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Turning Red to Black Blog: Discussing Topics Related to Revenue Cycle Management, Debt Collection, Debt Recovery, Debt Management, Billing Operations and Billing Procedures

Why Providers Should Care About the CFPB’s Proposed Rules Changes

On May 7, 2019, the Consumer Financial Protection Bureau (CFPB) published its highly anticipated notice of proposed rulemaking (know as an “NPRM”) under the Fair Debt Collection Practices Act (FDCPA). While the actual rules are intended to apply only to third-party debt collectors covered by the FDCPA, first-party creditors, servicers and providers will certainly be affected by these changes as well.


With this NPRM document weighing in at over 500 pages, here’s a very brief summary of the major proposed rules that will have a definitive effect on providers:

  • Clarifying how debt collectors can communicate with consumers. As the US population ages, the modes of preferred communication have moved toward multi-channel digital options such as email and SMS texting.  The proposed changes in the rules covering this area of technology still need to be ironed out to include a bulletproof sample that can be used which avoids violations or suspect disclosures to the consumer.  The biggest obstacle for providers will be in accepting, validating and transferring those permissions to their third-party agencies in order to facilitate the proper collection of those debts.  This will require providers to keep records of their patients’ consent and include language that transfers that consent over to the agency while disclosing that this transfer will happen.  Plus, the provider will need to track any revocation of the consent (commonly called “opting out”).  Simon’s wrote extensively about doing this last year and has been presenting this idea at MGMA and HFMA conferences and webinars.  You can read more about contractual consent here.
  • Providers will be required to have oversight over their third-party vendors with whom they place accounts. A fundamental understanding of the final rules will be required in order to be an affective liaison between the organizations and the collection agencies they use.  Providers will also see a rise in the number of requests for documentation related to patient accounts as well as documentation related to patient consent.  This could be a considerable amount of added work, not to mention the implications for the initial transmission of data (see “Debt Validation Notice” below).
  • Providers should also be aware that there is potential for the final set of rules to be applied directly to providers, creditors and servicers as well. We all must understand that the main point of these rules is to protect the consumer in general by defining unfair and deceptive practices used to collect debt. The potential is there for these rules to be a guiding force for rules eventually directed toward providers and creditors.

In relation to the last two points made above, here are some of the additional things affecting agencies that may very well affect the providers as well:

  • Establishing a limit to the number of calls a collection agency can make to a consumer in a 7-day period. The rule proposes 7, but what is unclear is if that is for each debt or each servicer/provider, or whether consent can be given if working with the consumer over the course of several phone calls over several consecutive days.
  • Establishing a bulletproof “Debt Validation Notice” – basically a collection notice that is mailed via USPS – that includes the itemization of the debt. What is unclear is how deep this itemization must go.  As providers are keenly aware, their own itemized invoices can get very granular and transmission of that extended data could be problematic for both the provider and the agency that will disseminate back to the patients and consumers (never mind explaining it on the phone!).  Additionally, it should be acceptable to send the same notice via email if preferred by the consumer.  This has not been covered.
  • Damned if you do, damned if you don’t. One area that debt collectors have philosophically struggled with is needing to identify itself to the person that answers the phone without disclosing that they are a collection agency trying to collect a debt before verifying that the person they are speaking to is indeed the intended debtor.  Consumers have been rightly taught not to disclose personal information on the phone without verifying who they are speaking to.  Agencies simply cannot do that before verifying who they are speaking to for fear of running afoul of contradictory regulations.  Apply this situation to leaving voicemails and you can easily see the conundrum agencies face.  Having a bulletproof “Safe Harbor Message,” like the debt validation notice that can be used by agencies to inform consumers properly of their owed debt via voicemail is something that needs to be ironed out.
  • Prohibition of collecting on time-barred debt. This will accelerate the need to get accounts into collections, so the agencies can work it earlier and harder.  While it seems that a consumer can simply stall long enough to the effect that either the debt is lost to the annals of time, or legal action will need to be accelerated as well.

Everyone should understand that these remain proposed rule changes and there is now a 90-day period open to giving the CFPB feedback on the full NPRM. For more information about this please visit the CFPB website where you can submit feedback electronically or in writing.

While there are certainly many questions remaining this is a progressive first pass for modernizing collection regulations.  Under its new leadership, the CFPB seems to be trying to strike a balance between consumer protections and the right of creditors to recover debts in which they are owed with an eye toward modernizing regulations that are more than 40 years old.

A day after the NPRM was released, Kathy Kraninger, the Director of the CFPB summed it up at a Town Hall in Philadelphia like this, “Some of the friction in the market can be attributed to the fact that the governing statute in this market is more than 40 years old. The Fair Debt Collection Practices Act (commonly referred to as the FDCPA) is from 1977. Think about that. That’s the year the first Star Wars movie was released, Jimmy Carter became president, and a small company called Apple was trying to introduce the world to personal, home computers. Back then, when I was just a toddler, phone booths were on almost every corner and the ubiquity of cell phones wasn’t even imaginable. The FDCPA explicitly addressed the use of postcards, collect calls, and telegrams. I don’t know about you, but I’ve literally never received a telegram and wouldn’t even know how to send one. The upshot is that the FDCPA was written largely to address communications between debt collectors and consumers but it hasn’t always been easy to discern how it might apply to technologies today.”

Comments on the proposed rule can be submitted via an online portal, email, or mail. If you wish to submit a comment online, you can go to www.regulations.gov and, using the docket number CFPB-2019-0022, submit your comment. Comments can also be submitted via email by sending an email to 2019-NPRM-DebtCollection@cfpb.gov. Individuals submitting comments via email must include Docket No. CFPB-2019-0022 or RIN 3170-AA41 in the subject of the message. If you want to send a letter, address your thoughts to Comment Intake—Debt Collection, Bureau of Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552.

Click here to learn more about Simon’s Agency's COO, Tim Buckles participation in ACA International's Washington Insights Fly-In May 14-16, 2019.  Tim joined nearly 100 collection agency representatives from around the country in Washington, DC to speak with members of Congress on these hot-button issues.

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