The Bureau of Consumer Financial Protection announced its final ruling on the Fair Debt Collections Practices Act (FDCPA), confirming that digital communication channels, like email and text, are allowed to be used in debt collections, officially putting Regulation F into practice in November 2021.
Regulation F opened the doors for a digital-first debt collection strategy, allowing lenders and collectors to collect smarter and more efficiently. In this blog, our experts at TEC Services Group will explain how and why Regulation F sets a precedent for digital debt collection.
How does Regulation F work?
Regulation F pushes collectors to modernize how they contact consumers outside of traditional methods like cold calling, now able to reach consumers through email, phone, text, and social media.
However, there are restrictions on how often consumers can be contacted. Collectors are barred from calling a consumer more than seven times and a seven-day period about a specific debt, but this excludes other methods of communication like text, social media, and email.
How Regulation F opened the doors for a digital-first debt collection strategy.
Regulation F offers consumers more control over the frequency of contact and what means of contact debt collectors can communicate. For example, with the regulation, consumers must be offered an easy way to opt-out of a specific channel of digital communication they’re being contacted through. Misuse or unfair use of digital channels can result in hefty fines and punishments for debt collections, further protecting consumers.
Coupled with the limited phone contact (and fewer embarrassing conversations) and ability to make repayments online that comes with an effective digital collection strategy, the ruling offers consumers a more customized experience that fits their needs.
This is a massive step towards increased success rates for debt collection agencies, streamlined operations, and a better overall experience for consumers.
The CFPB’s ruling on digital communication has paved the way for a new path in the collections industry. With clear benefits to both the collector and consumer from incorporating digital contact methods, Regulation F is leading the way to a better consumer experience as well as improved collection rates.
Does your agency need Regulation F compliance audits, reviews, or consultancy, or are you looking to implement a digital collection strategy into your day-to-day operations? Either way, from our data-driven software or our industry-trusted, experienced experts at TEC Services, we’re here to help you. Contact us now: 941.375.0300