Listen to the full interview for insights on the upcoming CFPB rules expected later this month. The final rules will be the first rules clarifying the nearly 40-year-old Fair Debt Collection Practices Act (FDCPA).
Boris Grinshpun: Good morning and good afternoon, listeners and viewers. Uh, thank you again for joining us today on our Thoughtline series today. We’re lucky enough to have Joann Needleman, member of Clark Hill PLC, joining us. Hello, good morning or good afternoon, Joann.
Joann Needleman: Good afternoon, Boris. It’s so great to be with you today.
Boris Grinshpun: [00:11:41] Thank you for, uh, for joining us today. Uh, Joann, uh, we’ve known each other for a little bit and obviously, um, we’ve had a lot of very interesting conversations in everything, financial services, uh, however, for our listeners and viewers who may not be as familiar with the work that you do, would you [00:12:00] mind giving a little bit of an introduction as well as a little bit of your background?
Joann Needleman: [00:12:04] Sure. Thank you. Uh, and thank you for doing this. I think these types of podcasts are really important right now, as we’re all sitting at home, trying to figure out how to move forward. So I appreciate that LiveVox is doing this so hello to all your listeners. Um, if you, if we have not had the pleasure of meeting, my name is Joann Youdelman and I am a partner at the law firm of park Hill.
Joann Needleman: [00:12:28] I also lead our consumer financial services, regulatory and compliance practice group. Which is all things, consumer finance, uh, from compliance, um, internal processes, procedures, uh, as well as external compliance, um, on behalf of federal and state regulations. I deal a lot with the CFPB. I’m a former member of the consumer consumer advisory board at the Bureau.
Joann Needleman: [00:12:53] Uh, I know a lot of people there and, um, not many have left there. The same core group is still there [00:13:00] other than the director. Joann Needleman: Uh, but it is a pleasure to, in the last couple of years to have been working with live box and really it’s been a fabulous partnership and really understanding and, uh, w what the regulations are meant to do and how to, um, adjust your products and services to ensure that they’re used in a compliant way.
Boris Grinshpun: [00:13:22] Yeah. I mean, I think you, you say, uh, an important piece in terms of a compliant way, and that’s been sort of, if you will, a rabbit that’s been constantly sort of shifting and changing directions as lots of organizations have been trying to change that. And more specifically, I guess, maybe a question, uh, Joann to, uh, to you to start things off.
Boris Grinshpun: [00:13:42] Uh, given the fact that things have changed or things that are changing recently, what should organizations look out for? Like, what’s next on the docket? Uh, what is everybody waiting for next to come out? I know there’s already been a lot of changes, but what are the things and, and maybe the [00:14:00] timelines for those, uh, events that we should be looking out for today?
Joann Needleman: [00:14:05] I think it’s a good question. And I think, uh, certainly your clients in the collections industry and the financial services industry have always been looking to see what the CFPB is doing. And I think that’s the, that’s the main regulator where all of us should be focused and they have been really active.
Joann Needleman: [00:14:21] Um, in terms of what’s relevant, uh, to the folks listening on this webinar, obviously it is putting out final rules around that collection. Uh, our industry, as you know, Boris has been subject really has been regulated for a long time, but we never have had any real codified rules. Um, rules of compliance have been formulated by guidance.
Joann Needleman: [00:14:46] Uh, by enforcement actions and by case law. And that’s really hard for businesses to wrap their hands around in trying to plan strategically for the future, because you can vest in a [00:15:00] path of what you think compliance is. And a new law comes out or the CFPB enforces a company and that kind of blows up your plans.
Joann Needleman: [00:15:08] And it’s been really difficult for this industry to set in motion, a consistent compliance plan. It’s always been like, kind of whack-a-mole I got, I have something and then I change it well for the last five, almost six years. The Bureau, let me backup a second. As we know, most of your clients are governed by federal law, and that is the fair debt collection practices act back in 1977 under the Carter administration, when the FTC PA was enacted, there was a rift between Congress and then the FTC who was the primary regulator.
Joann Needleman: [00:15:43] So there were no codified rules that govern the fair debt collection practices act, which brings us to why we’re in this mess today. But when Dodd Frank was enacted, and the CFPB was formed many of the authorities that the FTC had, who [00:16:00] transferred over to the CFPB. And one of them was the fair debt collection practices act, and the most important authority that the CFPB got was to write rules and, uh, under the act TCPA.
