What You Need to Know About Regulation F

​​Regulation F becomes effective on November 30 of this year. ​But what exactly is it, and how will this new rule affect your business? 

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What You Need to Know About Regulation F

New Debt Collection Rule
Takes Effect November 30​

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(The following overview of Regulation F is not intended to be a full and exhaustive explanation. This article is not intended to be legal advice and may not be used as legal advice. Legal advice must depend on the specific circumstances of each case. Every effort has been made to ensure that this information is up-to-date. However, it should not be used to replace the advice of your own legal counsel.)

The long-awaited revision to the Fair Debt Collection Practices Act (FDCPA), known as “Regulation F,” will become effective on November 30 of this year. What is this new rule, and how will it affect your business? ​

Regulation F was designed by the Consumer Financial Protection Bureau (CFPB) over the course of many years. It was then published two parts: the first part addresses various communication technologies, while the second part focuses on the debt validation notice.

Communication Technologies

Part One of the new rule clarifies the proper use of text messaging, email and social media when attempting to collect a debt. It also places restrictions on telephone communications with regard to the number of times a debt collector may attempt to call an individual consumer about a debt.

Specifically:​

• Debt collectors may not attempt to call any consumer more than seven times within seven consecutive days. Voicemail messages (including ringless voicemails) and limited-content messages are all viewed as attempts to call.

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• Debt collectors are allowed only one debt-related conversation with any given consumer within a seven-day period. 

What Is a

Limited-Content Message?

 

“Limited-content message” is a new term defined by Regulation F. In essence, it is a voicemail message that provides only general information and does not identify the caller as a debt collector.

 

According to Regulation F, the limited-content message “does not convey information about a debt directly or indirectly to any person.” As a result, it is not considered to be a collection communication under the new law.

Debt Validation Notice

Regulation F creates a new Debt Validation Notice and provides a model for the new requirements.

Under the current rule (in accordance with the FDCPA), a validation notice is required to be sent  within five days of initiating contact with the consumer about the debt. Regulation F specifies the information that must be included in the validation notice and it proposes a standard model for creditors and collectors to use.

The new rule requires three particular changes to the Debt Validation Notice.   (See the graphic below.)

1. Instead of simply stating that the consumer has up to 30 days to either dispute the debt or request more information, collectors now must specify a particular expiration date for the validation period.
2. The notice must provide the CFPB’s website address (https://www.consumerfinance.gov/consumer-tools/debt-collection/), and inform the consumer that further information about consumer protections is available on that site.
   
3. The notice must now include an itemization date. This date is defined as one of the following five reference dates a debt collector can use to determine the amount of the consumer’s debt:

• The date of the last statement that the creditor issued to the consumer;
• The date the debt was charged off;
• The date the last payment was applied to the consumer’s debt;
• The date of the service for which the debt was incurred; or
• The date of a final court judgment concerning the debt.

​What It All Means to You

We at CSC rely on our creditor-clients to provide the account information that we must disclose to the consumer. Once Regulation F becomes effective, the provision of certain information will be even more important, if we are to expedite the recovery of debts under the new rule. Here’s how you can help:

Itemization Date
As outlined above, the required itemization date can be one of five possible dates. At CSC, we’ll work with you to determine which of these dates is best for you. Here is the information we will need from you once Regulation F becomes effective:

• The total amount owed on the debt per the chosen itemization date.
• Any adjustments (credits/insurance payments, interest, fees, etc.) applied toward the total amount since the chosen itemization date.

 
By helping us comply with the new rule, you’ll be doing your part to ensure that our debt recovery efforts will continue to exceed your expectations. As always, should you have any questions about the new regulation and/or its potential impact to your business, please feel free to reach out to us.

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Sources:
Featured Image: Adobe, License Granted
Consumer Financial Protection Bureau
InsideARM
American Bar Association