CFPB Regulation F Going Into Effect in November – Are you Ready?

After several years of waiting and wondering, the Consumer Financial Protection Bureau (CFPB) Regulation F will be moving forward. 

The CFPB issued a Notice of proposed Rule Making on April 7, 2021, which proposed delaying the effective date of the Debt Collection Final Rules (Regulation F) for 60 days, but near the end of July they did an about face, essentially taking the proposal back. 

On July 30, 2021, the CFPB issued a press release indicating that the effective date would not be delayed and the Regulation F would go into effect on November 30, 2021, as originally planned. 

The two debt collection final rules that fall under Regulation F broadly address both communications and disclosures when it comes to third-party debt collections. 

The rule summaries read as follows: 

The first debt collection final rule, released on October 30, 2020, addresses, among other topics, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection. The first final rule also addresses the use of newer communication technologies (such as email and text messaging) in debt collection and establishes record retention requirements.  

The second debt collection final rule, released on December 18, 2020, focuses on debt collection disclosures and addresses, among other topics, the information that debt collectors must provide consumers at the outset of collections communications. The second final rule also prohibits debt collectors from bringing or threatening to bring a legal action against a consumer to collect a time-barred debt and prohibits debt collectors from furnishing information about a debt to a consumer reporting agency before the debt collector takes certain actions to contact the consumer about the debt. 

But what does this mean for hospitals like yours? As the original creditor, these changes can impact you based on how you treat your collections.  

Hospitals that use a fictitious name for collecting have long been treated as third-party debt collectors as part of the Fair Debt Collection Practices Act (FDCPA). Regulation F adds another instance to how hospitals may be treated. It reads, “If original debt collectors attempt to enforce a security interest by means of interstate commerce (mail, telephone, etc.), they are subject to the Act and Regulation if the creditor (i) has no present right to possession of the subject collateral, (ii) has no present intention to take possession of the collateral, or (iii) the collateral is exempt by law from dispossession. 

Another part of Regulation F that could impact healthcare providers is Section 1006.14(b)(2), which deals with limiting collection calls to permitted timing (ie. Seven calls allowed in the span of seven days, waiting seven days after a successful contact, etc.). It’s also important to give patients “opt-out” rights when it comes to email and text messaging (Section 1006.6(e), and to understand the prohibition against collecting time-barred debts (Section 1006.26). 

There are portions of Regulation F that may be disruptive to your collection process, which is a reason the Rule may not be followed in every instance. An example of this is the notice for validation of debts and providing the required disclosures is something original creditors – like hospitals – shouldn’t follow. As the original creditor, there shouldn’t be anything to validate. 

The best course of action is to pursue collections in a way that you never have to argue with a consumer’s attorney about why you are not a “debt collector” under the FDCPA and the new Regulation F. But how do you get to that point? 

There are several steps you and your organization can take to ensure you are ready to meet the November deadline without any hiccups. 

1. Check on Your Tech Vendors 
Have a conversation with your collections system and technology vendors to make sure that your systems will capture your patients’ communication preference correctly., Any connections between self-service portals/web-based resources and application programing interfaces (APIs) are linked properly, and any apps offered to your patients are enabled to express or change communication preferences. This will help safeguard against any issues with technology. 

2. Update Your Patient Information 
By proactively reaching out to your patient base to update contact information, you can also check for any new, changed or revoked communication permissions or preferences. 

3. Make Sure Leadership is Ready 
It’s important to work with your leadership to make determinations about how Regulation F could impact your organization. By having this conversation early, you can avoid any confusion if there are questions later. 

4. Review Credit Reporting Policies 
If your hospital utilizes credit reporting, review your policies as they relate to sharing that data with the credit reporting agencies. Make sure that if you do furnish this data, that after November 30, 2021, that you will not be furnishing data on any accounts that have not received your initial collection notice. 

5. Staff Readiness 
Take the time to review and update the way you train staff who engage with patients to assure that they know how to handle and capture expressions of a patients communication preferences, how to offer optional communication choices, how to listen for changes/revocations of communication options, and how to answer any complaints. 

6. Document Retention Review 
Review your document retention program to ensure that you can prove compliance and meet retention expectations, including call recordings. 

7. Call Frequency Requirements/Alternative Communication Methods 
Most hospitals will rely on their collection partners to make calls on their behalf, but if you do make your own calls, ensure that you have the capability to monitor call seven call attempts within a 7-day period, then one call within a week of having a telephone conversation with a patient. If you use, or plan to use, email or text, make sure that opt-outs and unsubscribes are working in real time with no delays in complying with a patent’s desire to not be contacted by one or both of those methods. 

While Regulation F may not impact your facility directly, it is best to review your policies and procedures to assure that if you do your own collections, that you are in line with the requirements set forth.