November 20, 2020

[Webinar] CFPB Final Debt Collection Rule & What it Means for Financial Services

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Watch the on-demand webinar about the latest CFPB ruling. Learn how the new mandates impact debt collection and download the presentation deck here.

See the full transcript below. 

Full Transcript

 Lindsay Shelby: [00:00:00] Alright it is 11 o’clock mountain time. So I think we will go ahead and begin. To everyone for those of you that don’t know me, I am Lindsay with LiveVox. Thank you all for joining today’s webinar, CFPB Debt Collection Rule Announcement Insight from Legal Counsel and Operational Tips. Um, we’re excited to have an awesome line of panelists today, but before we begin, I want to just go over a few quick housekeeping items. 

[00:00:23] To the right of your screen, you should see a panel for questions, feel free 

to enter any questions you have throughout the webinar. 

Lindsay Shelby: [00:00:30] And we’ll try to address them either within our presentation or at the end if we have time, otherwise we will follow up with you after the event. Also, this webinar is being recorded and will be distributed, uh, after the web, uh, after the event, in the case that you have colleagues that you would like to share the content with.

[00:00:50] Um, so with that, I’m going to go ahead and read our legal disclaimer, and then, um, Mark, I’ll kick it over to you to [00:01:00] begin. All right. So. This presentation and the statements of the panelists do not constitute legal advice. 

[00:01:09] We urge businesses to consult with their own experienced legal counsel to independently review the topics covered on today’s webinar and independently evaluate any compliance measures you may choose to undertake.

[00:01:20] So with that, Mark, I’m going to hand it over to you to begin and take us away. 

Mark Mallah: [00:01:27] Great. Thank you, Lindsay. So first I want to thank everybody for joining. We really appreciate your presence here. And, uh, just to give you a broad overview of the purpose, obviously we’re going to talk about the new CFPB rules and we’re going to discuss it from two angles.

[00:01:41] So one angle is going to be the actual rules themselves. We have Joann Needleman and she’s going to go, uh, go over the actual rules from a legal perspective. We have Jason Queener with us as well from LiveVox. He will review the rules from an operational perspective. So my name’s Mark. I’m General Counsel for LiveVox.

[00:02:01] And, uh, let me turn it over to Joann. Joann, can you introduce yourself? Say a little bit about yourself.

Joann Needleman: [00:02:07] Sure. Thank you, Mark. And thank you, LiveVox for allowing me, uh, to join this webinar, and good afternoon, everyone. My name is Joann Needleman. I’m with the law firm of Clark Hill and based out of Philadelphia.

[00:02:20] And I lead the firm’s, uh, consumer financial services, regulatory and compliance practice group. It’s a mouthful, but we’ll get there.

Mark Mallah: [00:02:29] Thanks, Joann. [00:02:36] Jason, can you introduce yourself? 

Jason Queener: [00:02:39] Yeah, good afternoon, everybody. My name is Jason Queener. I lead our business consulting team here at LiveVox. We advise our customers and prospects on, uh, best practices, uh, KPIs, and a perfect example is the CFPB ruling. So happy to share some insight from our customers and our, and our discussions today.

Mark Mallah: [00:02:59] Thanks, Jason. So Lindsay, if we can go to the next slide. And just a little bit about a little bit of background about LiveVox. Um, you know, as a company, compliance is very important to us. Uh, we pride ourselves on compliance. We regularly monitor developments such as these new rules. And of course, as you can imagine, we designed products that help our customers address their compliance needs with respect to, uh, rules such as the CFPB regulations.

[00:03:32] And, um, we also, you know, the CFPB regulations as we’ll discuss, talk about multi-channel outreach, voice, SMS, and email, and we have tools in place to help our customers uh, address each of those, uh, communication channels as well as compliance considerations. So just a little bit about, uh, background about LiveVox from that perspective.

[00:03:56] So let’s get a little background on the rules. So the rules [00:04:00] were released as we know at the end of October. 638 pages, if I’m not mistaken. And, uh, somewhere in the 638 pages, it said somewhere in there that the rules apply exclusively to debt collectors and not to first-party effective database.

[00:04:18] And we’ll get more into that conversation shortly. The effective date of these regulations is one year after they’re published in the federal register. Joann, have they been published yet?

Joann Needleman: [00:04:28] No. 

Mark Mallah: [00:04:30] Okay. Alright. So we get basically one year plus a little bit of cushion before they actually go into effect.

[00:04:37] We’ve identified a few key elements of the, of the rules. So really we’re not looking to convey the hundreds, all 638 pages. That would be too ambitious. We’re focused on what we consider to be key elements. We’ve got some additional rules forthcoming in December. Joann can give us a sneak preview on that.

Joann Needleman: [00:04:57] Sure. Um, the, what will be issued in December will be the model validation, notice disclosures, on, um, time-barred debt. Um, those are the two main focuses. The CFPB is calling it a disclosure focused rule. Um, they will be critically important to the discussion we’re having today. Unfortunately, the way that the rules were kind of, um, laid out, we’re kind of starting in the middle of the process.

I think it’ll be important to look at those rules, Mark, that come out in December, because that is how the debt collection process commences by sending an initial validation notice and everything flows from there, so stay tuned. 

Mark Mallah: [00:05:40] Okay. So yeah. So we’ll have to piece, uh, this part of the rules together with the rules that are coming in December, if you get the full picture.

[00:05:49] Okay. Sounds good. And, um, you know, our philosophy here is. Uh, even though we’ve got a runway before the rules go into effect, it’s always a good idea to start preparing your operations now because there’s a lot of considerations and a lot of nuances that go into this. So let’s go to the next slide.

[00:06:13] And, you know, we talked before about the fact that the rules apply to first parties. Excuse me. The rules apply to third party debt collectors. So Joann, why should, uh, first parties care about these rules? Why should, if you’re a creditor and you’re not doing third-party collections, why should you care?

