What to Expect: Day 1 of Regulation F

When the CFPB published part one of the debt collection rule on October 30, 2020, and then part two a few weeks later, a little over a year seemed like plenty of time to understand, and comply with, the Regulation’s requirements. It was also a year full of discussion, debate, and conversation about how the industry would change and adapt once the Regulation went into effect.

So, what can we expect? We turned to the Consumer Relation’s Consortiums Legal Advisory Board for their opinions.

The Model Validation Notice

Jessica Klander says “agencies can expect to see some early lawsuits from the plaintiff’s bar aimed at testing the validation notice’s safe harbor protections.” These lawsuits will pay particular attention to “substantially similar” modifications to the model notice. When the lawsuits do crop up, Klander advises that “agencies should carefully consider whether the particular letter (and account) provides a strong basis to fight,” in order to make good law.

Stefanie Jackman agrees with Klander’s assessment of the situation, saying agencies will begin to see demands and lawsuits “very quickly after November 30th,” adding that she believes the lawsuits will focus on “whether such notices appropriately identify and itemize the debts.”

John Bedard sees things a little bit differently. He says, “savvy consumer attorneys will not file claims on letters which look similar to the model form, else risk backlash from the courts who see debt collectors complying with the new Regulation.” It’s likely that litigation will be focused on agencies that do not use the Model Validation Notice, or one that is considered “substantially similar.”

Consumer Communication

In addition to the Model Validation Notice, Regulation F provides some additional guidance around do not call requests, inconvenient time and place notifications, and customer preference.

Jackman expects that “agencies will see an uptick in consumers requesting various do not call or other inconvenient time and place requests over the coming weeks.”

Joann Needleman adds “it will be increasingly important for agencies large and small to be monitoring and re-training staff” as it relates to consumer communication. “Staff will need to listen very carefully to consumers to ensure that future and subsequent communications do not run afoul of Regulation F.”

Looking Forward

The industry will need to document not only the operational challenges presented by Regulation F, but also what is working well. There will be revisions to Regulation F in the future, and the industry will need to be equipped to advocate for appropriate revisions, but also to maintain status quo where necessary. As Joann Needleman points out, “consumer advocates do not like this rule and they will push for changes, even in areas where the rule may be working.” So, the industry will need to be prepared (with evidence) when the time comes.

The Main Points

The number of lawsuits in 2021 will likely exceed the number in 2020, and we can expect 2022 to be equally as active.
Litigation will likely focus on those who are not using the Model Validation Notice, but may also involve those who are using one that is “substantially similar.”
The data in the Model Validation Notice is also important; the debt needs to be identified and itemized correctly.
Enhanced call QA will be key to ensuring agents are documenting consumer requests as they relate to Regulation F.
Document what has been a challenge, and what is working well, so that when it’s time for revisions, the industry can properly advocate for itself.

About the Consumer Relations Consortium

The Consumer Relations Consortium (CRC) is an organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market. CRC is managed by The iA Institute.

Learn more at www.crconsortium.org

About the iA Innovation Council

The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders who envision the future of collections and map how to get there. Group members meet throughout the year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking.

Learn more at www.iainnovationcouncil.com