Navigating Regulation F With AI

Implementing and navigating Reg F well is a team effort.

As anyone abreast of regulations in debt collections is aware, Reg F implementation, with new clarifications, is in full swing since November 2021. As an amendment to 12 CFR part 1006, which implements the FDCPA, Reg F creates new communications requirements for debt collection groups and agencies

In short, with new regulation comes new responsibility. How strong is your agency’s Spidey sense? How can AI help it get even better?

Understanding and Anticipating Reg F Challenges

One of the most challenging aspects of Regulation F is maintaining seamless, standard and consistent interactions with consumers across channels. Manual auditing of 100 percent of multi-channel conversations with consumers with respect to Reg F is nearly impossible. 

However, debt buyers and collection agencies that are serious about adhering to Reg F across the entire consumer (account) lifecycle (and, hopefully, every agency is), can apply modern AI/ML applications to automate the audit process across all communications channels. With this type of insight and automation, every opt-out and dispute will receive the necessary attention and response, and every restriction requested by a consumer can be honored. Additionally, the most important compliance records can be easily maintained. 

So, it’s clear that bringing automation to collection workflows is imperative for modern debt collection firms to anticipate and eliminate Reg F compliance risks and thrive in the new regulatory environment. 

But let’s take a step back and examine why this automation is so critical to compliance success. What are the major implications of Reg F, and what can AI do to help solve them?

3 Major Implications of Reg F

First, we must take a look at the implications of the new rules. Let’s begin with a familiar one. 

1. The 7/7/7 Rule

This rule states that: 

  • Collectors can’t make more than 7 attempts to contact a borrower in 7 days
  • If they achieve RPC and speak to a borrower, they must obtain call-back consent in order to reach out again within the next 7 days
  • Voicemails are still considered contacts

The implications are heavy: if you violate 7/7/7, you are open to lawsuits. Given the variance in definitions of how agencies define rules and set up dialers, this could be more common than you might anticipate. 

2. Clear and Conspicuous Disclosure

This regulation illuminates an aspect of communication that is critical to agency success in adhering to Reg F: Clarity! 

If an agent gives a disclosure it has to be clearly stated, and the customer needs to understand what they said, period. If it isn't clear, and if it isn’t clear the customer understood, then that constitutes a violation and can have dire financial consequences for the agency. 

3. Digital Communications

Since CFPB has offered guidelines on the usage of digital communication channels, agencies have begun to use these to contact consumers. Importantly, these emails, SMS messages, and the like don’t count toward the 7/7/7 rule, allowing for additional contact points. 

The implications here may not be immediately clear, but agencies should consider that these forms of communication also represent possible areas of failure to provide the correct messages in a clear and conspicuous way. Additionally, while most debt collectors have considered or implemented rough speech analytics, a lack of oversight and insight into emails and text communications remains, opening a new area of risk. 

How Can AI Support Agencies and Lenders Navigating Reg F?

AI is not a monolith; rather, machine learning models are application-based. Therefore, when we imagine how AI can support Reg F adherence in the contact center, we should also consider application to each of the major areas listed above. In this section, we’ll describe how AI can support adherence to the 7/7/7 rule. Check out our upcoming blog posts for more on Clear and Conspicuous application and the Digital Communications applications

How AI Supports 7/7/7 Adherence

First and foremost, anyone attempting to comply with Reg F needs total call visibility and compliance violation transparency. Because so many contact centers use sampling or static tags to address these two areas, full coverage is rarely realistic — unless your tool, like Prodigal, specifically works to combat that lack of coverage. 

Strong machine learning models will be self-healing and self-learning, and guarantee the requisite coverage of calls and compliance violations. This aspect of the product can support all three major Reg F rules we mentioned, but 7/7/7 requires even a little bit more. 

Today, the seven attempts to call can be taken care of by the dialer tool, which is an easy rule to set. But when it comes to contacting right-party contacts (RPCs), we've seen that most agencies end up using dialer rules based on agent dispositions, which are famously faulty. Prodigal has seen that just in RPC calls, there still remains about 5-7% incorrect dispositions, opening agencies up to large lawsuits. 

The right AI-fueled product will provide:

  • Wrong Disposition Reports

AI can analyze the call and compare its contents to the disposition on the call, then flag any “wrong disposition” calls, which can be corrected. 

  • RPC Contact Reports

Your tool should analyze calls to see where RPC was established, and flag all calls (in near real time or end of day) where RPC was done and no call-back consent was given. This can then be fed to dialers to ensure that those accounts aren't called back within the time period. 

  • Limited Content Messages

Voicemails your agents leave are so often left out of the call analysis, but they must comply with LCM formats. Your AI should help you understand whether that’s the case for every call. Additionally, it should flag all calls recorded as “voicemails” where no messages were left (calls that don’t constitute “contact” but rather a contact attempt), allowing you to differentiate and maximize voicemail opportunities — as well as stay safe under the LCM safe harbor rules against third party disclosures. 

Getting Started with AI Contact Center Solutions

If you don’t already have full call coverage, voicemail clarity, or the right compliance framework — or if you think you have it but haven’t encountered a major Reg F challenge yet to prove it — it’s time to start considering how machine learning can help. As you begin to explore, don't forget to come back to learn about Clear and Conspicuous regulations, and in the meantime, reach out to Prodigal to start clearing your path toward compliance and peace of mind.

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Brian Reed

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Karin Krisher

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