Joann Needleman: [00:06:31] Well, it’s a really good question. Uh, Mark you, and I have talked about that a lot. I think. You know, as, as Mark said, uh, and I, and I will specifically tell you on page 32, the CFPB says specifically that these rules do not apply to first parties, but keep reading down that page, because they also go on to say that the rule is not intended to address whether activities performed by entities that are 

not subject to the FTCPA. May violate other laws, including the prohibitions against unfair, deceptive, and abusive use of acts and practices that you find in Dodd-Frank under section 1031. So first parties do engage in debt collection. And to the extent 

that that those activities could otherwise be deemed unfair, deceptive, or abusive, maybe not under the FTC PA, but the Bureau is basically saying if, if we think that those acts, uh, pose risks against consumers, we will look to you, um, you know, and, and, and, and look at you UDAAP as a way to make you comply and not engage in that activity.

[00:07:35] So I think that first parties need to be very, very careful. UDAAP has not gone away. And in fact, I think if you read this rule,  UDAAP is very much alive and well. Um, the CFPB is also going to continue to enforce and supervise. And for those of you that follow the Bureau, they have been very active this year, especially to ensure compliance with the cares act.

[00:07:57] There was a letter just issued by, uh, Director Kraninger, uh, to various consumer groups who were asking her to pull back some of her guidance on some of the Cares Act provisions that the CFPB had provided. Well, she was not inclined to do that right now, but she did stress that the CFPB is doing what is called prioritized assessments.And it’s a way to kind of do supervision without having to be on site. So there’s lots of questions and requests going out to all entities about how they are compliant, not only with the Cares Act, but I guarantee you about debt collection, which has been a big issue during COVID and credit reporting.Um, you know, as first parties, you hire vendors, right? To do some of your work. And Dodd-Frank is very specific about saying that service providers, um, that covered entities must supervise their service providers to make sure that they’re complying with federal consumer financial law. And so that, that duty has not gone away by these rules.You still are going to have to, you know, look at your service providers and make sure they’re in compliance. And in fact, your examination manuals and modules specifically address your service provider oversight. So that is also alive and well. Um, there is, we’ll start to 

explain, as we go through these rules, you really need to think about if you’re a first party, the new due diligence that you’re going to have to have when you talk with your vendors, there’s a whole new set of questions that you’re going to need to ask to make sure that your vendors are ready, uh, when the implementation period, uh, begins that they are ready, uh, to, to implement these rules and do them in the right way. And we will talk about that. And of course we can have a whole other webinar about the election aftermath and changes to the CFPB that we do expect. 

Joann Needleman: [00:09:40] And I think if you saw Biden’s transition team as to, 

uh, who he’s put together to select a new director, I think that gives you some idea of who, the type of regulator that they are looking for. And I, I guarantee you there’ll be somewhere along the lines of a Cordray type, uh, director that we saw when the 

CFPB first opened its doors.

Mark Mallah: [00:10:02] Great. That’s really good information, Joann. So basically, uh, potentially direct exposure through  or some other entrees, uh, the other rules as well as, you know, important vendor management, vendor oversight considerations. So, um, yeah. Good, good information. So, uh, Lindsay, let’s go to the next slide if you will, if you would.

[00:10:24] Um, so let’s look at some of the key elements of the rules, to bear in mind. So probably, you know, at least from our perspective, uh, one of the most important, uh, headline, uh, elements of the rules are the telephone contact amendments. Joann, can you take us through that? 

Joann Needleman: [00:10:41] Or, um, this did not, there was not a significant departure from the NPR to the final rule of the CFPB wants to put in, uh, limits of how many times you can contact a consumer by telephone. And what the final rule says is that you can contact a consumer per account seven times within a seven day period. You can make seven attempts to contact that consumer. Once you have made contact with that consumer, you then can only have a telephone conversation with them, once within a seven day period. And again, that is pretty identical to what was proposed in the NPR. It only applies to telephone. It doesn’t apply to digital channels, which we will talk about, uh, but there is going to be a specific contact limit and it will be incumbent upon third party debt collectors to monitor that.

Mark Mallah: [00:11:35] Right. And, and just to emphasize, you said per account, excuse me, the rules. Right? Which, and I think that’s really the same thing the rules say about the particular debts. So the contact limits pertain to the particular debt. If you have multi, multiple debts, With the same consumer, then you multiply the contact limits times the number of particular deaths or accounts, correct?

Joann Needleman: [00:12:02] Correct? That is correct. So if you have three accounts, you can make 21 attempts, uh, within a seven day period to attempt to contact the consumer seven times for each account. Um, you’ll people pull account, you know, I think there was a concern that that’s really, you know, you’ve got multiple deaths, that’s an awful lot of attempts, but I think as people know on this call, Mark, and your experience and talking with your clients accounts are pooled.

[00:12:29] And so if you speak to a consumer about an account more than likely, you’re going to ask them in that conversation. Can I talk to you about account B rather than hang up and then try to call them again? So opportunity for a lot of phone calls, is there, I think industry wide, Industry-wide that is not how it’s ultimately done.

Mark Mallah: [00:12:51] Makes  sense. Let’s go to the next slide. So when we talk about, you had said seven and within a seven day consecutive period, what are some of the exclusions from that?

Joann Needleman: [00:13:03] Yeah. So first of all, if the consumer contacts you directly, that does not count towards obviously the call cap. Um, if a consume consents, 

you know, you’re on the phone with a consumer. Can I call you back? Uh, you’ve made contact under the rules. Technically you’re not allowed to talk to them again for another 

seven days, but if the consumer says, can you call me back tomorrow? Or can you call me back in an hour? That would be outside of the limitation period.Um, what also does not count is if you get a busy signal, Or there is some reason why the call does not go through, maybe it’s disconnected that does not count to your seven attempts. 

Mark Mallah: [00:13:47] Okay, good to know. So Lindsay, if we can go to the next slide and I’m going to turn it over to Jason, Jason, we just heard about the rules.

[00:13:57] What sort of operational considerations should we keep in mind? 

