Does Your Collection Agency Name Violate Regulation F? [Podcast]

Regulation F contemplates debt collectors
communicating with consumers using a scripted “limited content” voicemail message
which contains the business name of the debt collector, but “does not indicate
that the debt collector is in the debt collection business.”  While consumer advocates agree that this
limited content message will be extremely beneficial to consumers, debt
collectors must proceed cautiously with implementation to ensure full
compliance with all requirements of the limited content message contained within
Regulation F.

In this episode of the Debt Collection Drill
podcast, Moss & Barnett attorneys John Rossman, Sarah Doerr and Brad
Armstrong provide practical guidance for implementation of the Regulation F
limited content message and the attorneys also examine the legal restrictions
regarding the use of certain words in a collection agency name.  

Listen here or read the transcript below.

Attendant:

Moss and Barnett is pleased to present the debt collection
drill. The podcast featuring Moss and Barnett shareholders, John Rossman, and
Mike Ponson, providing sage tips for improving collections and compliance.

John Rossman:

Welcome to another edition of the debt collection drill
podcast. I am John Rossman, your host. And with me today, I have two special
guests from here at Mass and Barnett. We have Sarah Doerr, who’s a shareholder
here at Moss and Barnett, and we also have Brad Armstrong, who is an attorney
here at the firm as well. And today we’re going to be talking about a really
exciting topic that I’m really looking forward to, and it’s this concept of a
limited content message. I know that for several years, it seems maybe going
back to the Foti case or even earlier, there’s always been these questions
about what kind of voicemail message can we leave? What kind of voicemail
message should we leave? And a ton of lawsuits, a ton of litigation, a lot of
talk. Finally, it appears through regulation F that the CFPB has put an end to
those discussions and those conversations in those concerns and given guidance
as to what type of message can be left by a debt collector for a consumer that
would not constitute a communication and what they’re calling it is this
limited content message.

And I’ll read real briefly from regulation F how it
defines a limited content message. And it means a voicemail message for a
consumer. That includes all of the content described in paragraph J one of the
section, which we’ll go through that may include any of the content described
in paragraph J two of this section. And so what does it have to require the
required content includes the business name for the debt collector that does
not indicate that the debt collector is in the debt collection business, number
two, a request that the consumer reply to the message, number three, the name
or names of one or more natural persons whom the consumer can contact reply to
the debt collector and number four, a telephone number numbers that the
consumer can use to reply to the debt collector. There’s additional optional
content under reg F including a salutation date and time of the message
suggested dates and times for the consumer to reply, the statement that the
consumer may respond to any of the representatives at the debt collector. So
this is just a sample of the things that may be included in the things that
must be included. Sarah, I’ll start out with you. What were your thoughts as
far as the ability of a debt collector to use this limited content message in
the context of debt collection today?

Sarah Doerr:

I thought that in some ways it was a missed opportunity
for the CFPB to go further in terms of defining what can and cannot be said.
There’s some question, for example, as to whether, and what happens when, for
example, a company named does indicate that they are a debt collector and how
do they get around that? Do they register a DBA if they do that kind of what
implications does that have for the whole consumer facing side of their
business?

John Rossman:

Yeah, it’s a great question. And we’ve been getting a lot
of questions lately about, does our company indicate that we’re in the business
of debt collection, Brad, I know you’ve looked at this issue. What are you
seeing as far as there’s, there’s not a ton of guidance here in regulation, F
as far as what debt collector names might indicate that you’re in debt
collection and what might not, Brad, what does the case law, and what does your
research show as far as that question is concerned?

Brad Armstrong:

Yeah, this question, isn’t an entirely new topic. The FDCPA
actually has a similar provision, F(8), which prohibits debt collectors from
using names that indicate that they are in the collection agency business on
envelopes sent to consumers. So we do have a little bit of insight as to what
courts might construe to be a name that indicates you’re in the business. So
going back over the last 10 years, the most obvious thing is that courts are a
little bit less tolerable now than they were 10 years ago. As far as what’s
going to be construed to be something that suggests you’re in the collection
agency business, 10 years ago, something like estate recoveries was held not to
indicate that that the debt collector was in the recovery business. Nowadays
creditor specialty service is a name that the courts have said or something
that suggested to consumers that they were in the collection agency, business

John Rossman:

And Brad, that’s only over like a ten-year period of time
was from like 2006, like 2016, where it seems like the court cases went from
being a bit more permissive about what names can be used to being more
restrictive. Do you think that that’s a trend that we expect to continue,
especially with this limited content message?

Brad Armstrong:

Yeah, certainly there’s really no reason to think that
courts are gonna change course at this point. So we’ve provided guidance to
clients that there are some relatively mundane names that might be construed to
not allow the agency to use limited content message from reg F.

