Collections Reference Guide: A Refresher on the Debt Collection Rule

This high-level debt collections reference guide shares the key elements of the CFPB’s Debt Collection Rule.

Here are tips to manage your operations from scouring policy and procedures to developing a disclosure matrix. Use this refresher of best practices as you manage your operations due to agent turnover or challenges coming into compliance.

Social media contact?  Included, ready-to-mail debt validation notices?  With the CFPB’s Debt Collection Rule, effective November 2021, collections as we knew it changed. It took years of deliberation and over 14,000 conversations before change approval. And now the new rule is in place for the foreseeable future. How has your organization faired with the changes? This debt collections reference guide covers key elements of the rule to consider and actions to take to position you for success.

1.  Debt Validation Notices – Debt Validation Disputes Just Become Easier

Written debt validation notices are now required to include a “tear-off” form.  Gone are the days of needing separate letters. Consumers can simply return the available form provided with the debt validation notice to dispute the debt’s validity.  To dispute the debt or the account balance or any account matter, today’s consumer completes the form to initiate the dispute process.

What should you do?  Review Process and Procedures for Clarity and Consistency

Of course, you must closely monitor disputes volumes for spikes that the new form may drive. But also, you should properly organize and maintain your processes and procedures. This is a priority.  If disputes volumes require additional staffing, you’ll need available, accurate documentation to maintain consistency and provide support for process enhancement strategies.

RELATED CONTENTA guide to creating consistent, regulator-friendly procedures


2.  Digital Contact – Debt Collections has Gone Digital

In addition to traditional phone contact, customers may now be contacted via text, email or social media platforms, allowing for new, modern channels for communication.  New and improved ways to reach consumers sounds good.  However, debt collection entering the digital arena brings new risks.  How do you ensure that you offer and honor opt-outs?  How do you control the posting of public collections messages via social media platforms  These are just a few areas that need proper controls to ensure ongoing customer contact compliance.

What should you do? Create and Provide Ongoing Training

In addition to systemic controls, you must train staff to properly engage and accommodate customer contact requests. This training is critical to mitigating contact violations. Review training material and evaluate communication monitoring routines to account for the new available channels of communication.


3.  Call Frequency – Contact Strategies are Critical

Previously, debt collectors needed to limit the number of calls made about a specific debt to no more than 7 times total during a 7-day period. The CFPB’s rule adds clarification about calls going directly to voicemail. These calls are counted as a contact by phone attempt toward the 7 times in 7-day period.

It’s important to note that this requirement applies specifically to phone attempts and does not include text, email, or social media. However, you must maintain a proper balance of attempts per available channel to prevent excessive contact attempts.

What should you do? Assess Existing Call Strategies and Multiple Account Activity

Despite the new rule’s specific account level applicability, it’s important to consider consumers with multiple relationships. Be mindful of action taken on each account towards that full relationship to prevent potential contact violations.  Collectors should have the ability to apply notes to all related accounts at once to ensure contact with consumers about related account debt are well documented. This prevents inappropriate contact attempts following calls.

RELATED CONTENTSee how modular collections will transform strategies


4.   Limited-Content Messages – Doing Less During the Voicemail Message

Voicemail messages left for outstanding debt should be limited in nature and cannot convey the attempt to collect a debt.  Simply said, limited-content messages left for unavailable customers should be short and sweet, consisting of the following:

  • Business name that does not indicate that the call is from a debt collector
  • Phone number to return call
  • A request for response with the name(s) of who to contact

What should you do? Stick to the Script

Provide scripted messages to agents.  Including a sample of messages left by staff within total collector calls monitored monthly. This mitigates risks associated with inconsistent messaging. Also, you can deliver proper feedback to agents to prevent any future occurrences.

RELATED CONTENTSee 4 steps to create a high-performing sustainable program for your collections call center


5.   Consumer Debt and Rights Disclosures

As before the new rule, you must include statements about being from a debt collector and being about a debt. But now, disclosures must include details about the debt and consumer protections, including the right to dispute the debt and to request information about the original creditor.  Additionally, before furnishing information to National Consumer Reporting Agencies, the rule requires that debt collectors take specific steps toward disclosure of existing consumer debt. These steps include:

  1. Oral Contact: The collector must attempt to speak with consumers about their debt via telephone.
  2. Electronic Contact: The collector must send an e-mail, if available, to the consumer to disclose the debt information.
  3. Contact In-writing: The collector must send a written notice to the consumer. The collector must wait a reasonable period to receive a notice of undeliverability, such as 14 days. Information must not be furnished if a notice of undeliverability is received unless the collector has taken additional steps toward contact.

What should you do? Closely Review Disclosures

Review existing disclosures for confirmation of content to ensure compliance with the new rule.  Your current inventory should be assessed to identify and document potential gaps resulting from the rule changes to initiate efforts to revise your content.

Upon confirmation of compliant content, consider implementing a method to systemically document proof of disclosure delivery if this action is performed manually in the current state.


Getting Compliant and Staying there Requires Thoughtful and Ongoing Effort

Evaluating and selecting the right company to assist in your collections and recovery operations is a big deal with long lasting implications. We understand that this is not a decision to be taken lightly and that knowing the background of your potential partner is key to the selection process.  We know this because our clients have reached their goals with our efforts including:

  • New platform implementations
  • Collections training
  • Customer outreach and collections strategies enhancement
  • Hardship program development
  • Policy & Procedure development
  • Current and future state process mapping

We’ve shared this high-level debt collections reference guide to help you get new employees up to speed, or even overcome compliance challenges. We can also seamlessly improve your collections process.  With experience leading all components of collections services, our services provide for minimal disruption to your day-to-day operations, while providing maximum benefit to your desired outcomes.

Contact us and together we can help with guiding your collections and recovery activities into the future!


Reference Info for a Deep Dive into the Rules and Regulations:

CFPB Confirms Effective Date for Debt Collection Final Rules


Understand How CFPB Debt Collection Rule Impacts You


[Editor’s note: this article was written by Quan Baker, former Bridgeforce Consultant]

CFPB Compliance Resources FAQs


CNBC: Debt Collectors can Text, Email and Message You on Social Media


CFPB Releases Debt Collection Rule FAQs


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