Since the October 30 CFPB ruling, there have been several articles, webinars, and blog posts regarding the Final Rule for debt collection, and I wanted to provide you with an overview of our perspective.
We have spoken with many industry experts. They include RevSpring’s Chief Compliance Officer, Crista Harwood, outside counsel, and a number of our clients. We have also listened to industry panel discussions. There is a lot of information to break down regarding the guidance for text and email communications.
Ultimately, the telephone call limit that the CFPB outlined is clear, and there is an opportunity to consider other forms of communication once that limit is met. We expect many clients to embrace email and text as preferred mediums for post-call limit collection communications. These channels of communication do not require compliance with E-Sign.
Consent Requirements for Email and Text
The CFPB outlined the procedures required to raise a bona fide error defense over the use of email and text. Because the consent requirements are complex, concerns of a third-party disclosure violation have some clients hesitating to move forward with adopting email and text. However, with the proper workflows and controls, it is possible to manage consent in a compliant way.
Should your email strategy change from what you had before? This depends on your approach. If a collection agency wants to send the initial first notice validation via email, we suggest working with the creditors to ensure that you are contractually covered. Verify that consent from the consumer was not only agreed to, but that the consent is transferrable to you. Once that is established, you can utilize follow-up phone calls to update information. An alternative approach would be reaching out through the traditional print and mail channel to encourage the consumer to provide consent.
The consent piece is tricky, with different management needs for a collection agency versus a debt buyer. We recommend you work with your compliance professional to ensure that consent is captured correctly for email and text communications.
The New Rule also reviews record retention. We would like to highlight that record retention not only focuses on retention of call activity, but it covers a range of collection communication activity including print, email, and text. When considering the need for information access, the best solution would be to have a single system with configurable retention periods to house all communications. And to make it easier, the system should have the functionality to search by the consumer name or account number, with all communications (print, email, text) accessible and/or presented in a single search. Understanding that agencies have been looking for a single archive, storage, and retrieval solution, RevSpring will soon be launching RevSpring Retrieve to meet this industry need.
On a final note, I would like to comment on section 1006.34 – Model Form for Validation Notice. The CFPB has deferred a ruling until December 2020. In the late summer of 2019, RevSpring worked with the Consumer Relations Consortium to provide comments and design recommendations to the CFPB for the safe harbor Model Form for Validation Notice template. Like the rest of the industry, we anxiously await the final decision and guidance on the proposed Model Letter.
The CFPB ruling is a tremendous event in our industry, and RevSpring shares the excitement around the proposed rule’s closure. Guidelines around the use of modern communication channels like email and text give needed clarity on how to proceed, allowing firms to expand their methods and results. We look forward to working with the industry on new products and solutions that help you navigate this next chapter. Please don’t hesitate to reach out with any questions or comments.