Jason Queener: [00:14:03] The challenge for anyone in operations is going to be that, rolling seven days, seven attempts in seven days. It’s not seven attempts on Sunday to Friday, it’s seven attempts over a rolling seven days. So you really have to have a mechanism in place that keeps track of that.

[00:14:20] That knows in the past seven calendar days, I’ve made X number of attempts. Um, and you’re going to have to really be careful about bringing multiple channels worth of data into that too, because to Joann’s point, they reach out by SMS. That’s not an attempt, but it certainly does count as a communication potentially, and a contact.

[00:14:39] So that sort of thing has to be considered. And the other thing that you have to account for in your strategy and your tracking is those exclusionary efforts. Right? So if a customer says, sure, you can call me back Tuesday, I have to have a tool that can say, all right, I can make attempt number eight or nine potentially because the customer said it was okay, so that’s a new challenge. I think we’ve all managed with the kind of cooling off period. I can talk into a customer. I think everybody on this call has done that to some extent. Um, the new one really is the new challenge that is rolling seven days and seven attempts. And you’ve got to have a tool in place that can allow you to do that without sacrificing your strategies or short-changing your strategies by making a blanket, um, policy that may not, uh, sorry, may not apply to every customer.

[00:15:26] So the nice thing about. The multi-channel contact attempts at an account level or a phone number level is not sacrificing your strategy because potentially I call Joann seven times, but not Mark. So I think that’s the big one. And that’s one that really should be from a technology perspective.

[00:15:42] Something that everyone’s tackling right now, because that’s going to take a little time to deploy. 

Mark Mallah: [00:15:47] Yeah. Sounds good. That’s good information there. Lindsay, can we go to the next slide? Yeah. So let’s go to another element of the rules, which are the preferred channels. The rules speak explicitly about this. And Joann, I’m going to turn it over to you to explain that. 

[00:16:03] Joann Needleman: [00:16:03] Sure. And I think what’s important as we start to go through these rules. So first we’ve talked about contact limits and that’s important that we have to keep track of that. We’re going to also talk about additional, um, some people call them, uh, restrictions. I call them preferences. So we have to pile all of those, both accounting for limits of communication and preferences of communication, both in time, manner, and place. So one of the first, um, opportunities that consumers have to  control the rhythm of flow of how they want to communicate with you is to, is to say ] that they have a preferred channel.I mean, you can be talking to a consumer and then they’re going to say, you know what? I want you to call me anymore. Just email or 

text me, or I don’t want you to email me at this address. You have to abide by that request of the consumer. I think that’s a, if there’s an underlying theme to these rules, it’s about really preference management. It’s about giving the consumer what they want, how they want it when they want it, when you were communicating with them about their debts and preferred method is, uh, is, is a very important, uh, opportunity to do that. And let me also say, as we will explain further, those preferences can change. 

Joann Needleman: [00:17:20] Frequently, and you’re going to have to manage when they change, how they change and you’re going to have to abide by.

Mark Mallah: [00:17:28] Sure. And, and, you know, combined with the. Telephone limits when you have these preferred channels and we’ll see with texts and, um, an email, it seems like the demand here has to have a lot of good processes and a lot of good automated mechanisms in place. To manage all this. Would you guys agree with that?

Joann Needleman: [00:17:50] Yeah. And it has to be instantaneous. I mean, it can’t, you, you don’t have time to have your staff going through accounts to see what’s the what’s the preference. Does your, I mean, you have to be able to pull it up if you have to capture it instantaneously and you have to be able to access it instantaneously.

Mark Mallah: [00:18:09] Great. Okay, let’s go to the next slide. So, uh, Joann, you had mentioned preferred channels. What are the exceptions to that? 

Joann Needleman: [00:18:18] Well, this is where it starts to get complicated and I don’t want to go off the rails here. Um, these are when all the questions started to come in. So the concern is that consumers are going to tell you that they want to prefer channels.

[00:18:32] The question is, um, what happens if they opt out of the channel or they tell you they don’t want the channel and then they use it again. And that again is just another layer of having to manage all these preferences. So a consumer can say, I want you to email me, but then the next day, the consumer sends you an email.

Joann Needleman: [00:18:53] You’re allowed to respond back to that consumer saying. Thanks for your email. You know, yesterday you [ told me that one email, I need to confirm again, uh, whether you want email and you’re going to have to go through that kind of dialogue with the consumers to find out at any given moment what’s their preference.

[00:19:13] Let, let, let me put a small caveat there. The fact that somebody emails you, um, unless you get that renewed consent does not give you the opportunity to start emailing again. You’re going to have to. Uh, really drill down and get confirmation that although I told you a preference of, uh, of, of excluding a channel, I’m now changing my mind and you’re going to have to, to capture that, um, there are exceptions. I don’t know if there’s instances where the law requires you to use a certain channel. There could be. I see that a lot in the mortgage space where you want to, uh, you’ve signed up for digital statements and the consumer says. I don’t want you to email me. I think you can still send the statements.There’s a couple of few exceptions, but th the, the question of maintaining and managing consumer preferences, especially when they change their mind is going to be really, really difficult.

Mark Mallah: [00:20:09] Yeah, this will have to be met very closely or clearly, but let’s go to the next slide. So, Jason, uh, we’ve talked about contact limits.

[00:20:20] We’ve talked about the current channels, exception, the preferred channels. Uh, talk to us about what speech analytics can do to assist with this. 

Jason Queener: [00:20:28] So, and I want to point out versus there’s a, there’s a lot of questions coming in and, um, we’re going to get to them kind of, as we go through the conversation, if we don’t, we’ll get to them at the end as best we can as well.

But Joann’s talked a lot about consent and capturing preference. And, um, I think everybody on this phone call can start to appreciate how important an agent is going to become in this process and the trust of that agent. Um, But I like to talk about speech analytics, almost like the way I would talk about taking a kid bowling.