Joann Needleman: [00:16:11] So what the Bureau has been doing for five years has been in the rulemaking process that has involved lots of proceedings, lots of hearings, lots of engagements. That ultimately, um, which resulted, I should say back in may of 2019 of what is, I noticed the proposed rule, which was right. All of your clients saw it was a 500 page document, which really was about 44 pages of rules, but everything else was how they got to those conclusions.
Joann Needleman: [00:16:42] And so the industry has been looking at that and really for the past year, And figuring out, and it’s been somewhat of a guessing game, you know, what should my infrastructure of my company look like in anticipation of a final war? And I think that the art gives you an excellent [00:17:00] guide to what the final wolves are going to be.
Joann Needleman: [00:17:02] I don’t think you’re going to see real departures from what is being proposed in the end PR when the final rule comes out. And we suspect that the final rule based on what the CFPB has said is going to come out next month.
Boris Grinshpun: [00:17:22] Wow. Okay. Okay. So that that’s, that’s 30 days out, uh, give or take, we should absolutely be looking out for that.So do a question for you, Joanna, on this particular piece. Um, so first of all, for folks who are maybe not familiar with the proposed rules at a fairly high level, what are these rules? Either, both proposals contained, like what is the big, what is the big sort of, if you will, theme of these roles.
Joann Needleman: [00:17:43] Okay. So I think the big theme of these rules is to get some consistency in areas where the debt collection industry has struggled with. So let me highlight about three or four. The first has been the demand letter. The [00:18:00] validation notice we have had such heartburn about what the validation notice says, all we know is what’s in the statute.
Joann Needleman: [00:18:08] Well, we have no idea formatting. We have no idea. Uh, I really have no guidance. If you wanted to add more information, less information, you know, something as simple as what is the balance that is owed that has been an issue of litigation and, uh, an oversight for, as I said since 1977. So, for one of the first things that the rule dot did, excuse me.
Joann Needleman: [00:18:34] I put out a form. Um, they call it a model form of what a validation notice should look like that. In my opinion, you may not like it. You may not like everything. It says it may be difficult for some companies to develop that form, but if you can develop it in something substantially similar to what the CFPB has proposed.
Joann Needleman: [00:18:57] You get a safe harbor meeting. If you send [00:19:00] out the letter, you know, everything that the CFPB says should be in that letter, you will not be liable under the app. You should not be sued. Or if you are, you know, being enforced or investigated, you have complied in the CFPB with the fair debt collection practices act.
Joann Needleman: [00:19:16] So that’s extremely important. That’s been an issue for many of your clients. I think the other big issue for your clients is that the CFPB has proposed. A limitation on how many times a client, uh, a debt collector can contact a consumer as what we know is called caps. And what was interesting is the well made process, the Bureau proposed six contacts per account per week, once right.
Joann Needleman: [00:19:46] Contact has been established in the proposed rules. They up that up to seven. And so there’s been a lot of debate back and forth, whether that’s hurtful, helpful, clearly [00:20:00] consumer advocates. Don’t like the fact that you could call somebody one time per day, per account. Somebody who’s got three accounts.
Joann Needleman: [00:20:08] That means they’re getting called three times a day for a total of 21 calls in a week. Um, but as we know, I mean, we, there needs to be an element of contact in communication with consumers in order for, in order to communicate with them and hopefully help them to resolve their debts. You need that open line of communication.
Joann Needleman: [00:20:29] So call caps is a very, very big issue. Um, the, the one interesting aspect of the proposal, which I think is really helpful and. It’s interesting in comparison to the call caps is the idea that the Bureau now is, is a lab. I shouldn’t say allowing, but certainly, um, finding favor in alternative forms of communication, being email and text, and Boris [00:21:00] is, you know, I mean, you’re, you’re, you’re in the call center technology business for years.
Joann Needleman: [00:21:04] It’s been about the telephone. That’s right. We also know moving forward, it’s been less about the telephone and more about alternative forms of communicating with consumers. And more importantly, what we know and what LiveVox knows is that’s the way consumers want to be communicated. They want the text, they want the email.