John Rossman:

So the question that we’re looking at right now for some
clients is we already have a certain name that we’re using for our company.
It’s a recognized name, perhaps the name infers that we’re in the collection
business, or maybe we’ve been using an acronym. So I guess the question is kind
of what steps should a collection agency take to change its name, if it’s
concerned that there’s an issue. And if it’s concerned that it wants to use a
limited content message, Sarah, I’ll start with you. When, when you’re talking
to a client who’s looking at using the limited content message. What are you
thinking about when you’re talking to them about a name change.

Sarah Doerr:

What I’m thinking about, first of all, and, and Brad
alluded to this a moment ago is making sure that if they’re going to change
their name, they change it enough. And in the right ways, as Brad explained,
there are names that are arguably not related to debt collection or implying
that they are recovery companies. But I think if, you know, if you’re going to
go to the trouble of changing your name, you want to make sure you’re as far
away from anything that might even raise that question as you can.

John Rossman:

Sarah, I think what’s going to happen, me predicting, I
think there is going to be litigation on this. And I think ultimately some
court is going to say, here’s the 10 words you can’t use in your name if you’re
going to be in the debt collection business. I don’t know what those 10 words
would be. We could hypothesize about them, but I do think ultimately it’s going
to be either a court or a regulator is going to say you can’t use collection
agency in your name. If you’re a collection agency for instance.

Sarah Doerr:

I think that’s right. I think it’ll get there. I think
it’s going to be what happens between now and when we get there and we will see
a lot of litigation parsing those issues.

John Rossman:

Sure. And Brad, I know you work substantially with clients
as far as renewing collection agency licenses. I know we do that for a number
of clients. When you’re thinking generally about collection agency licensing
and a name change. What kinds of things come into your mind as, as you’re
meeting with a client, and you’re thinking about a name change of a licensed
collection agency

Brad Armstrong:

For licensed collection agencies. The first question is
going to be whether the changing names going to necessitate new license
applications. And this is this all goes back to state laws. Some states will
say, anytime you change the name, if it’s a new entity, you’re going to have to
submit a new license application. Some will just require notice filing of a DBA
might get you in more notice, require use notice in more states than if you’re
actually changing the name of the company. But in any event, there’s going to
be dozens of states where an agency is going to need to take proactive steps
before making any changes to ensure that it’s going to be permitted, that they
continue to conduct business. And they’re not going to have any, any sort of
gap as a result of licensing.

John Rossman:

Couple of things that I think about when I think about
these number one would be Colorado and states like Colorado, that require a
very short period of time for a licensed collection agency to give notice of
certain changes, whether a name change would fall within that parameter or not
remains to be determined. But I think the point is you can’t just change your
name and then say, oh, let’s go tell the regulators. Now there needs to be some
pre-planning with this part of that pre-planning too is perhaps the name that
you’re choosing has already been used.

There’s so many examples in our industry of companies that
have very similar sounding names. And we’ve seen it many times before in
litigation where a company will get sued, we’ll get started and, you know, down
the path of defending, and we’ll find out that the plaintiff sued the wrong
party just because of a naming convention. So I do think there are a lot of similar
names here in the industry. Sarah, that leads me to a question for you when
thinking about the options. And like Brad said, you could do a name change. You
might be able to do a DBA kind of depends on your circumstances, Sarah, when
you’re thinking about a DBA. And so what that would mean is that you’d keep the
name of your company, ABC collection agency, but then you would register like
an assumed name. You’d be doing business as XYZ servicing or something. Sarah,
you’ve done some research on this issue of assumed names and you found that
that might not be such an easy solution in certain jurisdictions. What’d you
find out

Sarah Doerr:

That that is true. In addition to the licensing concerns
that Brad talked about, there are a number of jurisdictions where, for example,
you cannot register a DBA at the state level with the secretary of state or
similar agency, for example, in Connecticut, in order to use a trade name, you
have to register that trade with the town clerk in each town where you’re doing
business. So arguably in Connecticut, where there are 269 town clerks, and you
don’t know where you might have occasion to do business in Connecticut or
where, you know, the next consumer is going to be, that presents a real hurdle
in certain jurisdictions. Connecticut is probably the, the highest hurdle, but
there’s certainly a handful of others that have similar county by county or
jurisdiction city by city type restrictions on doing business under a DBA or
trade name.

John Rossman:

Sure. And I think here again, this goes to Brad’s point,
which is, you really need to plan this out ahead of time. You can’t just say,
okay, tomorrow we’re going to change our name. You need to look at, is this
going to be a DBA? Is it going to be a name change? If we choose DBA, we have
to understand, I think you identified there’s eight jurisdictions in total
where there’s some requirement or some difference regarding filing a DBA on a
state level, as opposed to a city level or a county like Connecticut. So I
think there’s a lot that has to be considered here when looking at this limited
content message. The other thing I think with this limited content message more
generally as I read the definition here, limited content message means a
voicemail message. Wait a minute. I mean, voicemail message. That sounds like
2003, you know, it’s 2021, we’re using texts. We’re using email. Brad, let me start
with you. What is your opinion on the likelihood of a debt collector, being
able to take this limited content message, which by definition is a voicemail
and applying it to other communication mediums.

