2014 Workshop Series
Collecting the Right Way -
Know your Consumer Collection Laws
Presented by Mark R.
Consumer Financial Protection Bureau (CFPB)
Fair Debt Collection Practices Act (FDCPA)
Telephone Collection Laws
Collecting Time Barred Accounts
Lessons and Contact Information
The CFPB was formed July 21, 2011 – Crafted out of the Dodd-Frank Wall
Street Reform and Consumer Protection Act
The CFPB has 3 missions: Educate, Enforce and Research
Established the federal agency to regulate consumer protection for
financial products and services.
Jurisdiction is wide spread and includes Student Loans and
Job is to take and act on consumer complaints
An extension of the FTC looking at non-banks
Know Before you Owe - see CFPB website is a good resource to
check out for your knowledge and students
Like GLBA before we need to understand that the CFPB is
something we need to comply with--- not ignore
The Compliance is IMPORTANT
It is important that every school makes sure all of their agencies have
taken the right steps to be in compliance and that the school follows
the same guidelines.
Agencies in the know have taken the steps to be fully compliant and
will continue to make necessary changes as regulations change.
A sample of items that compliance must include: Appoint a
Compliance Officer, Establish a Compliance Team to oversee
operations, Build Compliance into all systems, Conduct an annual
audit, Document everything, Train and retrain staff, Employ good
technology and Foster a culture of compliance.
Understand the Rules, Laws and Regulations discussed in this
Recently in the News
On July 10, 2013, CFPB Director Richard Cordray remarked that it is the CFPB's job
to “root out bad actors and protect consumers against unfair, deceptive or abusive
practices and other legal violations. which damage both consumer and also every debt
collector that tries to operate within the law.”
CFPB Now Accepting Debt Collection Complaints
The CFPB announced that it is now accepting complaints about debt collection.
Consumers are now able to submit complaints against any company that attempts
to collect a debt from them. In addition, however, the consumer can also choose
to submit a separate complaint against the company with whom the consumer had
the original account. According to CFPB these new complaints will serve as useful
feedback for creditors that hire third-party debt collectors or sell their debts.
Creditors, he stated, “will be made aware of the kinds of struggles that consumers
are having with their continuing debts and can potentially rethink what is
happening to their customers or cut off those debt collectors they deem to be
Fair Debt Collection Practices Act (FDCPA)
Passed in 1977 as a consumer protection amendment establishing
legal protection from abusive debt collection practices. This has
been strengthened and is used in conjunction with the Fair
Credit Reporting Act to hand down penalties and fines and
protect consumers. In 2006, attorneys were added to those the
Federal Trade Commission regulates under this law.
There are many prohibited actions and specific guidelines that need
to be followed when collecting from Consumers.
The FDCPA and related laws prohibit abusive, unfair and deceptive practices:
Specifically limit when a debtor can be contacted – not at an inconvenient time or at work without specific
Consumers can tell you not to call at work and your agency not to call them.
Know who you can discuss the Debt with –Collection Laws vs. FERPA .. . And regulations for first party’s vs.
Written verification required from third party’s and can be requested from first party’s.
Know what is considered harassment.
Threats, publication of names, profane language (even in response to the same), false statements, etc.
Know what can be garnished (federal payments exempt except for federal loans).
Know how to leave a message and identify yourself.
The FTC and Department of Education jointly oversee the Student Loan
Industry. They are watching for deceptive practices.
Understand that Consolidation is a good tool for collecting, but is not the best
for every Perkins borrower. Be sure that borrowers fully understand the loss
of benefits BEFORE they consolidate.
Be sure your in-house collectors and agencies understand your rehabilitation
The Communication Act of 1934 established the Federal Communications
Commission (FCC). The FCC regulates interstate, international, and maritime
communications including radio, television, wire, satellite, and cable. Their
jurisdiction covers all 50 States, the District of Columbia and U.S. possessions.
FDCPA prohibits a debt collector from communicating with a consumer in
connection with the collection of any debt at any unusual time or place or at a
time or place known or which should be known to be inconvenient to the
consumer. The consumer can inform the collector that contacting the cell
phone is inconvenient and the collector must cease any further communication
with the debtor by way of the cell phone.
You are permitted to call from 8A – 9P local time. Be sure you know where you are
calling –Telephone numbers can travel with individuals across the country.
School collection staff should follow these same guidelines.
