The CFPB’s new debt collection rule, Regulation F (Reg. F), lays out important requirements for lenders, servicers and debt collectors. Because Reg. F just recently took effect, we wanted to expand on our previous Reg. F blog post—and to outline some of the ways we’re helping alleviate the Reg. F compliance burden for our customers through smart automation and forward-looking product development.
Who Needs to Comply with Reg. F?
Reg. F is the implementing regulation of the Fair Debt Collection Practices Act (FDCPA), which is written to apply to “debt collectors.” While this seems to exclude creditors and first-party servicers, these entities can in fact be in violation of certain FDCPA requirements according to longstanding CFPB guidance.
As a result, many banks, credit unions, and fintech lenders and servicers have decided it’s important to comply with at least some of Reg. F’s new requirements. For your organization, the decision ultimately comes down to risk tolerance.
What Parts of Reg. F Pose the Greatest Implementation Challenges?
Reg. F introduces several new requirements, including call frequency limits, text and email rules, model validation notices, and additional disclosures. In our prior blog post, we talked about how Peach helps lenders and servicers comply with call frequency limits. Now we’ll cover our approach to two additional provisions that present major implementation hurdles: (1) compliance with “inconvenient time and place” requirements, and (2) safe harbor procedures for text messages and emails.
Challenge 1: Inconvenient Time and Place Requirements
It’s well known in the industry that the FDCPA prohibits debt collectors from contacting consumers for debt collection purposes between 9 p.m. and 8 a.m. But Reg. F clarifies that the FDCPA’s statutory language is actually significantly more restrictive.
- Consumer-Designated Preferences. Reg. F states that a debt collector cannot contact a consumer for debt collection purposes at any time or place “known or which should be known to be inconvenient to the consumer.” This puts the onus on the debt collector to honor consumer requests regarding when and where they want to be contacted. For example, a consumer might ask not to be contacted between 3–5 p.m. on Tuesdays.
- Conflicting Information on the Consumer’s Location. Reg. F adds that if a debt collector has conflicting information about a consumer’s local time zone, it can’t attempt to communicate at a time that would be inconvenient in any of the consumer’s possible locations.
Challenge 2: Safe Harbor Procedures for Text Messages and Emails
Reg. F confirms that text messages and emails can be used for debt collection purposes. At the same time, debt collectors have a responsibility to prevent unintentional third-party disclosures of debt. While debt collectors are free to implement their own procedures, Reg. F outlines specific ones that provide safe harbor protection against unintentional third-party disclosure claims brought under the FDCPA.
How Peach Helps Creditors and Servicers Comply with Reg. F
One of the challenges with legacy solutions is that most lack a thoughtful and ongoing commitment to compliance. As regulations evolve, these legacy solutions typically require significant resource investments to power manual processes and ad-hoc solutions.
By contrast, Peach allows creditors and servicers to swiftly implement an automated plan to comply with new federal and state requirements. You can instantly turn on any of our new Reg. F capabilities.
Solution 1: Inconvenient Time and Place Requirements
Peach’s proprietary Compliance Guard™ solution automates compliance for inconvenient time and place requirements. We capture consumer-designated preferences on inconvenient times and places and issue an alert to block any communication attempts that would be in violation. Compliance Guard also scans multiple borrower data points to ensure that outbound communications are made during compliant periods if there’s ambiguity about where the borrower resides. Compliance Guard applies to debt collection calls, texts and emails.
Solution 2: Safe Harbor Procedures for Text Messages and Emails
Peach makes it easy for organizations to take advantage of Reg. F’s new safe harbor protections for text messages and emails if they choose.
- For text messages, Peach’s Compliance Guard modules have been updated to obtain re-consent from consumers and to provide scanning of the Federal Communications Commission’s Reassigned Numbers Database to confirm that phone numbers have not been reassigned. As with other automated rules, Compliance Guard would recommend blocking any non-compliant text messages.
- For emails, Peach’s platform already tracks consents and opt-outs, ensuring that consumer requests are promptly stored and honored.
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While Reg. F introduces additional regulatory complexity for lenders and servicers alike, and raises the stakes for staying compliant, Peach’s compliance-by-design approach makes it easy for our customers to stay ahead of ever-evolving regulations like Reg. F.
If you’d like to learn more about how Peach can help your organization automate compliance while providing a best-in-class servicing experience, email us at firstname.lastname@example.org.