On July 28, 2016, the CFPB released its Outline for Proposals Under Consideration for Debt Collector Rules. The "outline" is 117 pages of CFPB dreams for the debt collection industry. If those dreams come true, debt collectors (and their clients) are in for some real implementation nightmares.
You've probably heard the hype. Maybe you've even picked up the outline to read. Well, just in case you couldn't make it through all 117 pages, please consider:
1. New Pre-Collection Obligations - Don't even think about collecting until you've done these 3 steps!
- Review all required information.
- Scrub for "warning signs" and investigate if found.
- Due diligence re: creditor's policies and procedures.
- All before beginning collection activity!
2. Big Changes to Letters and Disputes - Bigger letters with more information, itemization, inserts, and a tear-off page. Plus validation requirements explode outside the black letter law!
- Validation notices need more information including debt itemization, more disclosures, a Statement of Rights insert, and a tear-off page for disputes.
- New letter disclosure requirements for litigation, time-barred debts, and debts past credit reporting date of obsolescence.
- Collectors must investigate all disputes - written, oral, and untimely. If account transferred, subsequent collector must finish the process!
3. Good and Bad Communication Rules- The good? A safe harbor for leaving messages. The bad? Limited communication attempts and expansion of the convenient time and place rules.
- Communication limits per week, per account. All contact methods count toward the limit. And the limit varies after confirmed right party contact (by you or a prior collector!)
- Safe harbor for limited-content messages left with third parties, on voicemail, email, or text.
- Convenient time and place rules expanded - applies to emails and texts; automatically inconvenient places identified; deceased debtor waiting period required.
4. Administrative and Operations Issues - Information sharing, record retention, local numbers, incidental fees, and other implementation nightmares you should start thinking about now.
- Collectors must share with each other any account information related to contact restrictions or special statuses.
- Record retention requirements blown up beyond industry standards. This will affect service providers, too!
- CFPB identified several practices it deems FDCPA violations, including use of local numbers, incidental fees, particular misleading statements, etc.
Is it real? Not yet. When will we know? The final rule is expected in late 2016 or early 2017 - so we all need to prepare!
