Regulation F contemplates debt collectors communicating with consumers using a scripted “limited content” voicemail message which contains the business name of the debt collector, but “does not indicate that the debt collector is in the debt collection business.”  While consumer advocates agree that this limited content message will be extremely beneficial to consumers, debt collectors must proceed cautiously with implementation to ensure full compliance with all requirements of the limited content message contained within Regulation F.

In this episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman, Sarah Doerr and Brad Armstrong provide practical guidance for implementation of the Regulation F limited content message and the attorneys also examine the legal restrictions regarding the use of certain words in a collection agency name.  

Listen here or read the transcript below.


Attendant:

Moss and Barnett is pleased to present the debt collection drill. The podcast featuring Moss and Barnett shareholders, John Rossman, and Mike Ponson, providing sage tips for improving collections and compliance.

John Rossman:

Welcome to another edition of the debt collection drill podcast. I am John Rossman, your host. And with me today, I have two special guests from here at Mass and Barnett. We have Sarah Doerr, who's a shareholder here at Moss and Barnett, and we also have Brad Armstrong, who is an attorney here at the firm as well. And today we're going to be talking about a really exciting topic that I'm really looking forward to, and it's this concept of a limited content message. I know that for several years, it seems maybe going back to the Foti case or even earlier, there's always been these questions about what kind of voicemail message can we leave? What kind of voicemail message should we leave? And a ton of lawsuits, a ton of litigation, a lot of talk. Finally, it appears through regulation F that the CFPB has put an end to those discussions and those conversations in those concerns and given guidance as to what type of message can be left by a debt collector for a consumer that would not constitute a communication and what they're calling it is this limited content message.

And I'll read real briefly from regulation F how it defines a limited content message. And it means a voicemail message for a consumer. That includes all of the content described in paragraph J one of the section, which we'll go through that may include any of the content described in paragraph J two of this section. And so what does it have to require the required content includes the business name for the debt collector that does not indicate that the debt collector is in the debt collection business, number two, a request that the consumer reply to the message, number three, the name or names of one or more natural persons whom the consumer can contact reply to the debt collector and number four, a telephone number numbers that the consumer can use to reply to the debt collector. There's additional optional content under reg F including a salutation date and time of the message suggested dates and times for the consumer to reply, the statement that the consumer may respond to any of the representatives at the debt collector. So this is just a sample of the things that may be included in the things that must be included. Sarah, I'll start out with you. What were your thoughts as far as the ability of a debt collector to use this limited content message in the context of debt collection today?

Sarah Doerr:

I thought that in some ways it was a missed opportunity for the CFPB to go further in terms of defining what can and cannot be said. There's some question, for example, as to whether, and what happens when, for example, a company named does indicate that they are a debt collector and how do they get around that? Do they register a DBA if they do that kind of what implications does that have for the whole consumer facing side of their business?

John Rossman:

Yeah, it's a great question. And we've been getting a lot of questions lately about, does our company indicate that we're in the business of debt collection, Brad, I know you've looked at this issue. What are you seeing as far as there's, there's not a ton of guidance here in regulation, F as far as what debt collector names might indicate that you're in debt collection and what might not, Brad, what does the case law, and what does your research show as far as that question is concerned?

Brad Armstrong:

Yeah, this question, isn't an entirely new topic. The FDCPA actually has a similar provision, F(8), which prohibits debt collectors from using names that indicate that they are in the collection agency business on envelopes sent to consumers. So we do have a little bit of insight as to what courts might construe to be a name that indicates you're in the business. So going back over the last 10 years, the most obvious thing is that courts are a little bit less tolerable now than they were 10 years ago. As far as what's going to be construed to be something that suggests you're in the collection agency business, 10 years ago, something like estate recoveries was held not to indicate that that the debt collector was in the recovery business. Nowadays creditor specialty service is a name that the courts have said or something that suggested to consumers that they were in the collection agency, business

John Rossman:

And Brad, that's only over like a ten-year period of time was from like 2006, like 2016, where it seems like the court cases went from being a bit more permissive about what names can be used to being more restrictive. Do you think that that's a trend that we expect to continue, especially with this limited content message?

Brad Armstrong:

Yeah, certainly there's really no reason to think that courts are gonna change course at this point. So we've provided guidance to clients that there are some relatively mundane names that might be construed to not allow the agency to use limited content message from reg F.

