The CFPB has gone back and forth on the effective date of two Fair Debt Collection Practices Act (FDCPA) rules under Regulation F (12 CFR Part 1006). In April 2021 the CFPB issued a proposed rule would have extended the effective dates to January 29, 2022. Last month, the CFPB announced that the extension is unnecessary and that the two final rules issued under the FDCPA will take effect as planned, on November 30, 2021. The CFPB originally proposed extending the final rules’ effective date by 60 days to allow stakeholders affected by the COVID-19 pandemic additional time to review and implement the rules, but the public comments did not seem support an extension. While consumer advocates generally supported the extension, many industry commenters indicated that they would be ready to comply by the November 30, 2021, effective date.
The first rule, issued in October 2020, focuses on debt collection communications and clarifies the FDCPA’s prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt. To address concerns about debt collection communications and to clarify the application of the FDCPA to newer communication, the final rule, in general:
- Clarifies restrictions on the times and places at which a debt collector may communicate with a consumer, including by clarifying that a consumer need not use specific words to assert that a time or place is inconvenient for debt collection communications.
- Clarifies that 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.
- Clarifies that 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. It also clarifies that a debt collector is presumed to comply with that prohibition if the debt collector places a telephone call not in excess of either of those telephone call frequencies. The final rule also provides non-exhaustive lists of factors that may be used to rebut the presumption of compliance or of a violation.
- Clarifies that newer 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. For example, the final rule requires that each of a debt collector’s emails and text messages must include instructions for a reasonable and simple method by which a consumer can opt out of receiving further emails or text messages. The final rule also provides that a debt collector may obtain a safe harbor from civil liability 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.
- Defines a new term related to debt collection communications: Limited-content message. This definition identifies what information a debt collector must and may include in a voicemail message for consumers (with the inclusion of no other information permitted) for the message to be deemed not to be a communication under the FDCPA. This definition permits a debt collector to leave a voicemail message for a consumer that is not a communication under the FDCPA or the final rule and therefore is not subject to certain requirements or restrictions.
The December 2020 final rule clarifies disclosures debt collectors must provide to consumers at the beginning of collection communications, prohibits debt collectors from suing or threatening to sue consumers on time-barred debt, and requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency.
It should be noted that while the definition of a debt collector under the FDCPA and Regulation F excludes creditors collecting debts in their own name from the definition of a debt collector and they are not subject to the rules, creditors should still familiarize themselves with the rules. Many creditors chose to comply with the FDCPA as a best practice to avoid any potential UDAAP in the collection of their own debts. Likewise, creditors may want to consider complying with the requirements of Regulation F as a best practice to avoid any potential UDAAP. And creditors who retain third party debt collectors should be familiar with the rules so that they can ensure their service providers are complying when collecting debts on their behalf. Examiners have held creditors liable for the actions of their service providers and abusive debt collection practices are an enforcement priority for the agencies.
You can find resources to help understand, implement, and comply with the rules here. And, as always, feel free to contact the Temenos Compliance Advisory Team with any questions you may have.