Why does Reg F matter to me and my business?

The CFPB’s Regulation F is a debt collection law that applies to debt collectors using the same definition that the Fair Debt Collection Practices Act used. These organizations are defined as collection agencies, debt buyers, collection law firms, and loan servicers. If these business models apply to you, you need to be fully compliant with Reg F’s new rules.

So, understanding the new rules is important to your business, because if you’re in noncompliance, your agency can be hit with substantial fines. To avoid these substantial penalties, agencies should seek out and take advantage of compliance software that allows the ability to set intuitive rules, includes list management services, supplies natural language compliance and analytics to minimize your exposure to the risk of non-compliance to debt law. Agencies should also take steps to begin training implementation for their agents and contact centers now so they are prepared for how they can communicate with debtors.

Here’s a snapshot of the main requirements and contact restrictions of Regulation F:

The 7-in-7 rule: Reg F stipulates that there may be no more than seven (7) calls made by a debt collector to a consumer in a span of seven (7) days. 7-in-7 rule explained in more detail here.

Time of Day: Debt collectors may not attempt to contact a consumer before 8 a.m. or after 9 p.m. in the consumer’s local time zone. Some states have their own time restrictions that supersede Reg F — it’s best to follow the strictest proscription.

Place of Employment: Debt collectors may not attempt to contact a consumer at the consumer’s place of employment.

Explanation of all primary components of the law

Let’s go over the key components of the FDCPA regarding debt collection communications:

Unless given direct, prior consent from the consumer, a debt collector may not communicate about the debt with any other person than the consumer, their attorney, a consumer reporting agency if permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.
Debt collectors must stop communicating with consumers if the consumer notifies them in writing that they refuse to pay the debt or wish to cease further communication with the debt collector, with some exceptions.
A debt collector may not communicate with a consumer about the collection of any debt without direct, prior consent from the person or permission of a court with proper jurisdiction.
Debt collectors may not communicate with consumers at unusual or inconvenient times — the convenient time for communication standing at after 8 a.m. and before 9 p.m. in the individual’s local time.
Debt collectors may not communicate with the consumer if they know the person has an attorney with respect to the debt, and the debt collector is reasonably able to contact their attorney.
A debt collector may not communicate with a consumer at their place of employment if he or she has reason to believe the consumer’s employer prohibits such communication from taking place there.

The 7-in-7 rule explained

An important aspect of this new rule regulates the frequency in which collectors can place calls to and make contact with consumers at any phone number. Collectors are permitted to place a call to the consumer about a particular debt seven (7) times within a period of seven (7) consecutive days, so long as no contact is made with the consumer in any of the attempts.

The seven days are rolling and do not reset with the start of the calendar week. If, for example, the first call is placed on Tuesday, one call is made on Wednesday, Thursday, and Friday each, two calls on Saturday, and one on Sunday — totaling seven calls within the past in six days — a call on Monday would be considered the eighth call within seven consecutive days, and would therefore be in violation of the rules.

This rule applies separately to each debt a consumer may have incurred, so seven calls to a consumer about one particular debt within seven days would not count towards the seven-call limit regarding a discrete debt. If contact is made, which by definition includes a phone-call conversation with the consumer, the collector must not attempt to call the consumer again during the next seven days, day one being understood to begin on the day of contact. So, if you make contact on Tuesday, you cannot call again until next Tuesday — day eight — unless express consent is provided by the consumer to call them within seven days.

What are the types of communication Regulation F applies to?

Regulation F applies to communication by phone call including voicemail and extends to newer communication technologies such as SMS text messages, and emails, a necessary update since the previous regulation in 1977.

Concerning phone calls, Regulation F redefines rules for consent (the consumer must give consent and a collector may not continue if the consumer should request in writing that communication stop), content (no misleading or harassing content, no profanity), frequency of calls (see the 7-in-7 rule above), appropriate hours (8 a.m. – 9 p.m.), to whom calls may be placed regarding the debt (only the consumer or consumer’s attorney, or the original creditor or creditor’s attorney) and to which locations a call can be placed (not the consumer’s place of work, for example).

Voicemails are considered to be a “communication” or “making contact” unless they omit certain information and include other information, as specified in “limited-content message.” If the voicemail complies with the stipulations in “limited-content message”, it is possible that it not be considered as a “communication” with the consumer.

Regulation F also provides for debt-related communications through email and SMS, as long as the consumer has given consent (and — in the case of SMS — renews consent for each given period of 60 days) and as long as a clear opt-out method is indicated to the consumer. The act also empowers the consumer to make decisions in terms of time, place, type of media and duration.

Who does Regulation F impact?

“Debt collector” is a broad term, so Regulation F clears up who qualifies as a debt collector or debt collection agency; it also defines who is excluded from the term. The CFPB’s definition in the regulation incorporates much of the same defining terminology originally used by FDCPA.

It’s critical for you to be clear on these definitions so that you can understand how and if Regulation F applies to you or your business.

According to the regulation, a debt collector is anyone whose main business is to facilitate the process of debt collection on behalf of someone else; this could be an individual or an organization. Also, anyone who enlists the help of a third-party debt collector or uses a different name from their own for the purpose of collecting their own debts is included in this group.

This includes:

Collection agencies
Debt buyers
Collection law firms
Loan servicers
Anyone who works for one of these types of businesses in the capacity of a debt collector

Who is exempt from this definition?

A creditor, that is the person or entity to whom the debt is actually owed (except in the case mentioned above).
A person who does not work as a debt collector, but who aids in or carries out instructions to facilitate debt collection on behalf of the creditor. This could be a colleague or employee of the creditor.
Government employees
People who carry out judicial enforcement
Nonprofits that help consumers get out of debt by collecting payments from them in order to reimburse their creditors.
Anyone who is related to the creditor in a legal, financial, or professional capacity and is also impacted by the debt.