Joann Needleman: [00:21:24] And I think the Bureau recognizes that. Now the interesting thing about the proposals for email and text are unlike telephone polls. There is no cap. On the amount of times that you can contact a consumer using an email and text, however, you must comply with consumers, the right to opt out, right? Every communication, excuse me, that you have.
Joann Needleman: [00:21:49] Um, there’s also, I don’t want to get too deep because it gets complicated. As far as email goes, there are some requirements at the Bureau. The fields are necessary with regard to [00:22:00] science, especially if you’re going to be sending documents. Um, so that will be involved with, uh, with email. There will be an issue of consent now.
Joann Needleman: [00:22:10] Today, right now, if you want to email or text a consumer, let’s put aside the ATDS that you’re using certain technology. Let’s just say, I want to email and text and consume, I don’t need consent to do that. If I’m collecting the debt. When the FTC, when the final rules come out, you will have to get some consent and the rules spell out how we would do that.
Joann Needleman: [00:22:35] Um, and there’s also some safe harbors that if you do get consent, And in fact, you have the wrong consumer. You will not be considered in violation of the rules because you relied on what you believed was the correct information for that consumer to contact them using email attacks. But I think it opens up if the final finals do come out and as proposed the idea of using alternative [00:23:00] communications.
Joann Needleman: [00:23:00] In my opinion. And as we’re seeing it now will be extraordinarily helpful for the debt collection industry. Not only to be able to use these technologies, but to have a framework of how to use them without having tremendous risk exposure.
Boris Grinshpun: [00:23:24] Yeah, no, I think that’s, that’s great commentary. And I guess maybe to dig in a little bit about who should be, or shouldn’t be concerned about the proposed rules. Uh, you know, w we talked a lot about the debt collection industry, uh, but certainly there’s folks on the enterprise or on the direct to consumer side, from the standpoint of, uh, FinTech companies or banks, credit unions predominantly themselves, how, how concerned should they, or should they not be around the proposal?
Boris Grinshpun: [00:23:43] The proposed rules here, as far as it relates to consent, or the process of collecting on a, on credit or delinquent accounts?
Joann Needleman: [00:24:05] I think they should be concerned. You know, it’s interesting. I talked with a lot of internet companies in the last several months, [00:24:00] you know, there’s a lot of entrepreneurship going on right now, uh, with every disaster comes great opportunity. So a lot of people are talking about so many things right now, and, you know, let me just highlight fintechs for a second. So fintechs have just been such great disruptors of the financial services industry and thinking about things differently. Um, but I find sometimes with fintechs and I don’t mean this in a disparaging way that they tend to silo their focus on one particular aspect.
Joann Needleman: [00:24:28] And when we talked about financial services or assists, you know, it’s a holistic system, you know, there’s, there’s, there’s the mid service. Then there could be recovery, then there could be bankruptcy. So it’s, they all interrelate and you can’t just focus on one aspect. And I know that’s the beauty of what something texts do is that they drill down to one issue in the process that needs to be fixed or has a better solution.
Joann Needleman: [00:24:56] And that’s great, but you have to look at the holistic process. So I find [00:25:00] sometimes fintechs, especially in the lending space. No focus on lending. How do we get consumers? How do we lend the right way? Do all of that? You forget about the back and the back end is there still needs to be recovery while the debt collection rules only apply to third party debt collectors.
Joann Needleman: [00:25:20] Remember that whether you’re a bank or a FinTech company, sometimes you outsource your information. You know, you outsource your accounts to third parties to do that collection work, and that’s fine. But you, by doing that, you still have to oversee them. You still have to make sure that they’re, they’re complying with the law laws and regulations, especially when it comes to what we’ll call it default servicing collection, whatever the case may be.
Joann Needleman: [00:25:46] So too, while the rules may not apply to them per se, they still have to be aware of them because they have to make sure there are menders or otherwise compliant. So they should pay attention. There is also a [00:26:00] small nuance in the rule, which we don’t know how it’s ultimately going to shake out until the final war comes out.
Joann Needleman: [00:26:06] But there was a lot of commentary in the proposed rules from the CFPB that indicated that
Joann Needleman: [00:26:17] The CFPB was going to look at these proposals. And if you did not otherwise comply with them. So it, for example, says to call a cat. Paul seven times a day. Now, if you’re a creditor and you call eight times, excuse me, in a week, the CFPB minted that could potentially be an unfair deceptive act because under the FTC PA it would be a violation of their rules.
