Debt Collection Requirements Are Changing – Get Ready!

By Paul Johnson, President CMS – Complete Mailing Solutions

As the result of a Federal Appellate Court decision, the Consumer Financial Protection Bureau is making changes to Regulation F (Debt Collection Practices), which implements the Fair Debt Collection Practices Act (FDCPA).  These changes will have dramatic impact on collection communications and will go into effect in November 2021. 

Debt Collection

The changes will directly impact how collection agencies can contact consumers for debt collection purposes.  Debt collectors will no longer be able to transmit information about consumer debtors to third-party mail houses for generating demand letters.   As a result, communications may need to be generated in-house.

What is the FDCPA?

The Fair Debt Collection Practices Act was initiated in 1977 to address unscrupulous practices among some debt collectors, such as harassment and deception, in collecting outstanding monies from consumers.  It gave consumers control over when and how debt collectors contacted them. It also established privacy protections surrounding the collection of debts as well as protection from certain practices.  This is the first change since 1977 for the FDCPA. The changes are designed, in part, to address newer communication technologies.

Who Is A Debt Collector?

We think of debt collectors as one specific type of business.  However, the FDCPA defines a debt collector as any business whose principal purpose is the collection of any debts or who regularly collect debts that are owed to another.  This interpretation would include attorneys or collection law firms, as well as collection agencies, debt buyers and loan servicers.

What Is Changing?

Many firms use a third-party, such as mail vendors to generate notices.  The new ruling restricts consumer information from being shared with third-party vendors. This would include mail houses, data-hosting services, insurance providers and property appraisers, among others.  Anything regarding a consumer’s debt may now be an FDCPA violation of an individual’s privacy.  To be in compliance, debt collectors and servicers will need to in-source many of the services they had previously outsourced.

What Are Your Options?

CMS offers a complete line of in-sourcing equipment and software to easily handle communications.  Contact us for more information – 303-761-0681 today.

Obviously, this is a very high-level summary of the new regulations. Of course, the new regulations include very specific requirements. For more detailed information go to: Regulations