CFPB's New Collection Agency Rules and Compliance Addressed by Nexacollect
Starting November 30, 2021, all collection agencies must abide by the new CFPB's rules, also called the Regulation F, which drastically restricts how the third-party debt recovery will be performed in the future.
ROHNERT PARK, Calif., Nov. 12, 2021 /PRNewswire-PRWeb/ -- The accounts receivable industry's leading information portal, NexaCollect, has addressed several concerns that collection agencies must follow regarding Regulation-F that comes into effect from Nov 30, 2021. These changes include new restrictions while contacting a debtor over the phone, obtaining consent for electronic communications like email and text messages, additional disclosures and itemized breakdown of all payments, fees, and interest, and finally preventing the use of temporary credit reporting as a collection tool. Itemization date refers to the transaction date, last payment date, charge-off date, last settlement date or judgment date.
Before a collection agency reports to the credit bureau, they need to make a contact with the consumer regarding the debt, either by mail or phone. If they receive a mail return, it is not counted as a valid contact.
Nexacollect attempts to ensure that its medical collection agency partners are HIPAA, FDCPA, TCPA and Regulation F compliant. These rules apply to consumer collection agencies for dental collection agencies also. Commercial collections remain almost untouched by these new CFPB laws.
Most collection agencies are very concerned and scrambling to comply with these new rules and potential lawsuits this may invite in case of violations. Although this rule does not apply to older accounts already in collections, however, this does apply to all debts assigned for debt collections starting November 30, 2021. Therefore, the collection agency staff must contact all their existing clients and request them to provide the original balance, interest, fees, payments, or adjustments the account has incurred from the date of service. They must also ask for the exact date of delinquency. For clients whose data is loaded through the automated process, those integrations will require modification as well.
As per these new rules, without adequate information, a collection agency will not be able to perform collection activities in a Regulation F compliant manner. Debt collectors must also be trained so that their collection tactics and frequency of contacting debtors/patients do not violate these updated guidelines. So yes, there is a significant cost associated for collection agencies with becoming compliant with this new law.
Thinking broadly, this new rule brings greater transparency in the whole collection process. It eliminates some of the unethical practices that are currently being utilized by a few collection agencies, especially using passive credit reporting as a collection tool. This rule also restates and clarifies specific prohibitions on harassment and abuse, false or misleading representations, and unfair practices that are allegedly being used by some collection agencies today.
NexaCollect has assisted several businesses, institutions, and medical professionals to recover money from their past-due accounts through its partners effectively.
For any more information, contact Jessica at [email protected] or call 1-844-Nexa-123
Media Contact
Jessica Goyal, Nexa Collections, 1-844-639-2123, [email protected]
SOURCE Nexa Collections
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