Banking and Finance Law Daily CFPB issues final debt collection rule implementing FDCPA ‘in the modern world’
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Monday, November 2, 2020

CFPB issues final debt collection rule implementing FDCPA ‘in the modern world’

By Charles A. Menke, J.D.

The final rule addresses, among other things, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection.

The Consumer Financial Protection Bureau has adopted a final rule amending Regulation F (12 CFR Part 1006), which implements the Fair Debt Collection Practices Act. The final rule focuses on debt collection communications and aims at giving consumers more control over how often and through what means debt collectors can communicate with them regarding their debts. The rule also clarifies how the protections of the FDCPA, which was enacted in 1977, apply to modern communication technologies, such as email and text messaging. The final rule takes effect one year after its publication in the Federal Register.

According to the Bureau, "[t]he rule is the result of a deliberative, thoughtful process spanning more than seven years and reflects engagement with consumer advocates, debt collectors, and other stakeholders." The Bureau, which issued a notice of proposed rulemaking in May 2019 (see Banking Law and Finance Daily, May 7, 2019), said it received and considered over 14,000 comments during the public comment and rulemaking process.

Time and place of communications. In general, the final rule clarifies restrictions on the times and places at which a debt collector may communicate with a consumer. A consumer is not required to use specific words to assert that a time or place is inconvenient for debt collection communications. Absent an exception in the FDCPA or rule, a debt collector is required to abide by a consumer’s designation of inconvenient times, even if those times are presumptively convenient according to the statute.

Communication methods. Modern communication technologies, such as emails and text messages, may be used in debt collection, with certain limitations to protect consumer privacy and to protect consumers from harassment or abuse, false or misleading representations, or unfair practices. These protections include requiring a debt collector’s emails and text messages to include instructions for a reasonable and simple method allowing a consumer to opt out of receiving further emails or text messages. In addition, a consumer may restrict the media through which a debt collector communicates by designating a particular medium, such as email, as one that cannot be used for debt collection communications. The final rule also provides that a debt collector may have a bona fide error defense to civil liability under FDCPA for an unintentional third-party disclosure if the debt collector follows the procedures identified in the rule when communicating with a consumer by email or text message.

Telephone calls. A debt collector is presumed to violate the FDCPA’s prohibition on repeated or continuous telephone calls if the debt collector places a telephone call to a person more than seven times within a seven-day period or within seven days after engaging in a telephone conversation with the person. However, a debt collector is presumed to comply with the prohibition if the debt collector places a telephone call not in excess of either of those telephone call frequencies. The rule includes a non-exhaustive list of factors that may be used to rebut the presumption of compliance or of a violation.

Limited-content message. The final rule also defines a new term related to debt collection communications—limited-content message. The term identifies what information a debt collector must and may include in a voicemail message left with a consumer (with the inclusion of no other information permitted) so that the message is not deemed a communication under the FDCPA. Accordingly, a debt collector may leave a voicemail for a consumer that is not a communication under the FDCPA or the final rule and therefore not subject to certain requirements or restrictions if the voicemail is consistent with the definition of a limited-content message.

Estates, personal representatives. The final rule also clarifies that the personal representative of a deceased consumer’s estate is a consumer for purposes of communications in connection with the collection of debt. As a result, a debt collector is generally permitted to discuss a debt with the personal representative of a deceased consumer’s estate. The final rule also clarifies how a debt collector may locate the personal representative of a deceased consumer’s estate.

Disclosures. The FDCPA requires that a debt collector provide certain disclosures to the consumer. The final rule clarifies the standards a debt collector must meet when sending the required disclosures in writing or electronically. However, the Bureau has reserved certain sections of Regulation F for a disclosure-focused final rule that it intends to publish in December 2020 to clarify the information that a debt collector must provide to a consumer at the outset of debt collection and to provide a model notice containing the information required by FDCPA section 809(a). The Bureau said it also plans to address in the disclosure-focused final rule consumer protection concerns related to requirements prior to furnishing consumer reporting information and the collection of time-barred debt for which the statute of limitations has expired.

Additional provisions. The final rule addresses certain other consumer protection concerns in the debt collection market, including provisions:

  • clarifying debt collectors’ obligation to retain records evidencing compliance or noncompliance with the FDCPA and Regulation F;
  • prohibiting the sale, transfer for consideration, or placement for collection of certain debts; and
  • clarifying debt collectors’ obligations when responding to duplicative disputes.

Safe harbor not included. The Bureau did not finalize a proposed safe harbor for debt collectors against claims that an attorney falsely represented the attorney’s involvement in the preparation of a litigation submission. According to the Bureau, the proposed provision was aimed at providing greater clarity to the issue but, after receiving extensive feedback from numerous stakeholders, the Bureau decided not to finalize the provision.

Bureau blog posts. CFPB Director Kathleen L. Kraninger said in a blog post that in adopting the final rule the Bureau is "developing a debt collection system that works for consumers and industry in the modern world." A separate blog post highlights consumers’ debt collection rights and provides sample letters to assist consumers in responding to common debt collection scenarios.

Congressional reaction. In a statement, Sen. Sherrod Brown (D-Ohio), Ranking Member of the Senate Banking Committee, said that "[t]he CFPB’s new debt collection rule fails to provide hardworking consumers with the protections they need to guard against abusive debt collection practices." Although "pleased that the CFPB did not include some of the most harmful provisions of the proposed rule," Brown emphasized that "the final rule still allows collectors to make excessive phone calls to consumers—up to seven times a week for each debt—and unfairly puts the burden on consumers to ‘opt out’ of harassing text, email, and social media messages." House Financial Services Committee Ranking Member Patrick McHenry (R-NC), meanwhile, lauded the CFPB, stating that the final rule modernizes methods of communication while also preserving consumer protections against harassment. This will "provide clear rules of the road for small businesses and consumers," McHenry said.

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