With just over five weeks to add comments for the CFPB Notice of Proposed Rulemaking, we’ve spent a lot of time discussing recent articles including the disclosures legally required to send an electronically, how to electronically send them, and how the DAKCS Beyond ARM system can help you maintain and track consumer consent, approved and removed.
Attorney and industry advocate Joann Needleman adds input for DAKCS as our guest industry expert diving deep into the CFPB Notice of Proposed Rule. She recommends that debt collectors and creditors get used to a new vocabulary when it comes to the NPR.
The Consumer Financial Protection Bureau’s (CFPB or Bureau) Notice of Proposed Rulemaking (NPR) for debt collection was four decades in the making. Now that the industry has a new roadmap for compliance, changes in third party operations are inevitable, especially when it comes to receiving information from its creditor clients.
The NPR will require the use and understanding of new types of information, or fields, that clients will need to forward to their agency partners upon placement.
This information exchange is not optional; the CFPB specifically stated in the NPR that if a debt collector does not have this mandated information, then the debt collector will not comply with the validation notice requirements.
Three Words to Know
1. Itemization Date
Proposed §1006.34(b)(3) provides four reference dates for which a debt collector can ascertain the amount of the debt:
- (i) The last statement date, which is the date of the last periodic statement or written account statement or invoice provided to the consumer;
- (ii) The charge-off date, which is the date the debt was charged off;
- (iii) The last payment date, which is the date the last payment was applied to the debt; or
- (iv) The transaction date, which is the date of the transaction that gave rise to the debt
Ultimately, it will be up to the creditor to determine what reference date best describes a particular account and then convey that date to the agency upon placement. However, what if the creditor does not consider any of these reference dates as part of their terminology? This will be a new discussion with your client.
2. Validation Information
§ 1006.34(c)(2) proposes that a debt collector provide 10 items of information in every validation notice. While some of this information is nothing new, like the name and address of the debt collector and the consumer, some additional information will need to come from the creditor.
This information may not be information that was forwarded to a debt collector in the past:
- The “merchant brand,” if applicable, associated with the debt. This applies to private label credit cards. There may be other instances of special credit programs that are given a particular name or branding;
- The name of the creditor as of the itemization date. In the case of a purchased debt, the name of the creditor could be different from the last statement date as opposed to the charge-off date;
- The account number associated with the debt as of the itemization date. There may be instances where account numbers may change as of the charge-off date or other events in the credit life-cycle;
- The name of the creditor to whom the debt is currently owed. Again, this could be different from the name the creditor as of the itemization date; and
- An itemization of the balance due. While creditors typically provide this information, whether they break down or itemize the balance will depend on the creditor. While it may be left up to the debt collector to undertake this accounting, it will be crucial that the itemization aligns with the creditor’s information.
It is worth mentioning that capturing a consumer opt-out will be as important for creditors as it is for debt collectors. Opt-out will be particularly important for debt collectors in two instances:
- To confirm that a consumer did not opt-out of receiving non-work emails or non-work texts pursuant to 1006.6(d)(3) to assist debt collectors in their bona fide error defense under 1006.6 (d)(3)(i)(B)(2); and
- To confirm that a consumer did not opt-out of receiving electronic disclosures by a debt collector when that debt collector elects to use the alternative procedure for sending the required disclosures electronically by a hyperlink.
Agencies should be working with their clients now to develop this new dialogue and to ensure that all parties are speaking the same language.
The creditor-agency relationship will require a new level of communication to ensure that vital and accurate consumer information can be easily transferred. The NPR provides no safe harbors to the contrary.
Stay in the compliance forefront.
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