Regulation F: A Year in Review

Regulation F has been in effect for over a year and has brought a lot of change to how hospitals and others handle accounts receivable. Has it changed your accounts receivable process? In this article, we are going to review Regulation F and the impact of it since it has been in effect.

Regulation F Background

The Consumer Financial Protection Bureau (CFPB) was established in July 2011 under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFPB brought authority for rulemaking of the Fair Debt Collection Practices Act (FDCPA) from the Federal Trade Commission to the Consumer Financial Protection Act (CFPA). On May 20, 2019, the CFPB issued its rulemaking proposals to amend Regulation F, 12 C.F.R. part 1006, which implements the FDCPA. The CFPB was open to comments on the proposed rulemaking until August 19, 2019. On July 30, 2021 the final rule was issued and went into effect on November 30, 2021, which we now refer to now as “Regulation F”.

That’s the Case

It is typical to see an increase in lawsuits being filed anytime additions or changes to rules around revenue recovery occur. While there have been cases filed around Regulation F, the number is relatively low. As of November 23, 2022, there have only been 66 cases. In comparison, a WebRecon study showed that through March of 2022, there were 1,470 FDCPA, 1,441 Fair Credit Reporting Act (FCRA) and 360 Telephone Consumer Act (TCAP) lawsuits. The trend with these cases is focusing on notices and various communications.

On Notice

Regulation F includes a model validation notice for providing information to consumers about the alleged debt. While a majority of debt collectors are generally using the model validation notice for their communication with consumers, it is not stopping law firms from trying to find potential loopholes through the model validation notice.

According to data compiled by WebRecon, seven suits have been filed in Florida claiming the itemization date used for the validation notice is not one allowed by Regulation F. The important thing to remember with validation notices is to use a date you are able to prove if needed. While most of the lawsuits around validation notices involve the date used, others that have been filed include showing itemization amounts at zero as compared to the current balance and the meaning of “today” in the model validation notice.

Opting Out

Communications are increasingly going digital, and debt communications are no different. These communications are targeted by lawsuits that are focused mainly around opt-out language being clear and conspicuous. At least 10 cases have been filed under this focus focusing on the opt-out not being honored and finally, one lawsuit alleging no consent to text.

Previously, debt collectors would have the opt-out in the first communication, assuming any response was consent. Now, many are hard-coding the opt-out response into any email that leaves their system.

Call Me, Maybe?

The cornerstone of debt collection is using the phone, but there are rules that are targeted by lawsuits. Repeated or continuous telephone calls or telephone conversations were the major complaint mentioned in the lawsuits, and they were often accompanied by “inconvenient time or place” claims.

Many companies utilize software to combat this, but if a client has multiple accounts, it can get muddled when it comes to permission per account and contacts per account.

Everything and the Kitchen Sink

Regulation F lawsuits ran the gamut of challenges outside of the model validation notices, opting out and calls. Some of the highlights include,

• An agency began credit reporting after leaving a limited content message (LCM) but before communicating with the consumer.
• The LCM violated the FDCPA because it didn’t contain a mini-Miranda and constituted as an initial communication.
• Failure to provide g-notice with all the information required by Regulation F constitutes failure to provide the required disclosure “in a manner reasonably expected to provide actual notice”.
• Alleged violation for dunning notices on time-barred debt.
• Failing to note time-barred debt on communication about itemization.

The End Continues

As long as there are possible questions about the rules and requirements of Regulation F, there will be lawsuits brought against those trying to collect a debt. Just over a year in, there have been a variety of lawsuits presented, many of which were able to be defended. Going into the second year with more knowledge and clearer explanations will help everyone. Speak to your legal department for specific guidance when dealing with Regulation F. If you’re looking for a partner that can help lead you though the intricacies of Regulation F, contact Americollect today!