It has felt a bit like drinking through a firehose when it comes to keeping up with changes in the compliance landscape over the past year.  Undoubtedly, the biggest challenges have been Hunstein, Regulation F, and Covid.  As the Regulation F implementation date is upon us, everyone in the industry is working hard to change their processes and procedures to comply with the new guidance from the CFPB.  I have been regularly consulting and working with industry members to effectively make these changes and alter existing practices. 

Below are what I view as the top three regulatory issues as we begin implementing Regulation F:

  • The Model Notice Validation Letter.  No surprises here, everyone has been working diligently to either utilize the model notice or conform their current validation notice to the requirements under Regulation.  By far the most challenging piece of this is the itemization table and making this work for the many types of debts that our industry manages.  But getting the model notice right is critical because, if it is, you are granted safe harbor from liability and, if it isn’t, you are susceptible to class action liability.  To be sure, plaintiff’s attorneys will be scrutinizing these letters and challenging them in court

  • Medical Debt.  Trying to use the Model Validation Letter to collect on medical debt is a bit like fitting a square peg in a round hole.  One of the biggest issues with medical debt is that there are frequently several small accounts with different dates of service being collected at the same time against the same consumer.  While the CFPB attempted to address medical debt in its Final Rule and in recent FAQ guidance, it has left many more confused and unsure of how to collect on multiple debts in a single letter.  I believe this will be an area ripe for consumer lawsuits challenging the interpretations of the CFPB’s guidance.

  • Record Retention.  This is a regulatory issue that not many are focused on yet.  Regulation F requires organizations to keep documents evidencing compliance or noncompliance for three years after the last date of collection activity.  In addition, if an organization records calls, those calls must be retained for three years after the date of the call.  Keeping recordings for three years takes up a lot of data space and will increase costs and require additional resources.

Over the next year, I expect to see many challenges to validation letters, particularly in the medical debt arena.  On the bright side, however, I also hope to see the ability to collect and communicate with consumers to increase through the use of email, text, and website portals.  Hopefully, the additional methods of communication and ways to engage the consumer will begin to offset the costs associated with implementing the Final Rule.  I also expect that 2022 will bring a final resolution to the Hunstein conundrum.  I believe that we will finally get confirmation that the use of letter vendors to collect debts is not only permissible under the rules, but necessary in today’s collection climate.

About the Consumer Relations Consortium

The Consumer Relations Consortium (CRC) is an organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market.  CRC is managed by The iA Institute.

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About the iA Innovation Council

The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders who envision the future of collections and map how to get there. Group members meet throughout the year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

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