Until this month, the regulations governing how financial institutions and others could pursue debt collection were firmly grounded in the Jimmy Carter era.
Updates to the Fair Debt Collection Practices Acts of 1977, commonly known as Regulation F, went into effect on Nov. 30. Under the new Reg F, creditors are allowed to use email, texts, social media and other modern communications to contact those in arrears on their loans and other debts.
The new rules come with limitations, including that collectors must identify themselves as such, any social media messages must be private, and they must provide the people they contact with the chance to opt out of using social media as a means of communication.
Reg F also places limits on the number of phone calls that collectors can make to consumers with unpaid debt – that cap is seven calls per week, or an average of one call per day.
The rules change stands to affect banks and credit unions trying to collect their own debts in different ways relative to third-party debt servicers and collections agencies.
Some of the key points that Bill made during the hour-long webinar:
The biggest risk for any given banks and credit union is that their collections team will inadvertently run afoul of the new rules. This can be mitigated by having clear policies and making sure the team is properly trained on the “dos and don’ts.”
Email and other electronic communications methods are not considered secure, so care must be taken to ensure that consumer’s privacy is not violated in the process.
For your protection, keep thorough records of your contacts with consumers.
Financial institutions are not required to follow certain parts of the new rule, but they should consider doing so anyway as an added protection in the event of a consumer complaint to the Consumer Financial Protection Board or state regulators.
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