When the Consumer Financial Protection Bureau (CFPB or Bureau) issued its Outline of Proposed Rule for Debt Collection back in the summer of 2016, the industry applauded the CFPB’s plan for a limited content message (LCM). The LCM showed the power of the Bureau to actually do good and fixed the Foti problem that plagued the industry for years.
As the comment period for the Notice of Proposed Rule (NPR) winds down, it is surprising to hear some backlash about the LCM.
General Consensus about the Limited Content Message
In speaking with colleagues, there seems to be some general consensus that the LCM will have little utility, especially if a debt collector is not permitted to use email.
Other concerns expressed are that consumers will know the call is from a debt collector and will not respond as a matter of course, and the use of the opt-out will cut off the communication before it can even begin.
These arguments are all valid, but to silo the LCM without looking at it as one of many tools in a consumer engagement strategy would be imprudent.
The Bureau clarifies the definition
In § 1006.2(d), the Bureau clarifies the definition of communication and specifically excludes the LCM from its definition because, as the Bureau reasons, a debt collector does not convey information about the debt to a consumer when it uses the LCM.
In seeking to further protect consumer privacy rights, the Bureau’s rationale for excluding email messages from LCMs rest with the notion that emails
The Bureau concludes little benefit
The Bureau also concludes that an LCM sent by email will be of little benefit to consumers. This makes little sense because consumers are hesitant to respond to any electronic communication unless they know who it is from.
Based on the Bureau’s rationale, it would be unlikely then that a consumer would even respond to any LCM because they would have no idea who is sending the message. The industry must encourage the Bureau to expand the utility of the LCM and include the use of email.
Why should we expand on the LCM
Putting the arguments for expansion of the LCM aside, the consumer engagement process needs to start somewhere. For the 40 plus years since the enactment of the Fair Debt Collection Practices Act (FDCPA), a response from a consumer to an initial demand has steadily declined.
The telephone answering machine seemed like the next logical step in a debt collector’s attempt to reach a consumer, even when the consumer was not at home. However, in the world of the FDCPA, applying logic to an illogical law results in disaster.
Here the result was that an innocuous message became the epitome of consumer harm and created yet another barrier to communication.
How the LCM can become an effective tool
For the LCM to be effective, it must be incorporated into a debt collector’s overall multi-channel communication strategy and not a substitute for eliminating other opportunities for engagement. The LCM is a window of introduction to make the most of the otherwise awkward interaction of calling a person and asking them for money.
Regardless of the fact that the FDCPA treats consumers as having below-average intelligence, those in the debt collection industry know better— consumers are smart and they have a wealth of tools to make them even smarter. In the palm of their hand, consumers can access any and all information they need at that moment; including whether the entity that just sent them a limited content message is legit.
In other words, a debt collector must have a legitimate online presence, a user-friendly website, a live person on the other end of the phone if and when the consumer calls back, and a quick reply to a consumer who does respond to the text, and hopefully email.
Don’t shut the door on this opportunity
The CFPB has proposed to put Foti and its prodigy to rest. Rather than discount the usefulness of the LCM in general, the industry needs to embrace it. Albeit a small opening, the CFPB has recognized that debt resolution can only be achieved by effective communication that is not otherwise subject to the FDCPA.
The industry cannot shut the door on this opportunity.
About the Author:
Attorney and industry advocate Joann Needleman, guest compliance thought leader, continues to bring her experience and insight as a navigator and strategist to assist in the regulatory changes the debt collection industry is facing today.
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