CFPB Issues New Rules for Debt Collection Agencies

When you’re working with a collections agency to recover funds that you’ve lost due to unpaid income owed to you or your business, it helps to know you’re working with a company that you can trust to stay informed regarding the latest legal standards and practices.

By working with us here at Summit A*R, you’ll gain access to a company that is passionate about following any new developments about commercial debt collection laws closely.

This continual research vital to our own ability to ensure that every interaction we have with parties owing money meets the current regulative standards. It also helps to ensure that our clients can have any questions about debt collection answered correctly.  

Due to this diligence, you can always be sure that our practices align with the Consumer Financial Protection Bureau (CFPB) mandates, as outlined in the Fair Debt Collection Practices Act (FDCPA). This way, you don’t have to make any assumptions about the legality of your case or our practices.

Changes to the Fair Debt Collection Practices Act (FDCPA)

While the Fair Debt Collection Practices Act (FDCPA) has been in effect since 1977, as an amendment (Regulation F) to the larger Consumer Credit Protection Act (CCPA), two recent changes, or final rules, were proposed at the end of 2020 by the Consumer Financial Protection Bureau (CFPB).

As of November 30th, 2021, all debt collection companies in the United States will be obligated to follow the mandates of the two final rules.

First Final Rule

While both final rules added to regulation F focus on clarifying language regarding consumer debt collection, the first final rule focuses specifically on issues concerning

  • Abuse and Harassment
  • Unfair Practices
  • False or Misleading Representations

These pertain specifically to the process of collecting consumer debt and help to protect consumers from unethical practices. 

Second Final Rule

The second final rule is about what information debt collectors must disclose at the outset of initiating communication with a particular consumer in question. It also stipulates regulations requiring debt collectors first to ensure they have informed a consumer about the debt they own before that collector can report information about that debt to consumer reporting agencies.

What’s the Difference?

It may seem like all of the issues identified here in the first and second final rules are not new to the Fair Debt Collection Practices Act. However, these new rules exist specifically to clarify the language regarding these issues, particularly when it comes to the relationship between debt recovery and new communications technology.

Developments in Communications Technology

While the FDCPA provided an essential line of protection to consumers in 1977, the world was an enormously different place at that time. As in the case of copyright violation and privacy rights, when a significant shift in technology occurs, the laws surrounding specific industries need to change to account for those differences.

Consider, for instance, a few examples of communications technology that is in widespread daily use in 2021 but did not exist or was not typically used by the public 1977:

  • Personal Computers
  • High-Speed Internet
  • Email
  • Smart Phones
  • Social Media Platforms
  • Virtual Reality
  • Text Messaging

While long-distance phone calls existed in 1977, they were expensive. Today, many mobile phone plans offer unlimited calls to anywhere in the country and affordable rates for placing calls worldwide.

Technology and Debt Collections

It isn’t difficult to grasp the implications that these enormous leaps in communications technology that have been introduced since 1977 have on debt collections practices in 2021. Given that many of the steps involved in the process of debt recovery involve the necessity of direct communications between a debt collector and a consumer facing debt discrepancies, these new means of contact play a constant role in debt recovery practices in 2021.

Given that this is the case, those agencies that are determined to employ unethical tactics against consumers will find ways to use this technology to do so.

Why Do We Need Updates to the Rules?   

While the technology used in debt collections has changed dramatically over the past 44 years, the rules governing the use of that technology for the purpose of collections have not. With the introduction of new rules, past protections regarding things like abuse, harassment, unfair practices, false or misleading representations, as well as issues pertaining to the disclosure of information will now apply to contemporary communications technology.

It will also allow consumers the right to refuse contact through these new electronic means, should they opt for that choice. 

Responsibilities of a Debt Collection Agency

At Summit A*R, one of the most consistent aspects of our interactions with consumers regards our P.H.D. Philosophy, which stands for our mandate to Preserve Human Dignity in all aspects of the debt collection process as we practice it. This means that we take the issue of treating all parties involved in a debt collections dispute with a high level of dignity and respect.

Regardless of our means of communications or whether regulations have incorporated new technologies, you can be certain that our P.H.D. Philosophy applies. Given this fact, there isn’t much that will change in our process of recovering your lost revenue when the first final rule and second final rule of the Fair Debt Collection Practices Act (FDCPA) come into effect on November 30th 2021.  

While the debt collection industry has sometimes held a poor reputation due to companies that use unethical practices, changes like the first and second final rule help to demonstrate that it isn’t only communications technology that has developed, the attitudes and standards regarding debt recovery have as well.

When you end up with lost revenue that you’d like to see returned to your business as quickly as possible, choose a team that understands the value of ethical practices and closely follows developments in debt recovery regulation.

Please get in touch with us here at Summit A*R to find out more about how we can help make debt collections a painless process. There’s no time like the present to get started.