Brad Armstrong:

Based on the plain language of regulation F I don’t think
there’s a good likelihood at all that the court would buy into that. Now,
conceptually, whether a message is the communication, the ability to
communicate this limited amount of information to a consumer without kind of
opening the door to disclosing sensitive facts to third parties, we could kind
of use that. And maybe a bonafide air defense is kind of logic in the event
that say a third party opens an email sent to a consumer using a limited
content, tight message. And other methods of communication is certainly
something to consider. But at the end of the day, you know, something like
email, we’re certainly recommending that, that, you know, you’re emailing the
right consumer to begin with. So the hope is that that third party disclosure
is somewhat of an afterthought.

John Rossman:

No, I agree. And as I was thinking through this and
preparing for this podcast, I started thinking, well, if you sent out the
limited content message specifically is designed so that you don’t include the
name of the consumer, so who you are leaving that message for you, don’t say
according to the plain language of regulation F whereas with like an email
address, most people, their email addresses, like for me, it’s my first and
last name at law-moss dot com. So I think the argument can be made that to the
extent that the limited content message must be a voicemail, because if you
send an email, you are identifying to whom you’re sending it. However, if we’re
going to use that argument, I think an argument could be made that a limited
content message could be used for a text where a text is being sent out to a
number rather than to an address with the name, Sarah, what do you think about
my potential theory there?

Sarah Doerr:

I think it raises some interesting points and some
interesting questions, and I can certainly see it being an increasing area
that’s ripe for litigation and discussion, and probably ultimately for the
regulation. I think there’s some obvious differences between voicemails and
emails and texts just in terms of what the scope is of who might be reading or
listening on the other end just by their nature.

John Rossman:

You know, and I, I think you’re right. I think the flip
side to it is I think the risk of a third-party disclosure with an email is
near zero, whereas the risk of a third-party disclosure with a text, there
might be some risk there. And with the letter, there might be. But with an
email, I have to believe the risk of third-party disclosure is near zero. What
are the odds that someone’s going to send an email to John dot
rossman@lamoss.com and intend that it was to go to someone else? It seems very
less likely that we would have that type of third-party disclosure. So I think
this is an area that could be right for like an advisory opinion from the CFPB
to reach out and to see what type of opinion there might be.

Brad, you had mentioned that the plain language of the FDCPA
does include this prohibition on including the name of your company on an
envelope when you’re sending it out. So this isn’t a new concept as far as
whether the name of your agency infers that you’re in debt collection. How do
you read regulation F and kind of this expansion of this concept of your name,
reflecting that you’re in debt collection. Do you see any parallel between what
I’ll call the old FDCPA, which prohibited the use of your name, if on an
envelope, if it infers that you’re in debt collection to much more broadly
being prohibited to use the name here with the limited content message that
you’re leaving by voicemail?

Brad Armstrong:

I don’t think so. I mean, they’re at least on their face.
There’s no reason to suggest that courts are going to construe 1692f(8) and reg
F’s limited content message differently. Like I said before, I think that
looking back at some of the case law on f(8) is going to be quite instructive,
especially kind of that trend that you discussed, where courts have not been
quite as flexible construing names. As of late, I find it hard to believe that
that there’s going to be a big difference between the two. It’s certainly
interesting that f(8) hasn’t seen a great deal of litigation in an ideal world.
That’s gonna, that would remain true with the limited content message. It could
be a situation where consumer attorneys are easily able to get ahold of
voicemails that consumer save, as opposed to envelopes that a consumer might chuck
in the trash and while they keep the letter. So-

John Rossman:

I’ve been amazed too, in looking at what we’ll refer to as
the old FDCPA and how it’s been modified by regulation, but how this concept of
the name of the debt collectors carried through. But yet there’s all this
discussion today about the name of a debt collector, and what’s the right name
and wrong name and, and infers debt collection. But this provision has been in
the FDCPA in some form or another, since 1978, it’s just getting a lot of
interest nowadays. So it’s an interesting phenomenon that we’ll continue to
track. And we do definitely expect some, at least some regulatory guidance from
the CFPB on it. We are out of time for today. I’d like to thank Sarah Doerr.
I’d like to thank Brad Armstrong. I’d like to thank our executive producer,
Jodi Newsome, and we look forward to speaking with you next time. Thank you.

Attendant:

Visit the website for this podcast at the debt collection,
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Always check with your individual attorney for any specific legal concerns.