The Consumer Financial Protection Bureau’s (“CFPB” or “Bureau”) Final Rule for Debt Collection (Final Rule) not only provides industry with a much-needed (and long-awaited) framework for the interpretation of the Fair Debt Collection Practices Act (“FDCPA”), but it also provides consumers with control over the manner and method of communications about their debts. Section 805 of the FDCPA (15 USC § 1692c) has always (and continues to) prohibited debt collectors from communicating with consumers at “any unusual time or place or at a time or place known or which should be known to be inconvenient to the consumer.” The Final Rule settles how debt collectors can capture consumer preferences and abide by them. Furthermore, §1006.6 of the Final Rule outlines the explicit methods by which debt collectors can communicate with consumers using email, text, and possibly other social media platforms. Section 1006.6 also outlines how consumers can express and change their preferences for these communications. Both these provisions will present some challenges for the accounts receivable management (ARM) industry, while at the same time offering significant opportunities for the use of expanded technology to meet the intent and purpose of the Final Rule.
The nature and range of methods by which consumers may prefer to communicate about their personal, household, and financial matters have changed dramatically from 1977 when the FDCPA was enacted. The Final Rule creates a series of opportunities for consumers to drive the method by which they wish to communicate about their debts. Until the Final Rule was published, uncertainty existed about whether debt collectors could use modern methods of communication - such as text messaging - to engage with consumers about their financial matters. The Final Rule sets forth a series of controls and safeguards to allow consumers to initiate communication on their own using their preferred methods of communication (traditional or electronic) or to opt in or out of a series of choices knowing they can always make changes later, including returning to standards methods like snail mail and telephone calls.
To support debt collection activities via electronic mail, messaging in social media, or texting, a debt collector must assure two things: first, that it is honoring consumers’ communication preferences; and second, that it took proper steps to assure it is communicating in a manner that is reasonably expected to provide actual notice. The debt collector must also make sure all the traditional debt collection guardrails remain in place that prohibit third party disclosures, limit communications so that they are not delivered at either inconvenient times or in an inconvenient manner, allow consumers to express a preference about whether or not to be communicated with at a place of employment, and assure that any electronic communications can be obtained by a consumer and retained by a consumer in her or his preferred manner.
When considering alternatives for migrating to the promise of consumer-driven “modern” or “digital” communication, it is essential for the industry to prepare for consumers to make their preferences known on telephone calls, in letters, emails, self-service portals, text messages, on website ‘contact us’ pages, voicemails, and in response to artificial voice prompts. However, the email and text requirements of §1006.6 of the Final Rule enforce the CFPB’s desire for a robust consumer preference management system. Technology, therefore, will be crucial to obtain that objective.
First, entities who are covered by the Final Rule will need to access accurate information quickly to assist their employees, representatives, and collectors to ensure that the time, place, and manner of communication with the consumer, at any given time, align with consumer expectations. This access to information will need to be instantaneous. Collectors will simply not have time to scroll within account histories to ensure that specific consumer outreach, whether outbound or inbound, is compliant. Artificial intelligence (AI) and machine learning will play a big role in this process. Additionally, enhanced platforms that will enable employees to capture and, in real time, update consumers’ consents, opt ins, and opt outs to assure they can pivot to keep up with consumers’ preferences will be critical.
Second, the time has come for covered entities to think about driving consumers to them and offering self-serve options. This means a robust website or other online resources that can allow consumers to make payments, review account history information, balances, and payment histories, explore repayment alternatives, and more importantly, set their preferences. Every industry from financial services, utilities, retail, medical to education provides consumers with these options. The ARM industries must consider these options as well.
The partnership between debt collectors and creditors outlined in §1006.6(d)(4)(ii) regarding email addresses and account information should not be flagged as too burdensome. On the contrary, §1006.6(d)(4)(ii) is a perfect opportunity to serve the consumer better. This type of transfer of information occurs frequently in healthcare. For example, at the point of registration, patients are given the opportunity to direct communications about their services and payment for services from the day those services are initially rendered through the day any bills for those services are ultimately resolved. This can easily be applied to the collection of other types of accounts. It will require some work on the front end, but it will result in a seamless transition of accounts while at the same time maintaining the goal of keeping consumers in control of their information.
Finally, the ARM industry should not overlook opportunities that may exist within the CFPB’s Office of Innovation, especially regarding No-Action Letters (NAL). For example, developing a robust “hand-off” or “hand-shake” communication anticipated in §1006.6(d)(4)(ii) even before the Final Rule is implemented, may be a perfect opportunity to test the requirements of the regulation including the delivery of the communication. Testing the limited context message within other digital mediums may also be a consideration. The Bureau makes clear throughout the preamble that it will continue to monitor the requirements of the Final Rule especially as it relates to email and text. The Bureau has also stated its willingness to expand or modify text messaging and email safe harbors. As industry begins the process of planning for implementation of the Final Rule, discussions around a digital strategy should include CFPB partnership and guidance to ensure that all stakeholders are achieving the intent and purpose of this regulation.
The decision as to whether to pursue a digital strategy is not “if” but “when.” The one-year implementation period provides ample opportunity for many in the ARM industry to assess the regulations, to compare the regulations with existing processes, and to determine whether gaps exist. For those new to a digital strategy, this one-year period can offer an ample amount of due diligence to determine how best to implement a digital strategy that aligns with the size and scope of your business.
Consider the Final Rule as the floor. As consumers continue to drive the process, it will be important to ensure that any digital infrastructure is nimble enough to adjust to the changing preferences of consumers.