[00:21:01] Right. Um, you want to let them bowl, but you want to put some guardrails up so that the ball is not in the gutter every time they throw it. So speech analytics is really kind of part of that guard rail situation. And we’ll talk a little bit more about empowering the agents here in a little bit, but this is where you really start to be able to verify and validate every communication you’re having with every customer.

[00:21:21] So. You can use speech analytics to hear those, those exclusions where the customer does say yes, you can call me back on Tuesday or they say, yes, you may text message me, or yes, I would prefer you email me. All of those things are easy to automate for every single phone call and speech analytics. And that’s really the only way that you can tackle this.

[00:21:43] Right? Again, we’ve all been in contact centers for a lot of time and I love agents, but. Putting the sort of power in their hands without oversight is dangerous. So being able to monitor your agents, every single phone call, and for those of you that are placed with agencies, doing the same with your agencies is very, very powerful because it lets you reconcile every consent, every revocation, every channel of choice.

[00:22:03] So I think that speech analytics is going to be very, very powerful tool over the next few years for customers, as they try to manage this Mark. 

Mark Mallah: [00:22:12] Yeah, that makes total sense. Total sense. So let’s, let’s turn to email. So the rules talk about obtaining valid email addresses and there’s three it’s divided into three separate categories of how you obtain a valid email address.

Joann, can you walk us through that? 

Joann Needleman: [00:22:32] Yeah. Look, the first preference that, um, you got to read the rule very carefully. Um, it allows you to email and texts. The procedures that the CFPB has outlined are real and are solely for the benefit of the debt collector. In case there is a third party disclosure. What’s interesting about these rules doesn’t really set forth a procedure to get consent to a degree. Um, it, these procedures, again, are there to prevent. Third-party disclosure, if you do these procedures and for some reason, you know, your email gets in the hands of the person that’s not intended. Um, you can say, well, I have these procedures in place. I verified it this way. Therefore, you know, I’m not disclosing third-party information under the FTC PA, which is a very, very big concern and really one of the major. Purposes of the FTCPA is privacy is to make sure that your debts are not disclosed to a third party. So it’s really important to understand that this is not necessarily about consent, which raises the issue again, why should creditors care?

Because the  CFPB maybe purposely or not has not addressed the issue of consent. And I would say to you, people say, Oh, can I start emailing people? Well, do you know, you know that you have consent to do it? No, I don’t. But the rule doesn’t say it. Yeah, but there’s something called UDAAP. And if you’re going to start emailing people who didn’t want your email in the first place, I will tell you that’s an unfair or abusive practice.

So, you know, you’ve got to keep all these kinds of terms in mind. So getting back to this. The CFPB is allowing email, um, and, and is protecting debt collectors from third party disclosure, if you follow certain procedures. So one procedure is that if the consumer emailed a debt collector, uh, use an email address and contact the debt collector about that particular debt.

[00:24:34] You can say that that is a correct email address to contact the consumer. 

Or if you’re speaking with the consumer and they say, yes, you can email me at this address. That is a proper procedure to say that is the correct email address for that consumer that works. And that’s a process that you need to have in place.And that will in the, in the CFPB is mine mean that you haven’t, uh, made a third-party [00:25:00] disclosure. You haven’t contacted the wrong person. 

Mark Mallah: [00:25:02] Right. And that’s based on communications between the debtor and the debt collector. Let’s go to the next category is Lindsay. If we can advance. 

[00:25:16] Lindsay Shelby: [00:25:16] Yep.

Mark Mallah: [00:25:16] That’s the next one. So this is really interesting. And this is 

where we’ve had a lot of discussion about this. Um, And Joann, just to set this up. So the first one is communications. We talked, we just talked about between the debtor and the debt collector. This is, uh, getting its valid email address based on communications by the creditor.

Joann Needleman: [00:25:35] Okay. Right. So this has always had this idea that debt collectors and creditors have this very tight relationship and, and some of them do, and some of them don’t. But certainly creditors, especially lenders who’ve started a relationship with a consumer from the beginning, from the time of the purchase because of the car or, or, or whatever.

[00:25:56] Um, you know, they have a lot of really good information about consumers. So in this process, the creditor could pass along an email address. Um, that it obtained from the consumer to the debt collector, and that would be sufficient for the debt collector to use. However, I won’t go too much into the nitty gritty here.There is, it’s a process and basically what we’re calling it is somewhat of a handoff letter. Now we see this a lot in the mortgage space. We also see it a little bit in the medical space where the creditor will send a letter to the consumer saying, okay, we’ve reached this threshold. We are now sending it to ABC collection. And we are going to use the, we are going to provide them with this email address, which is the email address that they use to communicate with the consumer, but it also gives the consumer an opportunity to opt out. And after a certain amount of time, if the consumer has not opted out, I believe it’s 35 days.

[00:26:54] Then the creditor can, you know, then the debt collector can then start communicating with the consumer using the information that it got with the creditor. We believe this is a great opportunity for creditors. Uh, it really sets in some ways up your, your vendors for success, because you’re providing them with a lot of really good verified information.

[00:27:14] And I, you know, I think at first blush it’s like, creditors are going to be like, why would I want to do that? I would really consider this option with your vendors. Um, because I do think it’s a good one. 

Mark Mallah: [00:27:25] Okay. And then the last category is communications between the consumer and the prior debt collector.

Joann Needleman: [00:27:32] Yeah, this one I don’t love, but you know, it could be an opportunity if the prior debt collector did communicate with the consumer using an email address about a debt. Um, you could potentially use that in you as the subsequent, the next subsequent debt collector could use that email address. And again, if the consumer has not otherwise opted out.

[00:27:54] But I, you know, I’m hearing a lot, I don’t know how much I, you know, how much do I know about the prior debt collector? How much do I know [00:28:00] about their prior operations? I think this is a, this is a difficult, um, transfer, and I think that that needs to be clearly vetted. Before you, you rely on information from another company of which you had no oversight, you don’t know how they operate and use their information.

