The limited content message exception in the CFPB’s Reg F presents an opportunity to strengthen your brand, which ACA attorney member Tricia Ann-Olson Zachary will cover in a Hot Topic webinar Aug. 5. Here, she explains why branding is important—especially now—in the ARM industry.
Many years ago, I wrote an article for Collector magazine concerning branding in the accounts receivable management (ARM) industry. The article encompassed a discussion of the prevalence of descriptive business names within the ARM industry, and the benefit of creating a distinguishable brand that begins with a unique business name. Although these considerations are still at issue today, one thing has changed—the law.
Beginning as early as Nov. 30, 2021, but potentially as late as Jan. 29, 2022, the rule implemented by the Consumer Financial Protection Bureau that revises Regulation F, 12 CFR part 1006, will go into effect. The debt collection rule provides guidance and clarification, especially with reference to communication.
The CFPB has proposed delaying the effective date to Jan. 29, 2022, to allow stakeholders in the ARM industry affected by the pandemic additional time to review and implement Reg. F. The bureau has not announced its decision.
When the debt collection rule goes into effect, a significant exception will create a much-needed safe harbor when it comes to what “communication” entails. The CFPB created a significant exception from the definition of a “communication,” which I will discuss in a Hot Topic webinar Aug. 5, What’s in a Name? Strengthening Your Brand Through the Limited Content Message Exception.
The new debt collection rule defines “attempt to communicate” as any act to initiate a communication or other contact with any person through any medium, including by soliciting a response from such person.
An “attempt to communicate” includes the new definition of a “limited content message.” This message will legally create an exception from a “communication” under the Fair Debt Collection Practices Act.
The “limited content message” (LCM) is a voice message that includes the following content:
A request that the consumer reply to the message;
A business name for the debt collector that does not indicate that the debt collector is in the debt collection business;
The name or names of one or more natural persons whom the consumer can contact to reply to the debt collector; and
A return phone number.
The significant advantage and relevance of the LCM is that it is not construed as a “communication” under the FDCPA. The LCM permits a debt collector to leave a message for a consumer without communicating, as defined by the FDCPA, with a person other than the consumer.
The LCM exception will eliminate the conflict between providing meaningful disclosure and unauthorized third-party disclosure. Until now, some courts have held that a message asking for a return call from a consumer is a communication under the FDCPA, and therefore must include a statement pursuant to Section 807(11) requiring the disclosure that the caller is attempting to collect a debt. However, this requirement increases the probability that a third-party would know that the message relates to debt collection.
Other courts have attempted to state that a simplified message omitting certain information might not qualify as a communication. The CFPB assessed the impact of this conflict and recognized that this tension leads to repeated contact and excessive dials, as a response to the jurisdictional disagreement. As a result, the debt collection rule created the LCM exception to reconcile the conflict and more closely follow the initial intention of Congress.
However, the debt collection rule requires that the name cannot “indicate that the business is a debt collector.” Under the section-by-section analysis of the final rule, the CFPB states that “a debt collector’s business name that [indicates] that the debt collector is in the debt collection business is [not allowed within] the required content of an [LCM]…”
It is important to note that if your company name reveals that you are in the debt collection business, the contact would not be construed as an LCM, but would be a “communication.”
As a practitioner whose firm concentrates on two distinct practice areas, intellectual property and collection compliance, the part of my practice that guides businesses on copyright and trademark law is challenged by the overwhelming prevalence of descriptive business names within the ARM industry.
This is a common desire of any business when it first considers its name because it wants to be identifiable. However, opting for a descriptive name often leads to confusion with other businesses and lack of identity for potential clients.
Without any intention to disrespect anyone, the “accounts receivable” and “debt collection” industry is rife with business names that use these core words as their primary title.
Because of this new exception, this is an opportunity to consider how to create an identity for your business as a brand, not as a description of services.
A branded name will help your business create a strong source identifier that is distinguishable from other businesses and ensure compliance under the LCM exception.
As further stated by the CFPB, “many debt collectors will be able to disclose … doing business as (d/b/a) name without revealing that they are in the debt collection business.”
Anyone whose business name might not be able to use the LCM exception has probably encountered at least a few occurrences of a misdirected complaint, or received allegations that a credit entry was erroneous, only to find it is a different agency.
Reputation is essential in every industry and the ability to stand out is a core benefit of establishing a brand, not just a business name—especially by using identifiers that don’t get lost in a sea of descriptiveness.
There is no better time than now to assess this issue to ensure that you can use the clarification created by the debt collection rule.
By Tricia Ann-Olson Zachary