Telephone Consumer Protection Act of 1991 restricts the use of automated dialing
systems, artificial or prerecorded voice messages, SMS text messages received by
cell phones and the use of fax machines to send unsolicited advertisements.
Additionally, the TCPA specifies technical requirements for fax machines, auto-
dialers, and voice messaging systems – principally with provisions requiring
identification and contact information of the entity using the device to be
contained in the message. Additionally:
Calls cannot be made with artificial voices or recordings to cell phones or
to any service in which the recipient is charged for the call.
In the event of a TCPA violation, individuals are entitled to collect damages
directly from a solicitor for $500 to $1,500 for each violation, or recover
actual monetary loss, whichever is higher.
The CAN-SPAM Act made a minor amendment to the TCPA to explicitly
apply the TCPA to calls and faxes from outside the US.
To understand the Statutes of Limitation, keep in mind:
Each state established a statute of limitations for debts
For most states, these vary from 3 to 6 years
When the time limit expires, a creditor may NOT sue to get paid.
After the limit Credit Reporting Bureaus will no longer list the debt
Federal Loans are NOT time-barred
Schools CAN maintain HOLDS and require payment before
Agencies can legally request payment, BUT cannot sue, infer or
threaten suit or credit damage and should inform the debtor that
the debt is time-barred.
FDCPA suits for time-barred collections are growing. The CFPB and lawyers have educated the
consumer on their rights
In New York on July 21,2013, the Cuomo Administration proposed new reforms including the
following for time-barred (Zombie Accounts):
Protections against Collection of ‘Zombie Debts.’ Often times, debt collection companies will
try to collect on “zombie debts” for which the statute of limitations has already expired. Under
this new regulation, if a debt collector tries to collect on a debt after the statute of limitations has
expired, the collector will need to inform the consumer, in every communication, that the statute
of limitations has expired and the consumer can use that as a defense against a collection lawsuit.
Most consumers are not represented by counsel and debt collectors can take advantage of this by
threatening to sue, or actually suing, without the consumer knowing he or she has this defense.
This reform will help prevent companies from bringing expired zombie debts back from the dead.
Make sure that you and your agency partners understand that the accounts are time-barred and
follow the laws and restrictions.
Holds may be the most effective collection tool for time-barred accounts!
+ More than one out of every six American homes (17.5%) had
only wireless telephones in 2008 – a number that continues to
increase every year!
+ In addition, more than one out of every eight American homes
(13.3%) received all or almost all calls on wireless telephones
despite having a landline telephone in the home.
+ Estimates put collection calls to student loan recipients at 50-
These Laws make it imperative that we as Schools and
Collection Agencies that represent schools, understand
the rules, laws and regulations that apply to all levels of
collections and specifically to Higher Education debts
The news is full of reports on higher education debt loans
and we need to make sure we follow the right steps
when contacting and collecting from the former
From the beginning incorporate full disclosure and good communication. Focus on the idea of
“prior express permission” or required authorization which includes:
Obtain permission to use cell phones for contact purposes.
Make sure to be compliant in the verbiage of the statement that you are requesting the
student to sign.
Make sure that this happens in the admissions or registration process.
Make sure that there are statements in printed materials indicating that you will use the
number provided to make contact with the student.
If adding collection fees when placing an account in collections, make sure this is
provided to the student in writing at the time of registration.
Work hard to accompany all receivables with a promissory note and written
Foster a Culture of Compliance (CFPB and more) and education for all your Students
Follow the guidelines of FDCPA and related laws and do not step over the line with demands
Do what is best for the Student borrower/debtor regarding Consolidation and
Know the laws for telephone collections such as leaving messages, working with debtors and
related individuals (TCPA, FERPA, etc.).
Understand time-barred debts and make the decisions that are best for your Campus.
+ Making Training of Collectors a Priority. Use your agency partners, associations and
+ Know who you may disclose the existence of a debt. Only those the borrower/debtor
has granted permission – usually their attorney and spouse
+ Understand the dangers of communicating about the debt via unsecured fax or e-mail
(even with consolidation information)
+ Be aware of changing rules and regulations. Your agency partners, loan servicers,
associations, list serves and ACA are all good sources of information.
Contact us at:
Mark Goodman – Educational Service Consultant at Mega Returns Inc.
firstname.lastname@example.org 856-577-7703 (Pacific time zone)