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Are You Ready for the New CFPB guidelines? It is Time To Upgrade Your Collection Process to Make the Most of the CFPB Updates.

  • icon image Aug 23, 2022
  • icon image Chirag Dutta

If you’re a debt collector or run a debt collection agency, you must be bracing yourself for the impact of the new CFPB guidelines just like we are. No worries! To make the most of the situation, you need to know the areas of the debt collection/negotiation it will affect. Note that the CFPB revises the reinforces the FDCPA, precisely the Reg F. Before we discuss how the CFPB can affect your business, here are the core areas of debt collection/negotiation that will feel the impact of CFPB’s guidelines:

  1. Alerts and notifications sent to borrowers
  2. Consumer Information relay between the agency and the third parties
  3. Responses received by debt collectors/debt collection agencies
  4. Collection Strategy & Compliance 

Notifying A Consumer

Every validation letter sent to a consumer must contain the following details to avoid a penalty under the new guidelines provided by the CFPB:

  • Debt details & Creditor’s name.
  • Responses made available to consumers (including terms to invoke protective measures and the right to request creditor details.)
  • The validation letter has to be within five days of making first contact with a consumer.
  • The consumer cannot be approached after his due is cleared.

If the debt collectors or debt collection agencies fail to follow these new parameters provided by the CFPB then a borrower has the right to ignore the debt or refuse to acknowledge it.

Information relayed to third parties:

According to the new guideline provided by the CFPB, consumer debt information like account details, the debt amount, previously collected information, and such cannot be provided to third-party reporting agencies without consent (a signed agreement) from the consumer. Also, debt collectors and debt collection agencies cannot threaten to sue a borrower over a past due.

Responding to a borrower

The new CFPB guidelines shed light on the conduct of debt collectors in response to consumer requests for creditor details (if a consumer has the same current creditor as previously.) It also states that if a validation notice isn’t sent to a deceased consumer, then a validation letter has to be sent to the consumer’s trustee before any debt collection attempt is made.

Collection Strategy & Compliance

According to the new guidelines provided by the CFPB, these steps must be followed by all debt collectors and debt collection agencies to avoid penalties:

  • A creditor can send consumer details to a third-party agency only if the consumer fails to clear his payment dues in a given time. Post this deadline, a creditor can only communicate with the third-party agency responsible for collecting the due payment. At this point, creditors cannot directly communicate with consumers.
  • A debt collector or a debt collection agency can modify their debt collection strategy following various factors like debt amount, age of the debt, chances of success, and similar factors.
  • If a consumer uses the statute of limitations as a defense against debt collection attempts, it does not mean that he cannot be approached. A debt collector or a debt collection agency may keep attempting to collect via different communication channels as long as they don’t violate FDCPA guidelines.

What does this mean for Creditors & Debt Collection Agencies?

Yet another indication that creditors and lending services need to focus more on training their staff and upgrading their credit control departments. Small loan services like PPP loans, auto loans, payday loans, and such have to divert more money and resources towards adjusting their debt collection strategy to fit the CFPB updates.

Making necessary changes to abide by the revisions issued by CFPB may get a little tricky with traditional debt collection techniques like phone calls, letters, etc. On the bright side, loan providers and other lending services can now make the most of the online space. Digital debt collection could be the next best trick to increase collection rates!

Five steps to reinforce your compliance safeguards:

  • Introduce your debt collection agency to the revisions issued by the CFPB.
  • Read the revisions on the FDCPA issued by the CFPB and understand them well. Plan and focus on changing minor aspects of your collection process that consume less time and money first.
  • Educate your debt collectors about the updates on the FDCPA issued by CFPB thoroughly. The best way to achieve this is by conducting training programs, seminars, webinars, meetings, etc.
  • You can get counsel from the outside on the new policy procedures if you deem it necessary. You may also consult a lawyer to help you better understand the updates.
  • Introduce your clients to the changes made in your compliancy policy and note their feedback. Analyze their feedback to make improvements to your existing collection process.

Or, you can get Total CollectR – Our all-in-one, hassle-free gateway to Debt Collection and Management. Our Virtual Debt Collector & Negotiator protects your business from the following:

  • Compliance Violations
  • Credit Crunches
  • Management Disasters

How Total CollectR Helps You Achieve Your Goals?

Debt collection gets a little more tricky every day, especially after the new revisions issued by the CFPB. Failed attempts put more pressure on debt collectors, who already have the stress and burden of achieving performance objectives and avoiding lawsuits.

  • Total CollectR becomes the customer preference. Our platform provides alternative communication channels that your customers prefer.
  • Capable of communicating in more than seven different languages (and languages can be easily added), and is completely customizable to meet your specific needs.
  • Time of the day matters. By leveraging artificial intelligence, Total CollectR works to understand the best possible time to get in touch with your customers.

What is Total CollectR?

Total CollectR’s Virtual Agent and Debt Negotiator are as close as you can get to achieving the perfect communication strategy. Our platform connects your customers with the channels they prefer and empowers them to resolve their past-due balances at their convenience. By leveraging AI technology, Total CollectR analyzes and evaluates consumers to plan an effective communication strategy best suited for them.

Get your virtual collector!

Book a demo now!

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