Mark Mallah: [00:28:18] Yeah. So, you know, we talk about the rules, uh, from this standpoint, with obtaining a valid email address, combined with the channel preferences combined with the contact limits. Again, the theme I’m seeing here is really the need for really good processes. Really good accountability. I think you gotta be audit ready for these types of things.

[00:28:39] Probably you could be in a position of proving up. That you have a valid email address. You probably want to have a good paper trail, so to speak, you know, for that, um, all true burden of proof could be on, on, the, uh, the creditor or the third party that proves these things up. I would imagine. 

Joann Needleman: [00:28:58] I I, yeah, I mean, there is, there’s a lot to your point Mark processes that are going to have to go in place again.You may have gotten the valid email address. You go through that process. And once you start emailing again, going back to what Jason was talking about, they could change their mind and you’re going to have to, you know, so you went through all of that to get the email address. You start using it and then either they want you to use a different one or they want you to email you at a different time or different place, or, you know, so there’s, there’s a lot of technology.Uh, that’s going to have to be in place. And again, it goes back to what we 

talked about at the beginning of the webinar. These are questions, regardless of whatever procedure you use for email, whether the creditor wants to send it to the debt collector or, or however you’re going to send your accounts to your third parties.

[00:29:49] These are questions that you’re going to have to ask. Having this kind of technology is going to be critical because otherwise it’s going to be unmanageable. 

Mark Mallah: [00:29:57] Yeah. So it’s a quick time check. We’re [00:30:00] halfway in. We got 30 minutes left. Jason, you said you’ve seen a lot of questions come 

in here. 

Jason Queener: [00:30:05] Yeah. So let’s, let’s knock out a couple of them now because I want to join.You mentioned earlier, but I want you to clarify. These rulings for the seven attempts. The question was, are those voices only, or did those include digital channels as well? 

Joann Needleman: [00:30:18] No, they are voice only. And let me also mention too, which we, we, we didn’t, I don’t want to get too much in the weeds. Um, what this rule did with the NPR did not was say that even if you reach this limit, you have a rebuttable presumption that you did not otherwise violate the rule. So I think he needs to be very clear. And when you’re monitoring your agencies, you need to be very clear. They start going over. Not that they will necessarily violate, but they’re going to have to defend themselves to say that their conduct was not otherwise harassing or abusive. Um, and so that’s a particular, um, nuance that was changed in the final role.

[00:31:00] And I think it’s really, really important. Again, I think it’s, there’s no bright line and I think you have to be, and there’s a lot of talk in the rule that even if you do six, that still could be harassing depending on the content of the attempts and how often you’re doing them. So there’s going to be this. There’s always going to be a look back. So the Bureau did not give us a bright line. So you’re still responsible for your conduct, even though you may be coming. 

Jason Queener: [00:31:26] Makes sense. Let’s do one more. Uh, I think, I think we touched on this big list. Make sure. So the question is what if there’s a borrower and co-borrower so, uh, Mark and I go in on a, on a condo together.

[00:31:38] Can they call me seven times and Mark seven times? Or is it seven times for the account,for the particular debt? 

Joann Needleman: [00:31:44] So, and that’s another thing you have to match. You know, you could have one accountant, three borrowers could be student loans and it’s, uh, uh, parents. And so you have to be really careful that it’s only, you know, I can’t talk to [00:32:00] dad, you know, six times and mommy, eight times, you know, you, you gotta be careful.You gotta be really, really careful. 

Jason Queener: [00:32:08] Okay. And I think that’s, I think Mark, I can answer this one, but keep me honest here voicemails, whether you leave a message or not are an attempt 

Mark Mallah: [00:32:16] that’s correct. Oh, definitely. Yeah. Yeah. Yeah. I think we talked about before. If not, uh, the exception from the count is if there’s not a connection, a voicemail would be a connection.

Lindsay Shelby: [00:32:29] Yep. Yep, absolutely. Absolutely. 

Mark Mallah: [00:32:32] Yeah. Okay. Jason, any more you want to take now? Or should we keep going? 

Jason Queener: [00:32:36] Let’s keep going and we’ll grab a couple of these towards the end. 

Mark Mallah: [00:32:40] Okay. And feel free to jump in if you see anything inappropriate question at the right time. Okay. Let’s turn the text messaging. So there’s a lot, a lot of content here.

[00:32:50] Joann, can you walk us through it? 

[00:32:53] Joann Needleman: [00:32:53] Let me try to drill it down. So I think that the 

a key overview about text, unlike the email procedures is, [00:33:00] um, texts. Information about telephone numbers that you want to use for texts, can’t be passed down unlike email, where it could go from the creditor to the debt collector, or can come from a prior debt collector, um, with texts, it has to come from the consumer and the consumer had to have either used that number to contact you about the debt.

[00:33:24] Um, and has it opted out within 60 days? I’ll get to that point in a minute. Or the consumer has otherwise consent. Maybe you’re on the telephone and you’re, you’re talking to them and yeah, you can text me at this number and they consent again and they haven’t opted out or withdrawn that consent. In the past 60 days, there is another way to kind of verify telephone numbers for texts in the, in the Bureau has put it in this rule 

Joann Needleman: [00:33:49] that the debt collector can confirm through a complete and accurate database that the number has not otherwise been reassigned.

The problem with that proposal. Isn’t I don’t know of a complete and [00:34:00] accurate database. The FCC has not put together the reassigned number database. There may be companies out there that say, Oh, I can get you the correct number. I’d be very wary of them. So it’s an interesting part of the rule that I don’t know how applicable it’s going to be.We’re going to have to, maybe by the, they thought maybe by the implementation 

period, the FCC would habits, reassigned database. So I’d be very careful with that. I think the  other point to consider is this idea that yes, you can use the telephone number to text as long as the consumer has not either withdrawn their consent or opted out within the past 60 days. Well that says to me that every time you talk to a consumer, you’ve got to refresh that consent. Otherwise you’re going to have to manage what’s the 60 days from the last time I got the consent, that could be a nightmare. So that it’s, it’s a 

a really important nuance to that. That again has to be managed and I don’t see any other way to do it other than technology.

