Part 2: Top 10 Elevator Conversations about the CFPB's Proposed New Rules for Debt Collection

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

As I write this, it has been three weeks to the day since the CFPB released its proposed new rules for debt collection. After the initial frenzy of conversation, consumer groups and the debt collection industry have quietly retreated to their respective corners. As a watchdog over legislation, regulation and case law impacting the industry, I find their silence deafening. Both camps are assessing precisely how their world will change if the new rules, as proposed, become final without any significant change. In the meantime, let’s look at five more elevator conversations (if you missed the first five, check them out here) you can use to help your team digest 537 pages of information.

Elevator Conversation #6: “The Limited Content Message is not a communication, but it may be a call if you leave a voicemail.”

If you have any tenure in the collection industry, you know where you were on March 25, 2006, when the Southern District of New York decided Foti v. NCO Financial Sys., 424 F.Supp.2d 643 (2006). In Foti, the court made clear that a voice mail message left on a consumer’s answering machine is a communication in connection with the collection of a debt and must therefore include:

• the meaningful identity of the debt collector 15 USC 1692 d (6); and
• the disclosure the communication was from a debt collector See 15 USC 1692 e (11).

The Foti court also held the inclusion of such information in a voice mail message can establish a claim against a debt collector for the unauthorized disclosure of a debt to a third party.

Huh? Yes, that is the reaction every debt collector has had in response to Foti and all the other cases like it for the past 13 years. To alleviate this catch-22, the CFPB attempts to placate the industry and protect consumers from the unauthorized disclosure of a debt to a third party by handing us a “model message.”

The model message purports to be a safe harbor from liability when leaving a message with a consumer. It should include the following:

• the consumer’s name;
• a request the consumer reply to the message;
• the name of names of one or more natural persons [NOT A BOT OR ARTIFICIAL VOICE OR IVR] the consumer can contact to reply to the debt collector;
• a telephone number the consumer can use to reply; and
• if applicable, the opt-out notice for electronic communications provided in 1006.6(e).

Example: This is a message for Bob Andersen from Mary Smith. Please reply by contacting me at XXX-XXX-XXXX.

If you like, the CFPB will allow you to include a salutation, the date and time of the message, a generic statement that the message relates to an account, and the suggested dates and times for the consumer to reply to the message.

There are no restrictions on whether this may be a voice mail message or text message. But we do know it INCUDES a ringless voice mail message and that an email can never be used to leave a limited content message. 

See 1006.2 (j) 1-2.

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Elevator Conversation #7: “I have a riddle for you today. What can never be an email, but will always be a call, even if the phone does not ring, unless it is sent by text?”

You got it! A limited content message is the answer. Under the proposed rules, if you use the model message as prescribed, the model message shall not be deemed a communication under the FDCPA and will, therefore, not trigger the disclosure requirements of the FDCPA noted above. However, if you leave the model message on a person’s cell phone, VoIP or landline answering machine, the model message is a call for purposes of the call cap limit.

Surprisingly, if you send the model message as a text message, it is NOT a call for purposes of the call cap limit even though the TCPA tells us it is a call. Don’t try to make sense of these last two statements. For the time being, just memorize them. Perhaps more clarity will be provided in the final rules. See 1006.14 (b)(2)

Oh, and before I forget, if you leave the model message, communicate, or attempt to communicate with a consumer electronically using a specific email address or telephone number for text messages or any other electronic medium, you must explain how the consumer may opt out of further electronic communications or attempt to communicate to that address or telephone number. See 1006.6 (e)

Elevator Conversation #8: “The call cap rule is easy. Seven in seven or one in seven.”

The CFPB’s proposed rules restrict a debt collector from placing repeated or continuous telephone calls in connection with the collection of a debt with the intent to annoy. Call caps are limited per person per debt to:

• No more than seven attempts to reach a particular person about a particular debt within seven consecutive days [includes busy signal, reaching a voice mailbox and causing the phone to ring]; or
• No more than one telephone conversation with a person within a consecutive, seven-day period. The day of the conversation is day one of seven. The term conversation is not defined. My guess is if you can identify yourself in the slightest manner, even by caller ID, and the person hangs up… it’s a conversation. Hopefully, the final rules will clarify the definition of a conversation.

