Debt collectors that accept recurring payments over the phone know that Federal laws – specifically Regulation E, the Electronic Funds Transfer Act and the E-Sign Act – provide guidelines for consent and disclosures. insideARM first featured an article on those issues in January 2013.
Since that time, the CFPB issued guidance on these issues in November 2015, stating:
Regulation E may be satisfied if a consumer authorizes preauthorized EFTs by entering a code into their telephone keypad, or, Supervision concluded, the company records and retains the consumer’s oral authorization, provided in both cases the consumer intends to sign the record as required by the E-Sign Act.
The CFPB guidance follows common sense and tracks consumer expectations: if a consumer consents verbally to recurring payments, and the debt collector records and maintains that consent, the law is satisfied. Despite the clear CFPB directive allowing verbal consent for recurring payments, consumer attorneys continue to bring lawsuits against debt collectors asserting that verbal consent violates the law. In the absence of guidance from a Court of Appeals on the issue, the lawsuits against debt collectors – with uncertain outcomes in the courts -- will continue. Further, these lawsuits undermine the ability of both consumers and debt collectors to rely upon interpretations of the law from the CFPB.
In this episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman and Mike Poncin are joined by special guest Mike Etmund to discuss a recent case addressing whether verbal authorization for recurring payments is sufficient. Also discussed in this episode are newer cases on the Spokeo requirement that a plaintiff must suffer a “concrete injury in fact” to maintain an FDCPA case and the status of the CFPB arbitration rule.