rule will have wide spread consequences to every aspect of our industry.
Courtney Reynaud, Creditors Bureau USA
Q. Why/why not is the proposed debt collection rule good for the credit and collection industry?
The Proposed rules are a step forward, in the right direction, for the collection industry because the prior rules that we have been following, are outdated and interpreted by each court differently and thus opened debt collectors to increased frivolous collection lawsuits and oftentimes, bad case law.
2. What is the most important provision/component of the proposed rule and why do you think that?
Exemptions and interpretation of Communications. I am happy to see that communication has been put into two categories, Attempts to Communicate and Communications with a consumer. While there are new limits on the quantity of attempts or communications that can occur with consumers, the new Limited Message ability will help agencies maintain compliance with regulations while also ensuring that we aren’t at risk for frivolous lawsuits like we are currently when we have to decide whether to use a Foti, Zortman or Limited message.
3. What surprised you most about the proposed rule?
Lots of things surprised me as I read through the CFPB proposed rules, but the extent to which alternate forms of communication are discussed in the Proposed rules is exceptionally surprising. CFPB makes numerous mention that debt collectors may have the ability to communicate, compliantly, via text message, email or other electronic means. While there doesn’t appear to be any TCPA clarification, these provisions are a breath of fresh air because our consumers have requested these modes of communication for many years, yet we were fearful of embracing these communication methods for fear of frivolous and class action complaints.
4. If you were to file a comment with the CFPB today about the proposed rule, what would that comment be?
I’m still reading…so no comment
David Kelley, The Preferred Group of Tampa
Q. Why/why not is the proposed debt collection rule good for the credit and collection industry?
Overall I believe it’s good. It is attempting to provide what we have asked for for many years; clarity. Hopefully… this attempt at clarity will be a first step in combatting the plague of nuisance lawsuits that the outdated current laws allow for.
Q. What is the most important provision/component of the proposed rule and why do you think that?
For our agency it is the specific info on Emails and Text Messaging and the updated validation notice.
Q. What surprised you most about the proposed rule?
Really there weren’t any real surprises to us in the proposal.
4. If you were to file a comment with the CFPB today about the proposed rule, what would that comment be?
We have many but the first would be, “How’s the TCPA going to play into this?” (which they won’t be able to answer…)
