Editor's Note: This article previously appeared on the Ontario Systems Blog and is republished here with permission.

Of any year in recent memory, 2020 has been the most turbulent and unsettling. COVID-19, civil unrest, and natural disasters are taking a heavy toll emotionally and financially.

For third-party collectors, showing empathy for consumers is a moral and business imperative. So is communicating compliantly to protect their rights. But the compliance piece is becoming more of a challenge. Between the current state of affairs in the U.S. and the forthcoming release of the final Consumer Financial Protection Bureau (CFPB) rules, it’s worth revisiting how and when you communicate with consumers.

I recently sat down with Wendy Badger, chief compliance and ethics attorney and Special Compliance Of Counsel for Ovaile Law Group. Wendy and I discussed the mailbox rule, the coming CFPB final rules, and what it all means for collection agencies. Here are some of the highlights of our discussion.


Why Third-Party Collectors Can No Longer Count on the Mailbox Rule

Debt collectors have relied on the mailbox rule for decades. It’s a presumption that when a letter is properly addressed, includes the proper postage, and is mailed First Class, it will be delivered to the addressee within three days.

The mailbox rule is critically important because many of the disclosures debt collectors must provide to consumers have very specific time constraints around them. For example, the validation period begins as soon as a consumer receives their validation notice in the mail.

Today, the mailbox rule is being chipped away by the courts. This shifting legal landscape—coupled with hurricanes, wildfires, and destructive acts that are disrupting postal delivery (mail being lost, mail being tossed)—has rendered the mailbox rule a rebuttable presumption.

For collectors, this changes everything.

Inbound and Outbound Effects: An ARM Compliance Minefield

The imminent demise of the mailbox rule will affect every aspect of your collection process—and, by extension, your policies, procedures, and workflows.


If collectors rely on the mailbox rule, they run the risk of miscalculating the start of the validation period, making overshadowing a distinct possibility. As Wendy asked during our discussion, “What do collectors know, and when do they know it?” When is the next collection letter teed up and sent out? When are phone calls being made?

Post-dated payment notices pose an even trickier problem, as they must be provided (i.e., placed in the consumer’s possession) no fewer than three days and no more than 10 days before a consumer’s prearranged payment is due to post. If collectors can’t rely on the presumption of delivery, it’s going to be tough to hit that target window to avoid violating the Fair Debt Collection Practices Act (FDCPA).


When consumers mail disputes, requests for verification of a debt, requests to cease communication, and debt payments, delivery delays can complicate the collections process (postmarks notwithstanding). If you’re giving consumers the benefit of the doubt rather than immediately reporting late payments to credit bureaus, you’ll need to establish workflows around that.

5 Tips for Communicating Compliantly in an Uncertain World

How will you survive without the mailbox rule, especially as we await the CFPB’s final rules? This list of tips is a good place to start, but be sure to consult with your outside counsel to formulate a detailed plan.

1. Rethink how you calculate periods of time.

The validation period doesn’t start when you send batches to your letter vendors. You need to know when those letters hit the mail. That’s when the clock starts ticking.

The proposed CFPB rules complicate the equation by introducing the concept of not counting public holidays, Saturdays, and Sundays as part of the validation period. This will extend the validation period and require adjustments on your end. The new proposed rules provide:

“For purposes of determining the end of the validation period, the debt collector may assume that a consumer receives the validation information on any date that is at least five days (excluding legal public holidays, Saturdays, and Sundays) after the debt collector provides it.”

You’ll also need to recalculate the seven-day period for postdated payment notices as referenced in the statute.

[A debt collector shall not] “Accept from any person a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument not more than ten, nor less than three, days (excluding legal public holidays, Saturdays, and Sundays) prior to such deposit.”

2. Revisit your collector training.

Focus your training on what collectors should note in the system (e.g., actual send date versus the date a letter batch was uploaded to your vendor). In any follow-up communication, vendors should be verifying that the consumer received his/her validation notice.

You should also emphasize active listening in your training. This is a crucial skill. Collectors need to understand exactly what consumers are telling them so they can take appropriate steps and time future communications appropriately.

3. Pay attention to what’s happening in various parts of the country.

Give due consideration to adverse circumstances and events that could be causing delivery delays or failures. You might decide to extend the current time frame for your validation notices for certain consumers, depending on where they live.

4. Document everything you’re doing.

Document in detail your policies, procedures, and training regarding next steps when communications fail. For example, what is your letter vendor doing to incorporate their timing into your collection process? This needs to be established now, if it isn’t already, so you and your vendor are on the same page.

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5. Embrace digital communications.

Depending on snail mail to communicate with consumers will only make collections and compliance management more difficult over time. Although digital communications aren’t foolproof—delays and failures are still possible—but they offer more assurance than postal delivery, as your providers can track digital communications more easily (including undeliverable emails and emails trapped by spam filters) and in a more timely manner.

The new CFPB rules will make the move to digital channels more of an urgent need and a greater opportunity for ARM businesses. If you’re concerned about E-sign consent, it isn’t difficult to obtain. It’s not even required for initial electronic communications when validation notices are embedded; when E-Sign is required, you can obtain it by phone, IVR, or self-service web portal.

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