Joann Needleman: [00:26:47] And so there’s a lot of discussion of whether the CFPB is going to look at creditors who while they may not otherwise be subject to the act of FDCPA, if they do. If their act or conduct would otherwise [00:27:00] violate the TCPA, they may view that as in depth. So that might be a backdoor way of pulling creditors, um, into the proposed rules or not even into the proposed rules, but setting a standard for which creditors and originators would have to comply with.
Joann Needleman: [00:27:18] Maybe they wouldn’t violate the rules, but they would violate UDAP. And as you know, bars, you’d have this, this big nebulous monster that can mean anything depending it’s open to a wide variety of interpretations, especially in examination. You know, what, what could be a, you would have today might not be a new doc tomorrow.
Joann Needleman: [00:27:36] So I think creditors really have to pay attention to what the fighter will say and how the CFPB is going to interpret those final rules for non deflectors.
Boris Grinshpun: [00:27:59] Got it. Got it. And is that on the horizon or is that still sort of TBD or is that, is that in other words, should we be holding out hope and waiting for this to be a prayer? And if [00:28:00] your opinion, when, when, if ever?
Joann Needleman: Well, I think it is on the horizon. So, um, about a year ago, the CFPB. Held a symposium, actually. Very good supposing how to better define your debt when, um, Mick Mulvaney and then ultimately Catherine Grant and GERD took over the Bureau. There was a lot of concern in industry about how to define U dot rank.
Joann Needleman: [00:28:28] Really doesn’t define it. It defines it in a very kind of amorphous way. And industry has asked the Bureau to. Put more definition around you that, and so they had a whole symposium and they ultimately came out with some guidance that said that, you know, look at you a little bit differently. And then the NPR came out and kind of touched on you that I do think.
Joann Needleman: [00:28:55] And we’ll get into this a little bit later. I do think that the Bureau is going to try to put some [00:29:00] framework around you dab and if they do, whether they do or they don’t you’d have as an issue, any originator, fintechs bank, whatever must pay attention to and see how the Bureau is focusing on it. And that’s ongoing.
Boris Grinshpun: [00:29:15] Got it. Got it. So that’s, that’s pretty, that’s pretty interesting. Uh, I, I think that there’s that linkage because, you know, we talked with a lot of clients and sometimes there isn’t necessarily that linkage between the CFPB on the creditors, originators themselves, uh, sort of, uh, directly. Um, but it seems like that’s a somewhat of a closing gap just based on what, what, you’re, what you’re indicating.
Boris Grinshpun: [00:29:39] So. Maybe it, maybe a question now more of a pragmatic or tactical question for some folks for our viewers today. Okay. We know these rules are coming. We know that’s on the horizon. It’s not too far of a horizon. Uh, out there and of course, uh, we’ll, we’ll have a post cath live recap once the rules actually [00:30:00] about, and we actually understand.
Boris Grinshpun: [00:30:02] Yeah. The, uh, but the question for you is what can people do today practically in their day to day business operation to prepare for this? Because, um, obviously I think in it, remind me if I’m incorrect on this. But once the rules are put forward, I think there is a, uh, a period of time when they are given a chance to be adopted.
Boris Grinshpun: [00:30:26] Is that a correct statement on my part? And how long has that period?
Joann Needleman: : [00:30:45] It’s a year, it’s a year implemented. You will be, the proposal is a year implementation period.
Boris Grinshpun: Got it. But what can folks do today or start to think about today in preparation for this, or what should they be doing?
Joann Needleman: Right. Practically. Yeah. Well, let me say this. If you haven’t thought about or read the NPR yet or done anything internally yet to prepare you’re a little late, we Boris [00:31:00] through your team. We have, we have. Uh, said to many of your clients, both in webinars and writings, that really the preparation for the final rules started the day after NPR was published.
Joann Needleman: [00:31:13] I mean, that was when you really needed it. To get with your team, read it, understand and get an idea of what the Bureau was thinking about. And really start to set a strategy. Assuming that everything in the NPR would be would, would come to fruition, how you were going to set up for that. So, um, that should have happened already.
