Reg F imputed permission to contact by email
Agencies and debt buyers would like to take advantage of all forms of collection communication. In order to effectuate collection by e-mail, it may not be practical to independently establish permission to utilize email. Regulation F sets forth the requirements to ensure that the electronic permission received by our clients, or sellers can be imputed to their collectors.
Your policies and procedures matter. A debt collector must maintain policies that are reasonably drafted to ensure that errors are not made with regard to electronic communications. This takes on added significance when one considers the consent requirement is not being met via communication with the consumer themselves, but rather vicariously from either the creditor or the previous collector. Below I will outline the specifics that the CFPB requires, which could go directly into any policy.
How can I ensure that my organization is not violating Regulation F when we attempt to take advantage of the consent given to those upstream in the collection process?
Here is what you need to look for to take advantage of consent given to the Creditor:
- A creditor obtained the email address from the consumer.
- The creditor used the email address to communicate with the consumer about the account and the consumer did not ask the creditor to stop using it.
- Before the debt collector used the email address to communicate with the consumer about the debt, the creditor sent the consumer a written or electronic notice, to an address the creditor obtained from the consumer and used to communicate with the consumer about the account, that clearly and conspicuously disclosed:
(1) That the debt has been or will be transferred to the debt collector;
(2) The email address and the fact that the debt collector might use the email address to communicate with the consumer about the debt;
(3) That, if others have access to the email address, then it is possible they may see the emails;
(4) Instructions for a reasonable and simple method by which the consumer could opt-out of such communications; and
(5) The date by which the debt collector or the creditor must receive the consumer’s request to opt-out, which must be at least 35 days after the date the notice is sent;
The 35-day opt-out period must have expired, and the consumer has not opted out; and the email address has a domain name that is available for use by the general public, unless the debt collector knows the address is provided by the consumer’s employer.
Some practical concerns raised here include the existence of a mechanism to pass opt-out information from seller to their debt buyer if accounts are sold prior to the expiration of the opt-out period. All of these items are best addressed during the contracting period with your seller, so expectations can be set in advance. Additionally, the willingness of a seller to provide a goodbye letter that meets (or doesn’t meet) these requirements may potentially affect the value of a portfolio. Certainly, this item potentially impacts both exposure and cost to collect.
If you are relying upon consent given to a prior collector as opposed to a Creditor, essentially you must verify that the prior collector satisfied all of the above, plus these additional requirements:
- The immediately prior debt collector used the email address to communicate with the consumer about the debt; and
- The consumer did not opt-out of such communications.
Can you be sure that the prior collector had their creditor meet all Reg F requirements?
Debt buyers, especially those that are passive, should plan in advance to compile this documentation for their network of collectors. This would ease the burden for the collector, and opening up cheaper, more effective collections. Creditors also need to have this item on their radar with an understanding that every level of collection activity will need to verify this process.
It seems that so much activity and energy in the industry was directed at the model validation notice that we now need to turn to the other elements of Regulation F. We seem to have received a step-by-step process here from the CFPB, so now it is time that the industry reacts and implements across its platforms processes that solve this issue for all. GOOD LUCK!
Kyle J. VonAllmen is a 27-year industry veteran, currently consults with the ARM industry, and serves as General Counsel for Starmark Financial, LLC - a debt buyer based in Deerfield Beach, Florida. He is a member of the State Bar of Michigan, and the State Bar of Ohio.