insideARM asked professionals in different seats within the industry to offer their perspective on the Consumer Financial Protection Bureau’s (CFPB or Bureau) Notice of Proposed Rulemaking (NPRM) for debt collection. Below is what they had to say.
Michael Kraft, General Counsel of The CCS Companies:
First and foremost, the Bureau should be commended for having produced such a comprehensive and well-conceived, balanced set of rules. A preliminary read of the rules suggests that the Bureau was definitely listening to all stakeholders as they worked so hard during the past several years. The rules appear to add much needed clarity, which will help the industry in conducting its business in full compliance with the law.
Of particular note, there is a considerable attempt by the Bureau to enable agencies to adopt and use modern technology to communicate with consumers in a manner that respects the consumers’ preferences and aims to limit or eliminated unwanted phone calls for consumers. This is very likely to result in better consumer experiences, facilitate communication between agencies and consumers, and most important, expedited resolution of many more accounts.
The Bureau also attempts to create several safe harbor provisions, which are designed to facilitate communication with consumers without subjecting agencies to frivolous litigation. As an example, they have created a limited-content message that can be used in an attempt to reach consumers without risking third-party disclosure.
The Bureau also recognizes that with such an enormous undertaking to remodel a statute that is over 40 years old, it will take time to make necessary refinements. To that end, there are dozens and dozens of requests by the Bureau for comments and insight from the public about the impacts of different sections of the rules and how they might be altered to make them more effective.
Ohad Samet, CEO and Co-Founder of TrueAccord:
The new law will push traditional, risk averse collectors to admit that phone calls are dated and irrelevant, as well as drive them to embrace the important role digital technology plays in improving the industry. Digital channels also allow the consumer to more easily control how and when they are contacted, and it creates a document trail that can better protect the consumer in the event of potential consumer rights violations.
[The] proposal shows that the industry is finally taking the first step to align itself with the vision TrueAccord laid out more than half a decade ago and has been executing on ever since. It marks a positive, fundamental change across the debt collection industry. By drastically limiting phone calls, which historically have served to harass consumers in debt, and by approving the use of emails and text messages - two media channels that are less intrusive and more easily controlled by the consumer, this law clearly prioritizes consumer-friendly, and consumer-controlled interfaces for collectors to use.
Cristina Musacchio, Vice President of Compliance and Internal Audit at AllianceOne Receivables Management, Inc.:
We have begun our review of the proposed changes and we appreciate the time and effort that has been taken to review our industry and look for ways to bring the FDCPA into the 21st century. Although we will have more concrete and specific comments as we dig in to the rules, we are pleased to see that the proposed rules are providing clarity to what have historically been grey areas, as well as providing us with more efficient ways to reach consumers, especially through their preferred channels.
Outside Counsel Perspective
Stefanie Jackman, Partner at Ballard Spahr LLP:
From outside compliance counsel’s perspective, while the NPRM strives to provide a number of guidelines and clarifications that could benefit the ARM space, particularly companies that have the existing financial and IT resources to take advantage of those opportunities, there are a number of areas where much confusion remains. For example, the NPRM suggests that an Avila-style disclosure is not required unless it would be under state law or FDCPA case law. So, do we still need to provide that disclosure when collecting in the Second Circuit? What does it mean to prohibit a debt sale when a “identity theft report has been filed” – to whom? What constitutes a “report”? Does it require a police report be filed? What happens if the report is investigated and resolved in a way that is adverse to the consumer – can the debt now be sold? The E-SIGN process and related alternative approach also remains shrouded in mystery but what is clear is that having access to experienced E-SIGN counsel will be extremely beneficial. At a high-level, the CFPB has taken the first step towards effectuating a sea-change in how collections occur, seeking to transform it from one that depends mostly on traditional phone calls to one that instead relies primarily on email and text channels. But a number of unanswered questions remain where the ARM industry will be well-served to comment in order to reduce ambiguity (and hopefully, litigation risk) as we journey together down this new road.
Mark Mallah, General Counsel of LiveVox, Inc.:
The proposed rules are a significant development in that they would establish bright line limits on telephone calls, encourage email and text communications, require particular disclosures, prompts, and opt-outs, and provide certain safe harbors. Whatever the ultimate rules look like, it is important for agencies to equip themselves with robust campaign controls and consent management, and become adept across multiple communication channels. It is also a good time to revisit campaign strategies to determine the best combination of communication channels as well as other performance factors, so that when the final rules take effect, companies are nimble enough to achieve both compliance and effectiveness.