Limited Content Message Requirements (LCM):

A business name for the debt collector that does not indicate the collector is in the debt collection business
The name of whom the consumer can contact
A request that the consumer replies to the message
And the phone number for the consumer to use to contact the collector

Significant Changes to the FDCPA in Late 2021

Starting November 30, 2021, debt collectors face new restrictions under changes to the federal Fair Debt Collection Practices Act (FDCPA).

https://www.nolo.com/legal-updates/significant-changes-to-the-fdcpa-in-late-2021.html

By Amy Loftsgordon, Attorney

The Fair Debt Collection Practices Act (FDCPA) (15 U.S.C. § 1692 and following) protects consumers from abusive debt collectors. The FDCPA places numerous restrictions on what collectors can—and can't—do when collecting debts. It also provides consumers with certain rights and remedies against those who violate any of the law's provisions. For example, under the FDCPA, a collector can't contact you at an unusual or inconvenient time or place, threaten to harm you, use obscene language, or call you repeatedly with the intent to annoy or harass you.

The Consumer Financial Protection Bureau (CFPB) has issued a final rule amending Regulation F (12 C.F.R. § 1006 and following), which implements the FDCPA. As of November 30, 2021, under these changes, consumers will get more control over how debt collectors communicate with them, while collectors face new restrictions on how they collect debts.

Restrictions on Phone Call Frequency

Under the amended law, a debt collector may not call a consumer more than seven times within seven consecutive days or within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt. The date of the telephone conversation is the first day of the seven-consecutive-day period. (12 C.F.R. § 1006.14(b)).

This limitation applies to each particular debt, not per consumer. So, a debt collector can call you more often if you owe on several debts they're trying to collect. And the limitation on telephone call frequency limit has three exclusions:

calls for which you gave prior consent
calls that don't connect to the dialed number, and
calls placed to specific professional persons, like your attorney. (12 C.F.R. 1006.14(b)(3)).

What Is a Debt Collector Under the FDCPA?

Under the FDCPA, the term "debt collector" generally includes debt collection agencies, collection attorneys, debt buyers, and mortgage servicers that obtained the account in default. Usually, original creditors are excluded.

How Collectors Can Use Electronic Communications, Like Texts and Emails

The amended FDCPA allows debt collectors to use newer technologies, such as email and text messages, to communicate with consumers regarding their debts, subject to certain limitations, which protect consumers against harassment or abuse. For example, debt collectors are prohibited from communicating or attempting to communicate through a social media platform if the message is viewable by the general public or your social media contacts. (12 C.F.R. § 1006.22(f)).

Also, if a debt collector sends you a private message via social media, like through Facebook or LinkedIn, asking to be added as one of your contacts, the collector is supposed to disclose their identity as a debt collector. (12 C.F.R. § 1006.18(d), see official interpretation).

Consumers Can Set Restrictions on How Collectors Contact Them

Under the modified FDCPA changes, consumers still have the right to cease all collection communications from a debt collector; and you can also stop communications through a particular medium, subject to some exceptions. (15 C.F.R. § 1692c(c), 12 C.F.R. § 1006.6(c), 12 C.F.R. § 1006.14(h)). For example, if you tell a debt collector to "stop calling," this statement means you've requested that the debt collector not use telephone calls to communicate with you. So, the debt collector is prohibited from communicating or attempting to communicate with you through telephone calls. Or you may request that a debt collector not use a specific address or telephone number. (12 C.F.R. § 1006.14(h), see official interpretation).

Consumers Can Opt Out of Digital Communications

If a collector sends you a text, email, or other electronic communication, it also has to give you a way to easily opt out of receiving those communications. The debt collector can't require you to pay a fee to opt out or ask you to provide any information other than your opt-out preferences and the email address, telephone number for text messages, or other electronic-medium address subject to the opt-out request. (12 C.F.R. § 1006.6(e)).

Collectors May Leave Only Limited-Content Voicemails

Voicemails the collector leaves must be limited to giving the collection agency's business name (without indicating the company is in the debt collection business), making a request that you respond to the voicemail, and providing contact information for whoever you should contact. (12 C.F.R. § 1006.2(j)).

When Collectors Can't Send Messages to Your Work Email

A debt collector can't communicate or attempt to communicate with you by sending an email to an email address that the debt collector knows is a work email address, subject to some exceptions. For example, a collector may send messages to your work email if you used the email address to communicate with the debt collector about the debt and you haven't opted out since. Or if you gave prior consent directly to the debt collector that it could use your work email address and you haven't withdrawn consent, then the collector can email you at that address. (12 C.F.R. § 1006.22(f)(3), 12 C.F.R. § 1006.6(d)).

Changes to Debt Validation Notices

The amended law also expands the law's requirements for debt validation notices by requiring significantly more information and additional disclosures. Also, under the amended law, collectors can provide validation information orally in an initial communication despite the large volume of information the law requires in the notice. (12 C.F.R. § 1006.34).

Collection of Time-Barred Debts

In addition, under these changes to the federal FDCPA, a debt collector must not bring or threaten to bring a legal action against a consumer to collect a time-barred debt. (12 C.F.R. § 1006.26(b)). This change is consistent with case law, which says threats of lawsuits after the statute of limitations has expired violate the FDCPA. And the amended law says that a collector violates this provision whether or not it is aware that a debt is time-barred.

Effective date: November 30, 2021

JPA / Johnston, Parker & Associates Inc.