Mark Mallah: [00:34:55] Yeah, that really stood out to me because I don’t think we’ve seen this before, where not only do you [00:35:00] have to have consent, but there’s a shelf life on the consent. And in this case, it’s the six it’s a 60 day shelf life. So you can’t be complacent about the consent. You’ve got, you really have to manage that very closely.

[00:35:13] Joann Needleman: [00:35:13] Yep. 

[00:35:15] Mark Mallah: [00:35:15] Okay. Let’s go to the next slide.

[00:35:20] Go ahead. Yes, 

[00:35:21] Joann Needleman: [00:35:21] please. Sorry, Mark. Um, you know, when 

any digital communication that you send to the consumer, if they do consent to email or texts, you have to have some sort of opt out provision. And I think the Euro has, hasn’t made that very difficult. I think if you, if it’s a text, if you say stop, if it’s an email, if you say unsubscribed, I think you’ve satisfied the requirement of providing the consumer an opt out.

[00:35:45] But I want to warn people that opt out, as I say, be aware of the opt-out because it is extraordinarily powerful. As we know, under the FTC PA consumers can in writing, say to debt collectors, don’t communicate with [00:36:00] me anymore about this debt and you, you, you and debt collectors must abide by that. And I would say industry even abides by an oral request to do that.

[00:36:11] Well, we’re talking about digital communication. If a consumer opts out there 

is language in the rule that says that a debt collector should presume that a consumer does not want to be contacted by that channel, text or email for any of their debts. So while a consumer may opt out for Deday, you better make sure that if that consumer has debt that kind of comes to your agency, you better do a scrub and make sure that there are no prior opt-outs because you cannot communicate with them about any deaths using that channel. I think that’s really, really powerful and much more so than 

the traditional CNDS that we see under the statute. 

Mark Mallah: [00:36:58] Yeah, that that is powerful.

[00:37:00] And, and, you know, again, we don’t want to over rely on agents, but agents in this situation would have the ability to say, Hey, okay, are you opting out of this channel and not other channels and sorta try to position and maneuver so that allow for some open channel to continue. I agree. Um, but hat is going to be difficult if the opt-out comes in through a text.Because you can’t, if they’ve opted out, you can’t text them unless they happen to text you  back and then you have an opportunity to clarify, okay, 

well, you texted me, but you said last week, you didn’t want to be texted again. It goes back to Jason point, we love our agents. Uh, they are an important part of the consumer engagement, but boy agents are going to have to be retrained and it’s going to be a whole different mindset of how to do that.

Mark Mallah: [00:37:52] Okay. Let’s uh, let’s go to the next slide. Jason, let’s turn to you for some operational considerations around all of this. 

Jason Queener: [00:38:01] Yeah. So, there’s good news, right? I mean, we’ve talked about how much of this relies on the agent and. One of the things that we haven’t talked about, especially when we become more and more reliant on multi-channel because they haven’t to date, is to put those restrictions in place.

[00:38:17] And combining that with the fact that more customers want to talk to us by text or email, you know, We have to start being aggressively proactive with, I like saying, making this the customer’s idea. So in your lettering to your customer, say, instead of saying, Hey, you give us a call at (800) 555-1212, or text us at blah, blah, blah.

[00:38:37] Uh, likewise on your inbound IVR, you know, Hey, if you’d rather text an agent right now, or chat with an agent right now, press one. So. Getting that consent by making it the customer’s idea to engage you via that channel is going to be a very big deal. But the important part about any of those strategies is, is that your agents have to be safely empowered to be able to manage it.

[00:38:58] So giving them a tool and a [00:39:00] desktop mechanism by which they can bring in consent and revoke consent safely with those guardrails again, is going to be critical to this process. So the nice thing about this example, I’m showing you is. They’re on the phone with a customer and every one of their conversations from now until the end of time is going to be, there’s an attempt to collect a debt, et cetera, et cetera, et cetera, by the way, do I have your permission to text you or do you have our permission to email

[00:39:28] When that customer says yes, that agent should have the power to be able to then give a second level of consent by texts. Okay. I’m going to send you a text message right now. Go ahead and confirm you have it. You do that with templates and messaging, giving that agent all the power, they need to give your customer a great experience, but keeping them in, in your safety mechanisms.

[00:39:47] Right? So on a single pane of glass, keeping an extremely safe, but at the same time, empowering your agents to make these customers have the experience they’re still going to expect to have with the limitations we’re not putting on [00:40:00] them. I think that’s going to be a very, very big deal, Mark. 

Mark Mallah: [00:40:03] Yeah. So it was sort of like a, like a real-time capture of all these different mechanisms that are going on and all these different variables where we can capture them in real time, the better position you’re going to be.

[00:40:16] Again, if there’s an audit, if there’s litigation, anything like that. 

Jason Queener: [00:40:21] Yeah, and it’s going to have to be a single source of entry. It’s going to have to be a single source of data, right? You can’t have your email over here, your text messaging over here and your voice channel over here. That’s just not going to work anymore.

[00:40:32] Your agents have to be empowered across your channels to make immediate decisions that are documented and reportable. Right? So if I’m an agent and I click customer says, check, I can text them at this specific phone number. I now have. The digital record of that. I now have the voice recording of that.

[00:40:51] And if I’m smart, I have the speech analytics to back it up in a reporting place as well. And I want to touch base on this real briefly. One person asked earlier, how has a predator, can I monitor an agency doing this? This is a perfect example, right? The reporting is there. And, and you’re going to have to stand up that framework to say, we expect you to give us reporting on consent.

[00:41:11] We expect you to give us reporting on revocation. We expect you to give us reporting on any attempts outside of this seven that you’re allowed. So all that’s going to be a big deal. And again, having that in a single place for all your channels is going to be 

Mark Mallah: [00:41:25] yeah, absolutely good information there. So let’s go to the next slide.

[00:41:33] So Joann time and place for communications. Take us through this. 

