Below, we highlight some of the notable communications provisions. Unlike a written cease communication request (Section 1006.6(c)(1)), a request not to use a specific medium of communication may be oral. The Final Rule does not require a debt collector to record telephone calls, but if calls are recorded, the recordings are considered evidence of compliance or noncompliance with the FDCPA, and the recording of each such call must be retained for three years after the date of the call. The Consumer Financial Protection Bureau is looking to delay the implementation dates of the Qualified Mortgage and debt collection rules and will resume collecting data on home loans, credit cards and prepaid cards. In the Proposed Rule, a debt collector would have been required to obtain a consumer’s consent in accordance with the Electronic Signatures in Global and National Commerce Act (E SIGN Act) to communicate electronically for all disputes. The FDCPA, enacted in 1977, expressly prohibits debt collectors from engaging in unfair, deceptive, abusive, and other unlawful collection practices. In addition to the expected December 2020 rule on disclosures, the CFPB may initiate a rulemaking to address other types of debt interventions. The Final Rule sets forth a number of safe harbors for disclosures sent by mail, including a printed copy of a disclosure mailed to the consumer’s last known address or P.O. Prohibiting the Sale, Transfer for Consideration, or Placement for Collection of Certain Debts (Section 1006.30(b)): – Subject to narrow exceptions, the Final Rule prohibits a debt collector from selling, transferring for consideration, or placing for collection a debt if the debt collector knows or should know that the debt has been paid or settled or discharged in bankruptcy. A debt collector is prohibited from communicating or attempting to communicate with a consumer in connection with the collection of any debt at a time or place that the debt collector knows or should know is inconvenient to the consumer. In May 2019, the CFPB published a proposed rule (Proposed Rule) concerning the communications practices and consumer disclosures for debt collectors under FDCPA. The final rule focuses on debt collection communications and related practices by debt collectors. The Final Rule does not specify a time period afforded to a debt collector to update its systems to reflect a request. In a footnote to the Final Rule, the CFPB noted that it had received feedback asking it to address such interventions, including a debt collectors’ obligation to substantiate debts. Debt Collection Process Generally, there are three phases to the debt collection process: For the first six months of your delinquency, you usually will deal with your creditor’s internal collector, which is sometimes referred to as a first-party agency (you, the debtor, are the second party). The opt-out period provided has expired and the consumer has not opted out; and. The FDCPA generally provides that a debt collector is any person who (1) uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts (i.e., the “principal purpose” prong) or (2) regularly collects, or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due to another (i.e., the “regularly collects” prong). The CFPB notes that depending on the circumstances, the FDCPA’s bona fide error defense to civil liability may apply. DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. To embed, copy and paste the code into your website or blog: Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: [HOT] Read Latest COVID-19 Guidance, All Aspects... [SCHEDULE] Upcoming COVID-19 Webinars & Online Programs, [GUIDANCE] COVID-19 and Force Majeure Considerations, [GUIDANCE] COVID-19 and Employer Liability Issues. March 31, 2021 Law Firms: Be Strategic In Your COVID-19 Guidance... [GUIDANCE] On COVID-19 and Business Continuity Plans. CFPB Resource Center Your one-stop source to stay up to date on CFPB news, compliance guidance, advocacy efforts, and more. Depending on the outcome of the 2020 election—especially if both houses of Congress and the White House are controlled by Democrats—Congress may consider legislative proposals on debt collection. Furthermore, the CFPB adopted a per-debt approach to counting for the call frequency restriction and declined to adopt a per-consumer approach. Provisions Covered in Forthcoming Disclosure-Focused Rule (December 2020). Under the Congressional Review Act (CRA), Congress with approval of the president may overturn regulatory rulemakings. The CFPB notes that under the existing case law, a debt collection communication sent under an attorney’s name may violate the FDCPA if the attorney was not meaningfully involved in the preparation of the communication. Understanding Debt Collection Terms. If a consumer has opted out of debt collection communications to a particular email address or telephone number, then a debt collector cannot use that email address or telephone number to send required disclosures. the date by which the debt collector or the creditor must receive the consumer’s request to opt out, which must be at least 35 days after the date the notice is sent. The Final Rule defines a new term related to debt collection communications: “limited-content message.” If a message meets this definition, then it is not a “communication” under the FDCPA. 