A Step-By-Step Guide of the CFPB's New Rule: Regulation F Simplified

Many have been preparing for the effective date of Regulation F, which is November 30th. This new Rule will undoubtedly change the world of debt collection. With careful preparation and resources from the Consumer Financial Protection Bureau (CFPB), navigating this new landscape is manageable.
In anticipation of this date, our team of professionals recently detailed Regulation F in an interactive webinar, Ask a Pro: The Debt Collection Rule - How Regulation F Will Impact Creditors, where they discussed and answered questions about Regulation F. Shareholder Sara Costanzo moderated this session with our panel, manager of client business operations Beth Cole and shareholders Jamie Hart and David Head. Now we will review some highlights of Regulation F to prepare for November 30th.

How Did It All Start?

The CFPB’s Rule was released in two detailed parts in 2020. The first part was released in October 2020 and mainly focused on communications between the consumer and the debt collector with the use of new technology. Part two was released in December 2020 with a focus on the Model Validation Notice (MVN) and credit reporting. Included within these announcements were model form language and voicemail scripts and examples for applying the rule in practical situations in the Official Interpretations section.

Understanding the Model Validation Notice (MVN):

The MVN replaces the initial demand letter that debt collectors use today. It must be clear and conspicuous and requires the inclusion of very specific information, which includes an itemization date. This date can be one of five reference dates for which a debt collector can ascertain the amount of the debt:
  • Judgment Date
  • Charge Off Date
  • Last Payment Date
  • Last Statement Date
  • Transaction Date
We highly encourage that prior to the effective date of Regulation F, a decision be made as to what reference date will be used as the itemization date. 

Utilizing Electronic Communication – Email and Text Messaging:

When communicating to debtors electronically, the new Rule allows the use of email and text communications to certain limitations. That said, users must also fully comply with the Telephone Consumer Practices Act (TCPA).  Regulation F’s authorization includes:
  • Email and/or text require prior consent and a reasonable and simple method to opt-out of the communication;
  • Email and text messaging are not subject to the 7/7/7 call count frequency limitation;
  • The CFPB will review the cumulative effect of conduct of the volume and frequency use of all communication methods to ensure that the result is not to harass or be abusive in any way.

Limited-Content Message (LCM) Strategies:

When leaving voicemails for a consumer, make sure it is an attempt to communicate, NOT a communication about the debt itself. When leaving your message, following the required content guidelines provides a safe harbor from it being deemed a communication about the debt. 
  • Required content to qualify as an LCM:
    -Business name of the debt collector that does not indicate that the debt collector is in the debt collection business
    -A request that the consumer reply to the message
    -The name(s) of a natural person the consumer can contact at the debt collector
    -A telephone number the consumer can use to contact the debt collector for a reply
Outside of this required content, there is optional information that you can include in your message, but it is not necessary. 
  • Optional content to qualify as an LCM:
    -A salutation
    -Date and time of the message
    -Suggested dates/times to reply to the message
    -A statement that the consumer may speak to any of the debt collector’s representatives

Call Frequency Compliance – The 7/7/7 Rule:

When it comes to call frequency, Regulation F has provided for a 7/7/7 rule. This rule states that a violation is presumed if:
1) A debt collector places telephone calls to a particular person in connection with a particular debt more than seven times within seven consecutive days, or
2) After have a telephone conversation with a particular person regarding a particular debt, the debt collector makes a call within seven days of that conversation. 
Included in placed telephone call count:
  • Limited Content Message/Voicemail
  • Unanswered calls (telephone ringing)
  • Ringless messages left at any number if applicable
Exceptions to the 7/7/7 rule include:
  • Busy or not connected to the number called/out of service
  • Misdirected calls
  • Calls placed with a person’s prior consent given directly to the debt collector and placed within seven days of consent
  • Calls placed to authorized third parties
It’s important to note that the rule focuses on each particular debt and each particular persons. This means that if a telephone number is listed under several different debts, each can be treated as separate contacts under the 7/7/7 rule. 

Additional Guidance – Staying Compliant:

Staying compliant with the CFPB’s new requirements is essential. Here are some additional new changes to be aware of under Regulation F:
  • The “consumer” definition now includes a deceased person
  • Probate initial communications must be directed to a named personal representative of the decedent’s estate, not the estate or family of the decedent, in general
  • Credit reporting may only occur after communication with the consumer about the debt
  • Prohibition against inconvenient time and place is expanded to include email and text limitations
  • There is now a record retention requirement of three years
Our team will be providing updates as this Rule comes into effect. If you have questions, please connect with Sara, BethJamie, and/or David today. 
For more comprehensive information and insights, watch our Ask a Pro: The Debt Collection Rule - How Regulation F Will Impact Creditors webinar and/or read Sara Costanzo’s blog Regulation F Top Three Tips: What Creditors Need to Know.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.

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Shareholder Sara Costanzo recently attended the American Financial Services Association (AFSA)'s 2021 Annual Meeting. Sara participated as a panelist to discuss debt collection and the CFPB's Regulation F.
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Sara M. Costanzo


James T. Hart


David A. Head


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