John Rossman:

So the question that we're looking at right now for some clients is we already have a certain name that we're using for our company. It's a recognized name, perhaps the name infers that we're in the collection business, or maybe we've been using an acronym. So I guess the question is kind of what steps should a collection agency take to change its name, if it's concerned that there's an issue. And if it's concerned that it wants to use a limited content message, Sarah, I'll start with you. When, when you're talking to a client who's looking at using the limited content message. What are you thinking about when you're talking to them about a name change.

Sarah Doerr:

What I'm thinking about, first of all, and, and Brad alluded to this a moment ago is making sure that if they're going to change their name, they change it enough. And in the right ways, as Brad explained, there are names that are arguably not related to debt collection or implying that they are recovery companies. But I think if, you know, if you're going to go to the trouble of changing your name, you want to make sure you're as far away from anything that might even raise that question as you can.

John Rossman:

Sarah, I think what's going to happen, me predicting, I think there is going to be litigation on this. And I think ultimately some court is going to say, here's the 10 words you can't use in your name if you're going to be in the debt collection business. I don't know what those 10 words would be. We could hypothesize about them, but I do think ultimately it's going to be either a court or a regulator is going to say you can't use collection agency in your name. If you're a collection agency for instance.

Sarah Doerr:

I think that's right. I think it'll get there. I think it's going to be what happens between now and when we get there and we will see a lot of litigation parsing those issues.

John Rossman:

Sure. And Brad, I know you work substantially with clients as far as renewing collection agency licenses. I know we do that for a number of clients. When you're thinking generally about collection agency licensing and a name change. What kinds of things come into your mind as, as you're meeting with a client, and you're thinking about a name change of a licensed collection agency

Brad Armstrong:

For licensed collection agencies. The first question is going to be whether the changing names going to necessitate new license applications. And this is this all goes back to state laws. Some states will say, anytime you change the name, if it's a new entity, you're going to have to submit a new license application. Some will just require notice filing of a DBA might get you in more notice, require use notice in more states than if you're actually changing the name of the company. But in any event, there's going to be dozens of states where an agency is going to need to take proactive steps before making any changes to ensure that it's going to be permitted, that they continue to conduct business. And they're not going to have any, any sort of gap as a result of licensing.

John Rossman:

Couple of things that I think about when I think about these number one would be Colorado and states like Colorado, that require a very short period of time for a licensed collection agency to give notice of certain changes, whether a name change would fall within that parameter or not remains to be determined. But I think the point is you can't just change your name and then say, oh, let's go tell the regulators. Now there needs to be some pre-planning with this part of that pre-planning too is perhaps the name that you're choosing has already been used.

There's so many examples in our industry of companies that have very similar sounding names. And we've seen it many times before in litigation where a company will get sued, we'll get started and, you know, down the path of defending, and we'll find out that the plaintiff sued the wrong party just because of a naming convention. So I do think there are a lot of similar names here in the industry. Sarah, that leads me to a question for you when thinking about the options. And like Brad said, you could do a name change. You might be able to do a DBA kind of depends on your circumstances, Sarah, when you're thinking about a DBA. And so what that would mean is that you'd keep the name of your company, ABC collection agency, but then you would register like an assumed name. You'd be doing business as XYZ servicing or something. Sarah, you've done some research on this issue of assumed names and you found that that might not be such an easy solution in certain jurisdictions. What'd you find out

Sarah Doerr:

That that is true. In addition to the licensing concerns that Brad talked about, there are a number of jurisdictions where, for example, you cannot register a DBA at the state level with the secretary of state or similar agency, for example, in Connecticut, in order to use a trade name, you have to register that trade with the town clerk in each town where you're doing business. So arguably in Connecticut, where there are 269 town clerks, and you don't know where you might have occasion to do business in Connecticut or where, you know, the next consumer is going to be, that presents a real hurdle in certain jurisdictions. Connecticut is probably the, the highest hurdle, but there's certainly a handful of others that have similar county by county or jurisdiction city by city type restrictions on doing business under a DBA or trade name.

John Rossman:

Sure. And I think here again, this goes to Brad's point, which is, you really need to plan this out ahead of time. You can't just say, okay, tomorrow we're going to change our name. You need to look at, is this going to be a DBA? Is it going to be a name change? If we choose DBA, we have to understand, I think you identified there's eight jurisdictions in total where there's some requirement or some difference regarding filing a DBA on a state level, as opposed to a city level or a county like Connecticut. So I think there's a lot that has to be considered here when looking at this limited content message. The other thing I think with this limited content message more generally as I read the definition here, limited content message means a voicemail message. Wait a minute. I mean, voicemail message. That sounds like 2003, you know, it's 2021, we're using texts. We're using email. Brad, let me start with you. What is your opinion on the likelihood of a debt collector, being able to take this limited content message, which by definition is a voicemail and applying it to other communication mediums.