Joann Needleman: [00:31:33] If you have not, is you need to pull out the NPR and let me also remind folks that a couple months ago, Um, to the extent that, um, you were collecting debt that might be out of state, there were proposals regarding disclosures for out a stat debt. So they’re all gonna, even though that was released after NPR, the conventional wisdom [00:32:00] PR and the time bar deck disclosures are all going to come at the same time.
Joann Needleman: [00:32:03] So you need to pull both of those out after you listened to this one and get your compliance teams together. And really you need to sit down and read it, determine what happens the NPR would, would, um, relevant to your company and the, and the activities that you do. And you really need to think about it from an infrastructure basis.
Joann Needleman: [00:32:27] What you would need to do to comply. So for example, you may be already in on texting and I hope that you are. And so can you compare with your policies and procedure today? What you would need to change? Should the wall come out? Uh, you know, once the wall does come out, so you can do somewhat of a comparison.
Joann Needleman: [00:32:45] Um, if you are sending, you know, you’re going to need to make determinations about what your forms are gonna look like. What is your, your validation notes? It was a big consideration for many folks about whether to send the validation notice, um, electronically. [00:33:00] And the wool does address that. I think it’s a little complicated.
Joann Needleman: [00:33:02] It’s not something that I’m recommending to clients right now. Um, but you, you really have to be a really dear colleague, friend of mine says you really have to kind of. Look at the rule and get people in a room and read it story time. You have to let her leave, get people in a room and read it out loud to everybody so that they clearly understand what it is that the rules say.
Joann Needleman: [00:33:29] So, um, That you should be doing that. And if you haven’t put a team together within your compliance group, I would do that. I would have a point person or two in that team, so that when issues do come up with implementation, it’s not this mass, you know, hail Mary email. Oh my God, what I do, what do I do?
Joann Needleman: [00:33:50] When eight people are giving their comments? There shouldn’t be, as I said, one or two point people who are in charge of making sure that the questions are going up. [00:34:00] And that the communication about how by is coming down in an organized fashion. Otherwise you’re all going to be running around crazy, trying to figure out what to do.
Joann Needleman: [00:34:09] I mean, I would also say I’m not shameful of this. You really need to hire counsel. Um, if you haven’t done so already again, to go through these rules and look at what those implications will be. Um, there’s going to be a lot of trial and error, but as I said, it’s, it’s not something that you want to start.Thinking about, um, you know, until it’s too late.
Boris Grinshpun: [00:34:29] Yeah, yeah. No, that’s, that’s, that’s great. Great advice. And I think to your point, if you haven’t done this already today, I think you need to go into a little bit of a speed mode. Let me ask you a little bit of a different question. Um, as we look forward to.
Boris Grinshpun: [00:34:48] You know, let’s say you’ve done all of the right things together, uh, today, meaning you’ve reviewed the proposal, uh, rules and you’re, you’ve sort of prepared yourself organizationally, um, across different [00:35:00] aspects, whether it’s operational, legal compliance and so on and so forth. And we’ve created an oversight committee.
Boris Grinshpun: [00:35:05] What should people look beyond the flex what’s after the 30 days beyond even the time months, uh, of, of where the rules are going to sort of take place. Well, what else is happening in between now and the next 12 months that people should have on their radar and they should be looking out for, in your opinion, you know?
Joann Needleman: [00:35:25] Um, I think that’s a really good question. Um, I think for our industry, look, it’s been a very challenging six months, not only, uh, internally and having to move massive amounts of people to, to home offices, setting up an infrastructure of technology that maybe you didn’t have. And then dealing with consumers.
Joann Needleman: [00:35:48] I mean, you’re dealing with consumers now at a completely different level, because remember as much as everybody kind of is in the same boat right now, we’re all sitting at home. [00:36:00] If you’ve got kids, your kids are home, you got to do homeschooling. Um, no one is in a better situation now during COVID it was, it was certainly a leveling off period of folks, but.
Joann Needleman: [00:36:11] I think some of the cues that I’m hearing from the Bureau and even from Prudential regulators, standard regulators that do banks, it’s all going to be about as we’re going to start to see how you dealt with consumers during these past six months or longer. I mean, I don’t know how long, you know, I don’t know when we come out of this, but there’s going to be a look back on that.
