For the past five years, the Consumer Financial Protection Bureau has worked diligently on developing new debt collection rules that align with modern times. Their efforts are finally set to pan out with the new federal regulations going into effect on November 30th, 2021. By that time, your debt collection efforts must align with the rules set in Regulation F or you could face harsh penalties. Here’s what you need to know about commercial collections in 2021.
Changes to Commercial Collections in 2021 Communication Practices
The biggest changes to come about as a result of Regulation F surround communication practices. Dubbed rather antiquated, the old rules did not allow commercial collection agencies to operate in modern times.
Instead, you had to use outdated methods of communication that undoubtedly made it extremely difficult to get in touch with consumers. With the new rules in place, it will be much easier to create open lines of communication that promise to improve results.
To work within the rules, here’s what you need to know about collection communications in 2021.
Ability to Use Text, Email, and Voicemail
Debt collectors now have the ability to go beyond phone calls and mailed letters in communicating with consumers. In addition to those methods, it’s possible to use text, email, and voicemail to correspond. Even messages through social media platforms are on the table.
Before doing that, you must ensure that the right consumer is getting your messages with a quick confirmation message. Consumers then have to respond before getting more messages through that line of communication.
Voicemails are allowed as well, just as long as your message is limited in content. It should only tell the consumer to call back or otherwise respond to handle the matters in question.
Follow Consumer Preferences for Commercial Collections in 2021
Customers now have direct control of how credit collection agencies can contact them. You must give them the option to opt-out of certain types of communication, like text messages or emails. If you go ahead and send a confirmation message, their response can serve as consent to keep that line of communication open. They have the right to change their preferences at any time, however.
Order to Limit Phone Call Frequency
To keep consumers from getting overloaded with debt collection calls, the new rules set a hard limit on how many each agency can send. You should only contact each consumer once every seven days after speaking with them about their debt.
Waiting Period After Notification Attempts
Since email and mailing addresses can swiftly change, all debt collection correspondence now has a waiting period. You must wait 14-days after sending out the initial message before reporting the debt info to any credit reporting agencies.
If the message comes back undeliverable, you will need to use skip tracing and other methods to track them back down. But if you do not receive a response or undeliverable message, then it’s okay to report the debt.
Creditors May Need to Participate More in Collection Actions
If you have a third-party handle your debt collection services, you may still need to participate in the process. You will likely need to provide even more information about the debt before collection agencies and the like can take action. They need a lot more info to verify that the debt is accurate and belongs to the named party to abide by the new rules.
In addition to that, you may need to send notice to consumers letting them know that the debt collectors will be in touch by email, text, or other communication lines. By doing so, you help to verify that the consumer is okay in receiving those messages as indicated. This helps complete the authorization process, giving the collectors the ability to move forward with the debt collection actions.
New Rules Go Beyond Third-Party Debt Collectors
Third-party debt collectors are not the only ones who have to follow the new rules for 2021. As a creditor, you are also on the hook and required to follow the regulations as written.
If you have a third party handle your commercial collections, you have to evaluate their performance and verify they are following the rules. Otherwise, you must operate under the same guidelines as the debt collectors, requiring that you fully read and understand the Regulation F documents. If you fail to follow the regulations properly, you could end up facing a lawsuit and have to pay out hefty damages.