1 EXECUTIVE SUMMARY OF THE OCTOBER 2020 DEBT COLLECTION RULE . Learn what debt collectors can’t do, the difference between third party & in-house collection, & your rights as a consumer. Limited-content messages are limited to voicemails left with a debtor, and the Final Rule identifies what information a debt collector must and may include in such messages. A debt collector must provide a clear and conspicuous disclosure on the method by which the consumer can opt out of electronic communications to a particular email address, telephone number, or other electronic-medium. This article was updated on November 30, 2020 to reflect the publication of the Final Rule in the Federal Register on the same day.. Several years in the making, on October 30, 2020, the CFPB issued a significant debt collection final rule amending Regulation F, 12 CFR part 1006. Model validation notice. The CFPB has interpreted the language in FDCPA section 805(a)(1) that a debt collector should assume that the convenient time for communicating with a consumer is after 8:00 a.m. and before 9:00 p.m. local time at the consumer’s location, unless the debt collector has knowledge of circumstances to the contrary. The consumer does not need to specifically use the word “inconvenient” to designate a certain time or place as inconvenient. Copyright © var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); JD Supra, LLC. The CFPB states that the Final Rule identifies neither the only circumstances in which a debt collector may communicate with a consumer electronically nor the only technologies a debt collector may use to do so. The Final Rule is a major development for all participants in the debt collection market and will have a direct impact on enforcement investigations, supervisory examinations, and litigation. These messages or activity may not raise the same consumer protection concerns that motivated other provisions of the Final Rule regulating attempts to communicate. Knowledge that a telephone number is associated with a mobile telephone does not, without more information, create conflicting or ambiguous information about time and place restrictions. The Final Rule adopts a safe harbor to facilitate compliance with the time and place restriction when the debt collector has conflicting or ambiguous information regarding a consumer’s location. The CFPB also announced it intends to issue a disclosure-focused final rule in December 2020 to interpret the FDCPA’s requirements regarding consumer disclosures and certain related consumer protections. Supplement I contains the official interpretations for the rule, divided by subparts in the same manner as the main rule text. In 1977, Congress passed the FDCPA to eliminate abusive debt collection practices by ... Fair Debt Collection Practices Act: CFPB Annual Report 2013, at 9 (Mar. [28] Many U.S. states and a few cities require collection agencies be licensed and/or bonded . A debt collector need not create and maintain additional records, for the sole purpose of evidencing compliance that the debt collector would not have created in the ordinary course of its business in the absence of the record retention requirement. Please Log In From 1938 to 1977, the federal government primarily protected consumers from debt collection abuses through Federal Trade Commission (FTC) enforcement actions under section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices. There are now procedures debt collectors may follow to raise a bona fide error defense to civil liability for unintentional violations of the rule’s prohibition against third-party disclosures for emails and text messages. The CFPB declined to expand the rule to apply to first-party debt collectors who are not FDCPA “debt collectors.” The CFPB also stated the Final Rule is not intended to address whether activities performed by entities that are not subject to the FDCPA may violate other laws, including the prohibitions against unfair, deceptive, or abusive practices (UDAAP) in the Dodd-Frank Act. The Consumer Financial Protection Bureau (CFPB) has proposed to delay the mandatory compliance date of the General Qualified Mortgage (QM) final rule from July 1, 2021 to October 1, 2022. Proposed rule with request for public comment – May 2019. Table of contents. The Final Rule covers “debt collectors,” as that term is defined in the FDCPA. What’s Next for Debt Collection Regulation? The use of the term “send” instead of “provide” is intentional, and the CFPB clarifies that the rule is for debt collectors to send the disclosures in a manner reasonably expected to provide actual notice. If the debt collector received directly from the consumer prior consent to use the telephone number to communicate with the consumer about the debt by text message, the consumer has not since withdrawn that consent, and within the past 60 days the debt collector either (1) obtained the prior consent or renewed consent from the consumer or (2) confirmed, using a complete and accurate database, that the telephone number has not been reassigned from the consumer to another user since the date of the consumer’s most recent consent to use that telephone number to communicate about the debt by text message. Consumer also means your spouse, parent or guardian (if you are a minor), executor or administrator. A creditor obtained the email address from the consumer; The creditor used the email address to communicate with the consumer about the account and the consumer did not ask the creditor to stop using it; Before the debt collector used the email address to communicate with the consumer about the debt, the creditor sent the consumer a written or electronic notice, to an address the creditor obtained from the consumer and used to communicate with the consumer about the account, that clearly and conspicuously disclosed: that the debt has been or will be transferred to the debt collector; the email address and the fact that the debt collector might use the email address to communicate with the consumer about the debt; that, if others have access to the email address, then it is possible they may see the emails; instructions for a reasonable and simple method by which the consumer could opt out of such communications; and.

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