There are a few exceptions to these rules. Telephone calls placed to a person do not count toward the frequency limits if:

• they are made to respond to a request for information from such person;
• they are made with such person’s prior consent given directly to the debt collector; or
• the placed calls never connect or the calls are placed to the consumer’s attorney, a consumer reporting agency, the creditor, the creditor’s attorney or the debt collector’s attorney.

See 1006.14 (b)(14)(a) -(b) and 1006.6(d)

Elevator Conversation #9: “We send a Spanish language version of the validation notice because we can.”

Many of the consumers from whom we collect tell us they prefer to communicate with us in a language other than English. Under the new proposed rules, we know we can send the validation notice in any language other than English so long as the non-English version is completely and accurately translated, and we include it with an English language validation in the same communication. Fortunately, the CFPB will provide us with the accurate and complete Spanish language version of the validation notice. If the CFPB adds sample validation notices to its website for other languages, we may consider sending additional versions to our consumer populations. See 1006.34 (e)

Remember, even if you send the consumer a Spanish/English validation notice accurately and completely translated, you must still comply with the new, proposed 1006.34 (d) disclosure. This section of the proposed rules requires us to inform the consumer they may request a Spanish-language translation of the validation notice. Specifically, the English version of the validation notice must include a statement, “Pongase en contacto con nosotros para solicitor una copia de este formulario en epanol,”(which means “Contact us to request a copy of the form in Spanish.”

Elevator Conversation #10: “Have you figured out how to send a validation notice and other required disclosures electronically? We have.”

It is not as difficult as it may seem to send your FDCPA disclosures electronically. To help you understand the requirements, you must understand one simple concept. You can only substitute delivery by U.S. First Class mail if the manner you use is reasonably expected to provide actual notice in a form the consumer may keep and access later.

In other words, you can’t email someone a validation notice to some goofy email address they never use, or you cannot text a URL link to a consumer if they have no idea what to do with a URL link, or worse yet, if the URL link doesn’t work or allow them to save and later access the document. Once you get on board with the benefits you will enjoy if the consumer receives the disclosure or validation notice you send electronically, then you will be able to more readily embrace the new requirements.

Also, the rules for electronic delivery do not apply to one’s verbal delivery of required disclosures. See 1006.42(a)

With the backdrop of actual notice/keep and access requirements, a debt collector may provide a validation notice within five days of the initial communication with the consumer or the disclosures regarding the name of the original creditor or the right to dispute and request verification of the debt within 30 days of receipt of the validation notice in one of three ways:

• After Debt Collector Obtains E-Sign Act Consent – In accordance with section 101 (C ) of the Electronic Signatures in Global and National Commerce Act (ESIGN Act) (15 USC 7001 (C )) after the consumer provides affirmative consent directly to the debt collector.
• After the Creditor or Prior Debt Collector Obtains E-Sign Act Consent – If the creditor or prior debt collector obtained ESIGN Act consent to use an email address or telephone number to text the consumer about the debt you are seeking to collect [doesn’t matter if they actually used the address or phone number to provide electronic disclosures].

If you use this option to secure consent to deliver required disclosures electronically, you must either place the disclosures in the body of an email sent to the address for ESIGN Act consent was obtained or include a clear and conspicuous hyperlink to the disclosure(s) located on a secure website. Remember, if you use a hyperlink, the link must be accessible for some reasonable period of time [I personally think a reasonable period of time should be interpreted to mean the latter of the date the debt is paid in full, settled in full, returned to the creditor or exhausted by operation of law … but that’s just my opinion.] The consumer must also be able to save or print from the web page. If you use a hyperlink process to display the disclosures, you must also provide the consumer with an opportunity to opt out of the hyperlink delivery and make sure the consumer has not opted out.

• You include the Validation Notice in Body of Initial Communication – You may include the contents of the Validation Notice in the actual body of an email if you:
  • treat the delivery of the email as a writing [not a verbal validation notice];
  • obtain ESIGN consent to deliver the required disclosure from the consumer and use one of two different email addresses:
    • the email address the creditor or the prior debt collector could have used for delivery of electronic disclosures under ESIGN Act regarding that debt; or
    • an email address you obtained using the reasonable procedures process detailed in 1006.6(d)(3).

These elevator conversations do not cover all the provisions of the new proposed rules, nor are they intended as such. In upcoming blog articles, watch for my workflow recommendations regarding text and email communications for both ordinary collection activities and extraordinary collection activities.