MODERN AGE OF DEBT COLLECTION

NEW DEBT COLLECTION RULES

AND HOW THEY MAY AFFECT OUR

MEDICAL PRACTICE.

DISCLAIMER

• This information is not intended to be legal advice and may

not be used as such. Legal advice must be tailored to the

specific circumstances of each case.

• Every effort has been made to assure this information is up-

to-date. It is not intended to be a full and exhaustive

explanation of the law in any area, however, nor should it be

used to replace the advice of your own counsel.

• Any opinions expressed are the opinions of the speaker and

not of the organization.

REGULATION F

On October 30, 2020, the Consumer Financial Protection Bureau issued a final rule (October 2020 Final Rule) amending Regulation F to implement most of the FDCPA’s substantive provisions. The October 2020 Final Rule addresses, among other things, communications in connection with debt collection, prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection. The October 2020 Final Rule is effective November 30, 2021.

On December 18, 2020, the Bureau issued a final rule addressing and clarifying consumer disclosure requirements, required actions prior to furnishing, and prohibitions regarding the collection of time-barred debt. The December 2020 Final Rule is also effective November 30, 2021.

ISSUES ADDRESSED BY THE NEW RULE.

-Guidance on Communications about a debt owed

-Call/Communication frequency and restrictions

-Clarifying Consumer notification requirements for validation of the debt

-Requirements before data furnishing to the Credit Bureau

-Restrictions regarding ‘Time Barred Debt’.

-Clarification of ‘Legal’ communications for a consumer

GUIDANCE ON COMMUNICATIONS ABOUT A DEBT OWED

• For many years Third Party Collectors have had to make a choice when leaving a message for

a consumer about a debt.

• 1- Leave a message identifying yourself as a debt collector as required. (Foti Message)

• Potentially disclosing the debt to a third party violating the FDCPA

• 2- Leave a message for the patient without identifying yourself as a debt collector. (Zortman

message)

• Potentially violating the FDCPA for not Identifying yourself as a debt collector.

• The CFPB Rule now provides the ‘Limited Content Message’ as an acceptable message.

CALL/COMMUNICATION FREQUENCY AND RESTRICTIONS

• The CFPB has now set restrictions on attempted Communication with Patients.

• 7 Attempts in a 7 day period-- Applies to phone calls & Voicemails only.

• Attempts apply to a single debt only. Each debt may receive the 7-7 .

• One conversation per debt within a 7-day period, unless patient gives consent for further

contact

• FCC may be implementing further restrictions on auto-voice messaging.

CLARIFYING CONSUMER NOTIFICATION REQUIREMENTS FOR VALIDATION OF THE DEBT

• New standards for the initial communication from Agency to inform the patient of their

right to validation of the debt.

• The CFPB has solidified the requirement to produce an itemization of the debt upon

request from the consumer.

• If you cannot produce an itemization, you should not place the debt for collections.

• Specific requirements for what is included in the validation.

REQUIREMENTS BEFORE DATA FURNISHING TO THE CREDIT BUREAU

• Effective Nov. 30,2021 , Agencies can no longer report a debt to a patient’s Credit Bureau

report, unless the have had an Oral or Written ‘conversation’ regarding the debt.

• This ‘conversation’ can be done in person, electronically or a written letter.

• Returned mail and no other communications would prohibit reporting.

• Previous reporting standards still apply, i.e. Fair Credit Reporting Act, H.I.P.P.A. ,etc.

RESTRICTIONS REGARDING ‘TIME BARRED DEBT

• ‘Time Barred Debt’= debt that is older than the statute of limitations for the account.

• Statute of limitations= The time allowed by the courts to litigate a debt.

• The CFPB now requires collectors to notify consumers of time barred debt and that

legal action will not take place on the debt.

• Statute of limitations in Kansas & Missouri is 5 years from the date of delinquency or last

transaction.

CLARIFICATION OF ‘LEGAL’ COMMUNICATIONS FOR A CONSUMER

• Emails- Ways to authorize email use by collectors-

• The creditor obtained the email address from the consumer.

• The creditor used the email address to communicate with the consumer about the account

underlying the debt, and the consumer did not ask the creditor to stop using it.

• Patient initiates first email regarding the debt.

• Prior consent from Patient to the agency regarding any debt.

• The Creditor sent the Patient a written or electronic notice to an email address the creditor

obtained and used to communicate with the consumer about the account. --‘Hand Off’ letter--

• Social media platforms- No direction given. Be cautious of third party disclosure.

CLARIFICATION OF ‘LEGAL’ COMMUNICATIONS FOR A CONSUMER

• Text Messages

• Direct consent given to the Creditor to text consumer. Either on intake form or after visit.

• The consumer sends a text to the agency first and ‘If ’ within 60 days.

• If the text was longer than 60 days, it must be run thru Cell phone data base for verification.

• Patient has never ‘Opted-out’ of text messages.

HAND –OFF LETTER REQUIREMENTS

• That the debt has been or will be transferred to the debt collector. To satisfy this requirement, the notice

must identify the name of the specific debt collector to which the debt has been or will be transferred.

Comment 1006.6(d)(4)(ii)(C)(1)-1.

• The email address and the fact that the debt collector might use the email address to communicate with

the consumer about the debt.

• If others have access to the email address, that it is possible they may see the emails.

• Instructions for a reasonable and simple method by which the consumer could opt out of such

communications.

• The date by which the debt collector or the creditor must receive the consumer’s request to opt out,

which must be at least 35 days after the date the notice is sent.

HOW DOES THIS AFFECT YOUR OFFICE?

• Itemization/Validation statement- Is it a clear and understandable reflection of the debt?

• Intake form – Does it ask for the right info?

• Does it require contact information? Or can they leave it blank?

• Does it authorize email and or text communications?

• How is the intake form entered into your system?

• Are you passing ALL of that contact info onto your agencies?

• Are you updating contact information with each visit?

• Do you send a ‘Hand Off’ Letter.

CREDIT BUREAU REPORTING ON MEDICAL DEBTS

• Main Types of Credit Scores Used - FICO® 9 & VantageScore®

• Both Scores weigh medical collections less heavily than other types of collections.

• The debt cannot be reported before 180 days from the date of delinquency.

• The debt stays on the Bureau report for Seven years from the date of delinquency.

• Requires the removal of medical debts that were paid or are being paid in full by

insurance(not by the consumer).

• ‘Pay For Deletion’ – Is it permitted to delete the debt when paid?

QUESTIONS / DISCUSSION

CONTACT INFORMATION

• Chris Robbins

• Manager

• Executive Financial Consultants

• 816-221-1333 Office

• 816-305-7658- Cell