[00:41:36] Joann Needleman: [00:41:36] Well, this is again, another element of preference that you’re going to have to manage, and this one can be really complicated. Um, the FCCPA has always talked about time and place, uh, in respect to communicating with consumers. But now, you know, I have to, CPO was written in 1977.There were no cell phones. There is no place anymore for can, you know, don’t call me at home. Don’t call me at work. Well, I’m home today. I’m working, you know, what does that mean? I have my cell phone, uh, you know, I, you know, I can be in different places, so it’s again, To Jason’s point, it’s going to take a lot of your agents to really drill down, to find what is the correct time, what is the correct place?

And as we talked about before, consumers can change that preference. So if they say to you, don’t call me on Tuesdays at eight o’clock, but then next Tuesday, eight o’clock they call you that doesn’t mean Tuesday at eight o’clock is good. It means that you’re going to have to then up. What is a good time to call.Um, so it it’s such attention to 

detail, uh, about time, place, uh, communication, that, that again is going to require your agents to be restrained, to, to really identify what is it that the consumer means about when they want to be haunted.

Mark Mallah: [00:43:02] Great. Next slide.


Joann Needleman: [00:43:09] Yeah, the exceptions are pretty simple. Yeah. You know, obviously if the consumer consents, uh, to contact you at a certain time, you can do that. And then there’s, you know, permissions, you know, if the court says, uh, if you’re a collection attorney or you’re in litigation, uh, regarding a debt, if a court says, you know, call the consumer on Tuesdays, even though the consumer said, don’t call me on Tuesdays to tell them that they, that the, um, Hearing has been continued.You’re allowed to do that. So there, there are some, there are a few exceptions. 

Mark Mallah: [00:43:42] Okay, Lindsey, let’s go to the next slide. This is a, uh, Joann, I think this is a new, uh, a new regulation here about the requirement to retain records for three years. 

Joann Needleman: [00:43:53] Yes. Not only retain records, pertain a recording of calls for, right, right, right. Was proposed in the NPR and it did make it to the final rule. Um, you know, there for the FTC PA at the federal level, there was never a, a record retention requirement. Many States have record retention requirements, and the question becomes what happens if the state requirements are different than the federal. I don’t have an answer to that question yet. And we don’t know whetherStates will ask for certain exemptions. So that’s a TBD. Um, but I think what is important is that debt collectors are going to have to retain records. And, the requirement is three years after the debt collectors last collection activity.Well, to me, that can be refreshed. You know, you could have closed an account and maybe you didn’t Mark it as satisfied, or maybe it’s still being reported on the credit report. A consumer could call you back in a couple years and say, you know, I got a question or you there, there’s still a problem with my account.

[00:44:57] That clock is now going to that [00:45:00] recording. And that documentation is going to have to be retained. And the same for call recording. I mean, I, I, you know, if, if someone calls you back after an account has been closed, but they have a question or there’s a problem, uh, those calls are going to have to be maintained.So I look at these, this three-year deadline is somewhat of our organic. And really a very fluid deadline that can continue. And I think, you know, I think about, uh, getting more cloud storage, uh, in order to maintain the student information. 

Mark Mallah: [00:45:31] Right. Well, hopefully if your agents are trained well, uh, retaining these calls will help you because they’ll be able to prove up consent, you know, and, and obviously, you know, recall will hopefully be fairly indisputable about consent, you know, and other elements that, you know, other claims that may come in.

Jason Queener: [00:45:49] And Mark, uh, Georgetta actually brought a question and it was exactly like this, right? This is very, very astute. You’re going to have to store your recordings for longer. If you’re not already doing that. I mean, you’re going to have to [00:46:00] have that record of truth out there to support a lot of these claims that could potentially be anecdotal if you don’t have that record.

Mark Mallah: [00:46:08] Right. And just returning to the point I made earlier, you know, a lot of these situations, the burden of proof is, is going to be on the color. And, you know, indirectly on the creditor. So when the claim comes in, the burden of proof may be again on the caller or the credit approved these things up. So these call recordings, these records, you know, are very important to have good retention policies in place so that you can prove it up.

[00:46:38] Okay. Let’s uh, let’s go to the next slide.

[00:46:43] All right, Jason, I’m going to turn it over to you, uh, at this point. 

Jason Queener: [00:46:47] Thanks for it. So here’s the good news. We have a year. Um, I would encourage you all to not wait for the year because some of the stuff’s going to take some time. Um, so, you know, number one is the obvious one where you are proactive. If you’re not a live ops customer, if you’re, that’s not your anticipation, I encourage you to reach out to your vendors sooner rather than later to start getting these answers.

[00:47:06] Um, from an operations perspective, you need to start prioritizing compliance, uh, and understanding how that could impact potentially. Your penetration rates, your, your depth, you go into your files, your staffing. I mean, it’s, these are all things you need to start considering because they are going to have potentially profound effects.

[00:47:26] Um, your strategy to decide if you have to implement a new process, uh, specifically around digital channels that we have talked about, is going to be a big deal, making digital channels. Part of your customer’s journey is going to be one of the key elements of success for these, these, these types of rulings.

[00:47:43] Um, you’re limiting your voice channels and your customers are screaming to you. I’d like to talk to you via digital channel. These need to be adopted and again, in a single source of truth, right? Um, siloing, these, these channels is, is a recipe for disaster with rulings like this [00:48:00] next thing we talked about, how important your agents are going to be in the last two are kind of burying the lead a little bit.

[00:48:05] Um, Monitoring reporting tracking on your agent’s performance in your customer’s wishes is going to be a critical piece to this. So real time monitoring, translating your transcriptions into actionable data is going to matter so that, you know, I had 200 SMS requests today. I can go to my analytics and see that I had 200 confirmed transcripts of SMS requests.

[00:48:31] So those are big. Those are not easy. Um, But they are certainly doable there. There are tools in place that are here. They’re built for this. So, I mean, it’s, there’s, there’s, there’s certainly no excuse. We have the time to get it. Right. So I think it’s something we start now for sure. 