Joann Needleman: [00:36:32] I think for banks, it’s going to be, how did banks, um, Comply with the cares act. As you know, there were certain provisions. So if you had a mortgage, you were allowed to have a deferment or forbearance to offer that in the student loan servicing space, there was, Oh, and even student loan space. You did you offer again, the deferment forbearance, there was credit, big, big credit issues about how to [00:37:00] report debts during COVID and accommodations.
Joann Needleman: [00:37:03] Um, and then how did you communicate with consumers? There’s no playbook, you know, the exam manual doesn’t anticipate your worker is being at home. Uh, it doesn’t anticipate the kind of, um, situation that consumers are going to be in. So it is so important in these last six months to make sure that you’ve documented all these different circumstances and in dealing with consumers.
Joann Needleman: [00:37:31] Um, because I think there’s going to be a big look back. Well, you should have done it. This, you know, a consumer called you and said they were going to be out of work for two months. Yet you still demanded that they make their payments, or you didn’t have a hardship, or you did a garnishment, all these things that were just never anticipated come, you know, when you started the year in January, nobody anticipated this.
Joann Needleman: [00:37:55] So I think it’s really important that you document all these [00:38:00] exceptions that occurred. Um, These last six months, you have, you reviewed it with these exceptions. You have a good explanation for why they happened. Um, how were you there, how was their oversight? For your 300 call center, people who were all sitting at home, how did you make sure they were doing their work?
Joann Needleman: [00:38:19] All of that’s going to be looked at. And, and I know this not because, you know, I’m kind of looking into a crystal ball, but about two, three months ago, the Bureau sent out questionnaires to some of the larger market participants. And these are the exact questions that they asked. Um, so these are the areas that they’re going to be focusing on.
Joann Needleman: [00:38:40] They can’t supervise the none, no regulator right now goes through any kind of supervision examinations. They can’t go on site. So what the Bureau has said is we’re going to do priority assessments. So they’re going to take all those answers from, uh, the questionnaires and they’re going to look at them and then they’re [00:39:00] going to send out, you know, Kind of paper, remote type of supervisions, and you’re going to have to put your information together and that’s how they’re going to look at this.
Joann Needleman: [00:39:10] So it’s really important if you haven’t organized yourself by what has happened in the last six months, you really need to do it now, especially if you’re a larger organization. No, that’s great. That’s great. Great advice and great foresight into that. I think organizations should, should, should get behind that.
Joann Needleman: [00:39:29] I think it’s good for them. It’s good for the consumer. So, uh, from, from, from that same, what does, let me ask you maybe a broader topic. Uh, with the impending election sort of coming, you know, by the time this gets released for potentially, you know, the next 30 days, what is the, what is the, your, in your opinion, the future for the CFPB, just in general as well.
Joann Needleman: [00:39:51] Cause that’s been a little bit of an influx from my understanding. I don’t know what your take on that is. Well, I think it’s going to be interesting. So, [00:40:00] um, as we, as you know, back at the beginning of the summer, uh, end of June, The Supreme court found that the structure of the CFPB having a, uh, a one director that can only be removed for cause wasn’t constitutional structure.
Joann Needleman: [00:40:19] And that was a position that CFPB initially opposed, but then they supported it. They believe that they were unfair. So as of this moment, um, the current director, Catherine crown and girl can be fired. At will by the president. He doesn’t need a reason. Um, if president Trump is reelected, all indications are that she will continue to serve her term.
Joann Needleman: [00:40:42] He has no reason to fire her. Uh, if a Biden is elected, then he now has that. Right. Um, there’s been some debate of whether he’ll do that. I have to believe that he will, based on the alliances that he has developed with the more progressive wing of the party. [00:41:00] And so I think it’s likely that if there is a Biden administration, um, Kathleen crown and her will, will, will lose her position at the CFPB.
Joann Needleman: [00:41:08] So the question is who’s going to replace her. It’s not going to be someone like having chronic her. And, and I will say this about her. I have found her to be, um, I think she’s trying to be very middle of the road. I think that she takes a lot of industry concerns to heart, which I think are good, but I also think she understands the mission of the CFPB and that is to protect consumers.