Brad Armstrong:

Based on the plain language of regulation F I don't think there's a good likelihood at all that the court would buy into that. Now, conceptually, whether a message is the communication, the ability to communicate this limited amount of information to a consumer without kind of opening the door to disclosing sensitive facts to third parties, we could kind of use that. And maybe a bonafide air defense is kind of logic in the event that say a third party opens an email sent to a consumer using a limited content, tight message. And other methods of communication is certainly something to consider. But at the end of the day, you know, something like email, we're certainly recommending that, that, you know, you're emailing the right consumer to begin with. So the hope is that that third party disclosure is somewhat of an afterthought.

John Rossman:

No, I agree. And as I was thinking through this and preparing for this podcast, I started thinking, well, if you sent out the limited content message specifically is designed so that you don't include the name of the consumer, so who you are leaving that message for you, don't say according to the plain language of regulation F whereas with like an email address, most people, their email addresses, like for me, it's my first and last name at law-moss dot com. So I think the argument can be made that to the extent that the limited content message must be a voicemail, because if you send an email, you are identifying to whom you're sending it. However, if we're going to use that argument, I think an argument could be made that a limited content message could be used for a text where a text is being sent out to a number rather than to an address with the name, Sarah, what do you think about my potential theory there?

Sarah Doerr:

I think it raises some interesting points and some interesting questions, and I can certainly see it being an increasing area that's ripe for litigation and discussion, and probably ultimately for the regulation. I think there's some obvious differences between voicemails and emails and texts just in terms of what the scope is of who might be reading or listening on the other end just by their nature.

John Rossman:

You know, and I, I think you're right. I think the flip side to it is I think the risk of a third-party disclosure with an email is near zero, whereas the risk of a third-party disclosure with a text, there might be some risk there. And with the letter, there might be. But with an email, I have to believe the risk of third-party disclosure is near zero. What are the odds that someone's going to send an email to John dot rossman@lamoss.com and intend that it was to go to someone else? It seems very less likely that we would have that type of third-party disclosure. So I think this is an area that could be right for like an advisory opinion from the CFPB to reach out and to see what type of opinion there might be.

Brad, you had mentioned that the plain language of the FDCPA does include this prohibition on including the name of your company on an envelope when you're sending it out. So this isn't a new concept as far as whether the name of your agency infers that you're in debt collection. How do you read regulation F and kind of this expansion of this concept of your name, reflecting that you're in debt collection. Do you see any parallel between what I'll call the old FDCPA, which prohibited the use of your name, if on an envelope, if it infers that you're in debt collection to much more broadly being prohibited to use the name here with the limited content message that you're leaving by voicemail?

Brad Armstrong:

I don't think so. I mean, they're at least on their face. There's no reason to suggest that courts are going to construe 1692f(8) and reg F's limited content message differently. Like I said before, I think that looking back at some of the case law on f(8) is going to be quite instructive, especially kind of that trend that you discussed, where courts have not been quite as flexible construing names. As of late, I find it hard to believe that that there's going to be a big difference between the two. It's certainly interesting that f(8) hasn't seen a great deal of litigation in an ideal world. That's gonna, that would remain true with the limited content message. It could be a situation where consumer attorneys are easily able to get ahold of voicemails that consumer save, as opposed to envelopes that a consumer might chuck in the trash and while they keep the letter. So-

John Rossman:

I've been amazed too, in looking at what we'll refer to as the old FDCPA and how it's been modified by regulation, but how this concept of the name of the debt collectors carried through. But yet there's all this discussion today about the name of a debt collector, and what's the right name and wrong name and, and infers debt collection. But this provision has been in the FDCPA in some form or another, since 1978, it's just getting a lot of interest nowadays. So it's an interesting phenomenon that we'll continue to track. And we do definitely expect some, at least some regulatory guidance from the CFPB on it. We are out of time for today. I'd like to thank Sarah Doerr. I'd like to thank Brad Armstrong. I'd like to thank our executive producer, Jodi Newsome, and we look forward to speaking with you next time. Thank you.

Attendant:

Visit the website for this podcast at the debt collection, drill.com and follow us on Twitter at collect drill. This program does not create an attorney client relationship between Moss and Barnett, a professional association, or any attorney appearing on this program and any listener, please remember that we can only give general information and every case is unique. Always check with your individual attorney for any specific legal concerns.



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