Mark Mallah: [00:48:48] Yeah, let me just jump in for a second.

[00:48:50] So, um, just to build off of what you said, so there’s no specific limits on the number of texts you can send. There’s no limits on the number of [00:49:00] emails you can send. There are limits with respect to phone calls, but. You’ve, you’ve got to look at this holistically. So you could be in compliance with the, uh, seven calls within seven days.

[00:49:13] But if you’re lighting someone on, on their text and lighting them up via email, then you still could be susceptible to harassment because you’re in technical compliance, you’re in technical compliance, but you know, the, the, the whole idea of harassment. It was a little more nebulous, and was the most objective.

[00:49:31] So, so I think, you know, to your point, this all has to be tracked holistically in one place. 

Jason Queener: [00:49:38] Yeah. I mean, a great example. Joann mentioned earlier, a customer decides to send you a text message and you resolve that or the text turns into a chat on your website. Okay. You have to have a mechanism in place from a technology perspective to know.

[00:49:53] I can’t call this person anymore for seven days and that has to be immediate, right. It can’t be next day. It can’t be two days later. [00:50:00] You have to know Joann’s in the middle of a chat on your website. That outbound calling effort has to stop. So yeah, you’re right. A single, a single source of truth is going to be critical in this.

Joann Needleman: [00:50:09] Right. And I think, you know, and content and frequency on an even at a digital level is still going to matter. I think that the Bureau has left that wide open for scrutiny. Um, you know, I don’t know, is, is, is three texts a week too much. I mean, I think the texts and digital channel, uh, evaluation is going to go the way of what we’ve seen with calls for the last several years. We don’t know what the, what is harassing and it’s going to be unfortunately on a case by case basis. And again, the minute you, you communicate with someone outside of their preference. I mean that, to me, that that’s just a recipe for disaster. I mean, I think those, those cases will, will happen very frequently.

Mark Mallah: [00:50:57] Alright, Jason, I think you got it from here. 

[00:50:59] Jason Queener: [00:50:59] Yes. So  Mark, I [00:51:00] think we have Mark and Julian. We have a few questions here, um, while we have time. So the first one, Joann, I’m gonna probably going to yield this to you. Can we require opt out to be in written text, email form, or can they opt out verbally? The answer is yes to both.

Joann Needleman: [00:51:17] Um, you are required in your digital communication to have some sort of opt out function. But if you’re talking to someone over the phone and they say, I want to opt out, you know, don’t email me, I want to opt out. Um, you have to treat it as such. And again, it goes back, Jason, you know, someone says, don’t email me.

[00:51:37] I think you’ve got to drill that down. What does that mean? You want it kind of. You know, you gotta, you gotta do what the consumer wants, but I think there’s also ways to fashion that preference to your benefit. Um, I don’t necessarily know if someone says don’t email me verbally. That is an opt-out.I would want to drill that down to make sure email me ever, uh, for all accounts today, next week, you know, there’s going to have to be a lot of. The nursing to ensure that you’re doing what the consumer, that the consumer understands, what it is that they want as far as their preference and you’re recording it.

Jason Queener: [00:52:15] So  this question came up a few times, actually. Are we considering leaving a voicemail, uh, contact, uh, re resulting in that seven day cool off? Or is that still in your, in your estimation and an attempt. 

Joann Needleman: [00:52:47] So we didn’t address this because, um, it’s a small portion of the rule. There were, I think email and text and frequency were more important, but the Bureau did finalize what is called the limited content message.And I know many of you on this, on the call have dealt with the photos and the Zortman of the world and leaving messages. So the Bureau has said, That you can now leave a limited contact con content message. It outlines you can leave the business name. You have to say, you know, call Susie at this time and Susie has to be available.And if you comply with their requirements, then that is not a communication, but it is an attempt and it 

only applies to voicemail. It does not apply. You can’t leave a limited content text. That is just not part of the rule anymore. 

Jason Queener: [00:53:18]  Great. That makes sense. Thank you. So, uh, to reaffirm this question, if a debtor communicates to us first through an email, does that confirm, opting into email?

Joann Needleman: [00:53:28] Yes. If it’s about the debt, if they’re communicating with you about the debt using an email address that is consent. 

Jason Queener: [00:53:38] Yes. Okay.  Let’s see if we have time for one more here, Lindsay, before I send it your way. And again, Lindsay, I know we had some questions. We’re probably not going to get time to get to you so we can probably follow up if we need to on this.

[00:53:48] Um, let’s see the seventh. Okay. So let’s confirm this one more time. The seven consents, the seven calls and seven consecutive days is a rule for third party collections. Not first party. Correct?

Joann Needleman: [00:54:06] That is correct. Um, but let me prefer, um, that is not to say that if a first party called within seven days and in each of those calls, maybe they said some profanity, maybe they said something horrible.

oann Needleman: [00:54:22] Those calls could be unfair, deceptive, uh, unfair harassing, or abusive or deceptive. Yes, I think from a technical legal standpoint, The frequency limits do not apply to first parties, but that does not mean first parties. The first party conduct, but not be applied elsewhere. 

Mark Mallah: [00:54:41] Makes sense. 

Jason Queener: [00:54:42] Before I pass it back to Lindsay. Thank you everybody. And Mark and Joann, thanks so much for your time today, Lindsey, I’m going to turn it over to you. 

Lindsay Shelby: [00:54:50] Awesome. Yes. Um, thank you, Jason Mark, Joann, for all joining today, this was a great panel. And thank you all again for joining today’s webinar, CFPB Debt Collection Rule Announcement:  Insight From Legal Counsel and Operational tTps.Um, be on the lookout for an email, with the, a copy of the recording, as well as the presentation and also, um, stay tuned and look out for additional webinar invites. In the next couple of weeks, we plan to do a follow-up webinar on the debt collection ruling. Once the disclosure piece has been announced.

[00:55:25] So again, thank you all for joining today’s webinar and I hope you have a great rest of your day. Thank you guys.

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