After the paradigmatic shift that the internet and the rise of digital communication supposed, an update to the original FDCPA agreement from 1977 was well overdue. Therefore, Regulation F was passed with the objective of protecting consumers by defining the boundaries between debtors and debt collectors in this new world of communication possibilities.
In this article, we will dive deep into Debt Collection’s Regulation F, what it implies for the future of collections, and how to be both efficient and compliant while collecting under the new rules.
Keep reading to find out.
Table of contents
- What is Regulation F?
- When was Regulation F passed?
- Which are Regulation F's key provisions?
- Does Regulation F override FDCPA?
- What is Regulation F 7 in 7?
- How are digital collections affected by Regulation F?
- How to keep Debt Collections Efficient while Respecting Regulation F
What is Regulation F?
Regulation F is a set of rules and requirements for debt collectors, designed to provide additional protections for consumers by updating and clarifying the Fair Debt Collection Practices Act (FDCPA).
Under Regulation F, debt collectors are required to follow strict guidelines for communicating with consumers, including providing clear and accurate information about their debts and avoiding abusive or harassing tactics. The regulation also includes new provisions for digital debt collection, such as email, text messages, and social media.
When was Regulation F passed?
Regulation F was passed by the CFPB on November 30, 2020, and went into effect on November 30, 2021. The regulation was the result of several years of research, development, and public feedback, and is considered to be one of the most significant updates to debt collection rules in decades.
Historically, the FDCPA was first passed in 1977 and established guidelines for how debt collectors could communicate with consumers. However, the law was often criticized for being outdated and unclear, leading to confusion and legal disputes in the debt collection industry. Regulation F was created in response to these concerns and is intended to provide more specific and up-to-date guidance for debt collectors in the digital era.
Which are Regulation F's key provisions?
With the aim of protecting consumers from unfair, deceptive, or abusive debt collection practices, Regulation F sets some key provisions that collectors have to comply with moving forward:
- Communication practices: Debt collectors must communicate with consumers in a manner that is clear, transparent, and not deceptive or misleading. The regulation sets out guidelines for how and when debt collectors can contact consumers, as well as restrictions on certain communication practices, such as the use of false or misleading statements.
- Validation of debts: Debt collectors must provide consumers with certain information about the debt they are attempting to collect, including the amount owed, the creditor's name, and the consumer's right to dispute the debt. This information must be provided in writing within five days of the debt collector's initial communication with the consumer.
- Prohibition of unfair practices: Regulation F prohibits debt collectors from engaging in certain unfair or abusive practices when attempting to collect a debt. These practices include, but are not limited to, threatening to take legal action that cannot be legally taken, misrepresenting the character, amount, or legal status of a debt, and collecting or attempting to collect interest, fees, or other charges that are not authorized by law or the agreement that created the debt.
- Dispute resolution: Debt collectors must provide consumers with a mechanism to dispute a debt and must investigate and respond to any such disputes in a timely manner.
- Recordkeeping and reporting: Debt collectors must maintain accurate records of all debt collection activities and must report certain information about their activities to the CFPB.
Does Regulation F override FDCPA?
Regulation F does not override the Fair Debt Collection Practices Act (FDCPA), but rather complements it. The FDCPA is a federal law that sets out general guidelines for debt collectors to follow when communicating with consumers, while Regulation F is a set of more specific rules and requirements that build upon the FDCPA.
While the FDCPA establishes general standards for debt collection practices, Regulation F provides more specific guidance on topics such as digital debt collection and how debt collectors can use new technologies to communicate with consumers. Debt collectors are expected to comply with both the FDCPA and Regulation F in their debt collection practices.
What is Regulation F 7 in 7?
The Regulation F 7-in-7 rule states that debt collectors are only permitted to call consumers about a particular debt seven times within a period of seven consecutive days, as long as no contact is made with the consumer in any of the attempts. The seven-day period is rolling and does not reset with the start of the calendar week.
If contact is made, the collector must not attempt to call the consumer again during the next seven days, unless express consent is provided by the consumer. This rule applies separately to each debt a consumer may have incurred, so seven calls to a consumer about one particular debt within seven days would not count towards the seven-call limit regarding a separate debt.
To stay in compliance with the rule and avoid unnecessary fees, debt collectors can use software to help them keep track of their communication attempts and ensure they do not exceed the seven-call limit within a seven-day period.
How are digital collections affected by Regulation F?
Regulation F has made itself known for trying to renew the original FDCPA agreement from 1977 by including regulations over digital channels.
Here are the main takeaways:
- Communication attempts need to be kept between reasonable hours (8 am - 9 pm) to not be considered harassment.
- Debt collectors are required to offer an easy opt-out option on every text, e-mail, or DM.
- Debt collectors must identify themselves as a debt collector when requesting to be added as one of the consumer's contacts on social media.
- The only way you can use social media for collections is through DMs, since posting about a debt to get the attention of a debtor would mean that it could be seen by the debtor's followers (which is prohibited).
- There’s no limit on the frequency of contact through digital channels, although being too persistent could be seen as harassment.
How to keep Debt Collections Efficient while Complying Regulation F
Keeping compliance with Regulation F can be time-consuming and complex. Fortunately, there are ways to keep debt collections efficient while adhering to regulations.
One way to do this is to use omnichannel debt collection software that automates many aspects of the debt collection process. This software not only will help you streamline communications with consumers, but also will ensure that all required information is provided, and track all communication for compliance purposes.