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In a recent Research Assistant Peer meeting, we discussed the growing importance of addressing requests from consumers who identify with a different gender or prefer to use a new name. This is a topic that collection agencies must consider carefully and ensure that collectors are trained to handle such requests appropriately.
The Consumer Financial Protection Bureau (CFPB) emphasizes the importance of consumer satisfaction. If a consumer prefers to be addressed by a name that is not their legal name, there is no reason not to honor that request. In many ways, this is no different than addressing someone by a nickname or a shortened version of a longer name. The distinction arises when it comes to sending official correspondence or filing legal action.
When sending letters, especially the first notice required by the Fair Debt Collection Practices Act (FDCPA), the consumer’s legal name—if known—should be used. This name is typically provided by your client when the account is turned over for collection. Many clients, particularly in the healthcare sector, may obtain a copy of the consumer’s identification and use that information for the account. In such cases, the legal name should be used on the validation notice and any legal documents sent to the consumer.
Your internal process for handling name changes should resemble how you manage name updates following marriage or divorce. If you already have a policy in place for these changes, consider updating it to address “Also Known As” (AKA) or preferred names.
Using AKA in Correspondence
The group discussed the potential risks and benefits of including an AKA in letters. There is some concern that a litigious attorney might challenge the legality of adding an AKA to a validation letter. It was universally agreed that legal documents should only include the consumer’s legal name. However, for standard correspondence, using the legal name along with an AKA (preferred name) is generally acceptable and may help maintain positive consumer relations.
When considering whether using an AKA might violate the FDCPA, the consensus is that you are more likely to face a CFPB complaint for not respecting a consumer’s preferred name than for including an AKA in a letter.
Phone Calls and Name Verification
Once a consumer provides proof of a legal name or gender change, there is no reason to refer to outdated information. Be mindful that the process of updating identification documents, such as a driver’s license or passport, can take time. However, once the change is complete and the consumer provides documentation, your records should be updated to reflect the new legal name. All further communications, whether via phone, letters, or legal proceedings, should then use the updated legal name.
Reporting to Credit Bureaus
The topic of using an AKA when reporting to credit bureaus was also discussed. When pulling a credit report, you may notice that various names the consumer has used in the past are listed. In accordance with the Fair Credit Reporting Act (FCRA), data furnishers must report only information they believe to be accurate. Ensure that your system of record can store both the legal and preferred names.
Balancing Compliance and Consumer Respect
The CFPB is actively monitoring potential discrimination. Agencies must balance regulatory requirements with social responsibility. If a consumer requests to be addressed by a preferred name, make a note of it in the account and use that name when communicating. However, always remember that legally required notices and documents must be issued under the consumer’s legal name.
Documents and Crowdsourced Materials:
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Upcoming Webinars/ Other Announcements:
- RA Compliance Corner: Managing Your Service Providers- Do you really have it all in order? September 25, 2024 at 2PM ET. Register here.
- Important Announcement: All AI Notetaking Bots will be removed from Research Assistant Peer Group Meetings. This is to maintain the confidentiality of our peer members.
- Have topics you want to discuss during the peer call? Please send them to: Sara_Consultant@roundtables.us by Thursday to ensure it makes it on our agenda!
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