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    Compliance and Collections: Adhering to the FDCPA and Regulation F

    A new federal debt collection rule enacted under the Fair Debt Collection Practices Act (FDCPA), Regulation F, went into effect in November 2021. This new law will significantly impact the debt collection process.

    All debt collectors, collection agencies, and loan servicers (both first- and third-party) are now expected to adhere to Regulation F.

    Regulation F for Debt Collection

    The primary requirements of Regulation F include a series of updated rules regarding the number of times and times of day debtors can be contacted. The new law also requires collectors, loan servicers, and agencies to provide a model validation notice and maintain their documentation for three years.

    For the debt collection process, Regulation F outlines:

      • Prohibitions on harassment or abuse
      • False or misleading representations
      • Unfair practices

    In this post, we’ll highlight the notable conditions and contract restrictions detailed in Regulation F.

    Executive Summary of Requirements, Conditions, and Restrictions in Regulation F

    Here’s the highlight reel for the new requirements imposed on debt collectors by Regulation F:

    1. Frequency of calls: Debt collectors are allowed to call the consumers or borrowers about a particular debt seven times within a period of seven consecutive days if no contact is made with the borrower in any of the attempts. This is known as the 7-in-7 rule.

    2. Time of day: Collectors are only allowed to contact borrowers between 8:00 a.m. and 8:59 p.m. in the borrower’s local time zone. Some states have more stringent laws regarding times consumers can be contacted. These laws take precedent over Regulation F.

    3. Calling at work: Collectors are prohibited from attempting to contact a borrower or consumer at their place of employment.

    4. Documentation: Collectors, loan servicers, and collection agencies are required to maintain records from the start date of collections activity and retain this documentation for three years following the last activity on the debt.

    5. New communication channels: Regulation F provides guidance and more legal certainty regarding the use of communication channels in the debt collection process. Some include:

      • Email: Collectors can contact borrowers or consumers to collect a debt via email, but only after the consumer has opted-in to receiving communication on this channel. Collectors may not contact emails listed under private domains or employer email addresses.

      • Text messages: Collectors are permitted to send text messages to borrowers or consumers who have given consent. Consent must be reobtained every 60 days.
    1. Voicemails as limited-content messages: Under Regulation F, voicemail messages left by collectors are considered “limited-contact messages.” These messages must contain all required information and additional messaging may not be included.

    According to the CFBP, a voicemail message is considered a “limited-content message,” if it exclusively includes the following information:

      • A business name that does not indicate that the caller is a debt collector
      • Telephone number(s) you can use to reply to the caller
      • A request that you reply and the names of the people who you can contact to reply

    The debt collector may also include the following optional information:

      • A salutation
      • The date and time of the message
      • Suggested dates and times for you to reply
      • That you may speak to any of the company’s representatives

    To be a “limited-content message,” the voicemail message cannot contain any other information.

    The Importance of FDCPA Compliance Training

    According to legal compliance experts, “The new provisions of Regulation F may seem straightforward, but when the provisions are applied to situations that could arise during collections, the complexities of Regulation F become apparent.”

    That’s why education is so important when it comes to regulatory policies that aim to protect your institution and its borrowers. Here are three ways you can help make employee compliance training a priority in your organization:

    1. Promote Top-Down Buy-In

    Encouraging employee education should start from the top down. When your leaders show they are engaged in supporting employee development by providing compliance training, it helps cultivate a culture of learning. Before implementing a training program, have a conversation with leadership to determine how it is aligned with the business goals.

    2. Make Compliance Training Accessible

    Since 2008, American financial institutions have been fined over $243 billion for compliance violations, and compliance-related operating costs have increased by 60%. To help avoid paying costly fines for compliance violations, prioritize training by making it mandatory for your employees and providing time to complete the program during regular working hours.

    3. Provide Training Tools to Support Your Team

    Providing an effective training program helps employee performance and contributes to the organization’s success. By providing the tools and information that employees need to perform their jobs better, you’ll see increased efficiencies, higher productivity, and a boost in morale among your staff.

    That’s why swbcU has added 200 eLearning courses to provide your employees the education they need to protect your member and your institution.

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    Regulations & Compliance

    Lisa Alvarez

    Lisa Alvarez is SVP of Regulatory Compliance at SWBC. In this role, she leads initiatives to measure risk culture and tolerances in an effort to develop and execute audit and advisory procedures focused on financial, regulatory, operational, as well as, internal control risks. Lisa is an experienced professional with an extensive career in business control development, compliance, and risk analysis within the finance, mortgage servicing and real estate industries. Prior to joining SWBC, Lisa served as a Vice President in the real estate finance group at Goldman Sachs Bank USA and as Vice President at Citigroup Inc., where she was responsible for the oversight of compliance and control programs within the global real estate lending division.

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