Joann Needleman: [00:41:30] And you’ll see in the last couple months, enforcement has been through the roof, so she supports our enforcement team, but in a political position of what she is sometimes being middle of the road, doesn’t serve you very well. It’s I, I think, uh, I agree with it, but it doesn’t serve you well, Washington, that is for sure.
Joann Needleman: [00:41:48] So I think it’s going to depend, you’re gonna, you’re going to get a much more aggressive regulator. Um, I have some ideas, but I won’t throw out names. And I think you’re to have somebody who’s going [00:42:00] to look to the prior, um, to, to, to, you know, during the Cordray administration, some of the things that the Bureau did.
Joann Needleman: [00:42:08] So I think you’re going to see heavy enforcement. Um, I do believe as much as the debt collection rule is going to come out. I think that rule could be in jeopardy with a change of administration. I think it would, it would potentially survive. I think the reason they want to, they want to publish it in October is to hopefully survive what is called the congressional review act challenge.
Joann Needleman: [00:42:33] Congress does have the ability to repeal any rule, uh, from an agency by joint resolution of both members of the house. I don’t think that, uh, given the makeup of Congress today and through the end of the year, they would be able to do that. So I think the wall survived. Congressional review. Um, challenges.
Joann Needleman: [00:42:55] I think you need to look at what, what happened to the payday rule? [00:43:00] The payday rule came out in 2017, there were legal challenges. And then in late 2018, 2019, Kathleen chronic, or made the decision as she is. Permitted to do under her authority. As director of the CFPB, she called the payday rule to do more review.
Joann Needleman: [00:43:21] She didn’t feel that the ability to repay provisions had enough scientific support and she pulled it for about a year. Now about a month ago, they reissued the payday rule and it did not have an ability to repay provision. It still had the payment provisions, but the ability to repay was. Was taken out.
Joann Needleman: [00:43:41] It was admitted. And now it’s, it’s a final rule which will be challenged the same. Thing’s going to happen, I think it’s going to happen with the debt collection. We know that consumer advocates do not like the call cap provision. They do not like the statute of limitations disclosures. They do not like the fact that email and text [00:44:00] can be unlimited, um, and not subject to a cap.
Joann Needleman: [00:44:03] So I really would not be surprised that if there is a new director, at some point, that director before the implementation period, we’ll pull that rule to say, we need to look at it again. So I know we’ve talked about companies, um, calm, you know, we’re doing an assessment, making sure they’re prepared for the role.
Joann Needleman: [00:44:24] Even if this happened, my advice to you is to still get prepared for the bull, because if anything, the proposed rule, as I call it is a policy document and it’s standard for best practices. So you were not going to be harmed if you follow what the CFPB already proposes, it cannot be that you were doing unfair practices.
Joann Needleman: [00:44:47] If the CFPB has already said it was a whole rulemaking process. That this is the kind of standards that we want. So you would be best served to continue to follow the MPR, regardless of what [00:45:00] a future director would do. Now, if the rule has changed, you can make slight adjustments, you know, okay, you can’t do seven, but you can do six calls per week.
Joann Needleman: [00:45:09] Right? That’s an easy thing, you know, they’re there, right? You’re not going to just blow up and say, there are no more rules that would really, I think politically that would be a bad thing. We might. Everybody agrees. There needs to be rules around debt collection, what the, what they are and how we nuance them.
Joann Needleman: [00:45:25] We can have that debate. So, but I do think that that the rule runs a risk of that in and changing.
Boris Grinshpun: No, that’s, that’s, that’s, that’s really great insight. And thank you for that. I think that that was going to be my question in terms of, uh, of the rules and how they may change with the change in administration.
Boris Grinshpun [00:45:43] Well, Joann, this has been educational and insightful. Uh, for me, uh, I hope it was for our viewers today because, uh, this is really, really important. It’s important that they stay on top of it. So, um, on behalf of live and the team here, I wanted to thank you for coming on our [00:46:00] podcast and sharing your knowledge with it, listeners and viewers.
Boris Grinshpun: [00:46:03] Thank you again, Joann. And I hope to be speaking with you in the near future and hopefully in person. Absolutely. Thank you so much. This was wonderful. And I wish you a happy new year. Thank you very much. I appreciate it. Thank you. Take care.
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