Don’t Wait until There is a Final Rule; It’s Time to Start Thinking about Email, Text & Electronic Communication

June 4, 2019

Start to create a communication strategy as the CFPB Notice of Proposed Rule is here.

Now that the Proposed Rule came into fruition, start thinking about ways to communicate via email, text, and electronically. With attorney and industry advocate Joann Needleman joining DAKCS as our guest industry expert we are diving deep into the CFPB Notice of Proposed Rule.

She brings her compliance experience and insight as a navigator and strategist to assist in the regulatory changes the debt collection industry faces and communication strategies that apply.

2019 Joann Needleman Headshot

Let’s begin.

It’s been two weeks since the Consumer Financial Protection Bureau (CFPB or Bureau) issued its Notice of Proposed Rule (NPR). On Tuesday, May 21, 2019, the Bureau finally published the NPR in the Federal Register which means that the comment period has officially begun and will close on August 19, 2019.

While it is still unknown whether the CFPB will finalize all the proposals set forth in the NPR, there is no doubt amongst all stakeholders that the use of email and text, and the use of electronic communication, will be part of the final rule.

Therefore, whether your company is currently using email and/or text, or you are considering it for the future, the time is now to do an assessment of your operations and not wait until the rule is finalized.

Here are a few suggestions:

1. Talk with your Clients.

The expansion of email and text alongside existing communication channels can present new operational challenges. Clients will be required to not only capture email addresses and telephone numbers but to also ensure they are accurate before they pass that information along to you. Are your clients capable of retaining and providing information about a consumer’s email and telephone number? Is your current system able to accept this type of information?

2. Opt-Out Technology

Although the NPR proposes to expand the use of email and text with no restrictions as to frequency, debt collectors will be required to provide the requisite opt-outs for text and unsubscribe for email.

  • Does your company currently have that technology?
  • Do you understand the process of leasing a “short code”?
  • Furthermore, are your current operations and infrastructure capable of capturing an opt-out or unsubscribe request?
  • What assurances are you given from vendors that these systems will even work?

While the NPR provides a bona fide error for incorrect emails or texts, there is no bona fide error for failing to abide by an opt-out.

3. Will you be Able to Accept Electronic Disputes?

The proposed model validation notice will permit consumers to submit disputes electronically; if you are willing to accept them in that medium. Is this something you are already doing or would like to do? Would your current system be capable of modification if you moved in this direction?

4. Electronic Delivery of Certain Disclosures.

This is the most complicated of the proposals set forth in the NPR and it requires a very careful review and assessment.

In a nutshell, the Bureau is proposing to permit the electronic delivery of certain disclosures as long as the debt collector either obtains (1) E-Sign consent directly from the consumer; or (2) proceeds with an alternative procedure whereby the creditor or former debt collector used an email address or phone number that could have been used to obtain E-sign consent.

If the alternative procedure is used, then the debt collector can send disclosures electronically either by a hyperlink or in the body of an email. There is actually a third alternative in instances where the validation notice is the initial communication. However, there is presently some confusion as to whether E-Sign is required in this instance. Nevertheless, every agency should thoroughly review this proposal.

Certainly, the delivery of disclosures, especially the model validation notice, would be worthwhile cost savings. However, the challenges and potential pitfalls must be considered.

The NPR presents new opportunities for all agencies. Consider these opportunities now in order to plan for the future.  

To discuss more on compliance and have access to helpful educational resources go to the DAKCS NPR – Compliance Insights Page. Continue to follow industry advocate Joann Needleman as she takes a deep dive into the CFPB Proposed Rule. Join the Compliance Conversation with Joann Needleman in her first article – The CFPB Issued the Notice of Proposed Rule … What Should You Do Next?

The Time is Now.

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