Email and E-Sign Require Different Consents
Attorney and industry advocate Joann Needleman joins DAKCS as our guest industry expert diving deep into the CFPB Notice of Proposed Rule. Today she focuses on email and E-Sign requiring different consents in the Notice of Proposed Rule.
The Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rulemaking (NPR) should be viewed, among other things, as a policy document. The NPR is an important step in laying a compliance foundation for communication with consumers using digital and electronic channels. However, industry participants should carefully read the text of the proposals as well as the analysis provided by the CFPB in order to fully realize the nuances of the permissible activities debt collectors can use when reaching out to consumers.
The NPR proposes to clarify how a debt collector can provide electronic disclosures to consumers. The Electronic Signatures in Global and National Commerce Act (E-Sign) provides a general rule of validity when using electronic signatures.
In the case of statutorily-mandated written disclosures, E-Sign allows those disclosures to be provided electronically, as opposed to paper writings, as long as the consumer directly consents. For purposes of debt collection, those disclosures are (1) the validation notice pursuant to § 1692g that is sent within 5 days of the initial communication; (2) the notice of dispute rights; and (3) the request for original creditor information.
Five years ago, email and E-Sign – as well as text – were unique operational functions for the ARM industry. With the release of the NPR, both email and E-Sign represent new opportunities for consumer engagement. With these opportunities comes much-added responsibility; especially when it comes to consent.
Here are four (4) things you need to consider:
1. Consent to receive email is not the same consent under E-Sign.
The NPR is clear: Consent to email must come directly from the consumer. However, because a consumer consented to receive email communications does not mean they otherwise agreed to receive disclosures electronically.
Before a debt collector can send mandated disclosures, the consumer must first be sent a clear and conspicuous statement of their rights under E-Sign.
These rights include, among other things, their right not to consent to the use of electronic signatures, the ability to withdraw that same consent, the scope the consent under E-Sign, and any hardware or software requirements for access to and retention of electronic records. The process and the implications of consent are very different.
2. Consent to E-Sign by a work email address may not be consent to email a consumer at work.
While a consumer may consent to receive electronic disclosures through a work email (make sure your clear and conspicuous statement confirms such a work address), use caution before emailing a consumer at that same work email address going forward.
The NPR suggests that contacting a consumer at work without their consent would be deemed an unfair and unconscionable act. That a consumer consents to the receipt of legal documents, probably on a one-time basis, may not sufficient to assume that they are willing to receive other and more frequent emails at work.
If an E-Sign consent is to a work address, then consider including special language to better inform the consumer of the scope of their consent.
3. E-Sign may present operational hurdles.
E-Sign requires a bit more communication with a consumer than regular email consent. Before you can provide electronic disclosure to consumers, enhanced staff training on understanding consent and consent management will be required.
4. Obtaining consent after opt-out.
If you have received an account from your client or a prior debt collector where a consumer has opted-out of email or text, obtaining E-Sign may be a bit more challenging, especially at the beginning of the collection process. In those instances, it may make sense to send the validation notice by mail.
In the instance where a consumer contacts you at the time of placement and that contact is the initial communication by email or text, then you can proceed to the E-Sign consent process using any one of those mediums. If the contact by the consumer is by phone, then you will need to get a new email or text consent just to send the E-Sign consent information.
As noted in prior blogs, now is the time for agencies to consider how and in what manner electronic communication will benefit operations. The size of your agency should not dictate whether to use electronic communication channels. The existing tools are already there. The key will be to encourage its use among your staff prior to full implementation of the NPRM.
Look for our follow up article next week – What Are the Required E-Sign Disclosures for Debt Collectors?
Helpful Educational Resources
Continue the compliance conversation and follow industry advocate Joann Needleman as she takes a deep dive into the CFPB Proposed Rule. Check out her last article – Don’t wait, start thinking about Email, Text and Electronic Communication.
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