The Consumer Financial Protection Bureau (CFPB) issued a Notice of Proposed Rulemaking (NPRM or "Proposed Rule") to prescribe rules governing debt collection under the Fair Debt Collection Practices Act (FDCPA), Regulation F, 12 CFR part 1006, on May 7, 2019.
The Proposed Rule clarifies how debt collectors may employ modern communication technologies, such as text messaging and emails, in compliance with the FDCPA (and the Electronic Signatures in Global and National Commerce Act); addresses other communications-related practices that may harm consumers or that currently operate within regulatory uncertainty; clarifies and adds requirements for certain debt collection disclosures; and prohibits certain actions by debt collectors related to time-barred debts and credit reporting.
The NPRM will have a 90-day comment period from the date of publication in the Federal Register. The CFPB proposes an effective date of one year after a final rule is published in the Federal Register.
- Proposed Covered Activities and Products - The Proposed Rule would apply to debt collectors as defined in the FDCPA, and certain parts of the proposal apply only when a debt collector covered by the FDCPA is collecting debt related to a "consumer financial product or service" as defined in the Dodd-Frank Act, e.g., stored value cards, check cashing services, and financial advisory services.
- Proposed Definition of "Consumer" - The proposed definition of "consumer" generally restates the FDCPA's definition, and would be interpreted to include deceased natural persons who are obligated or allegedly obligated to pay a debt, confirmed successors-in-interest, and personal representatives of a deceased person's estate.
Communicating with Consumers
- Electronic Communications - The NPRM sets forth safe harbor procedures for debt collectors who unintentionally communicate with an unauthorized third party regarding a consumer's debt. For example, debt collectors would be able to send "limited-content messages," which would not be deemed communications, thus avoiding the need to provide a "mini-Miranda" disclosure and other requirements, under the FDCPA. Under the Proposal, a "limited-content message" could state only that a debt collector seeks to contact a consumer, and it could otherwise provide no additional information about a debt. These messages, which may be sent through electronic means, would not constitute prohibited third-party disclosures if they were to be seen or heard by a third party.
- Option to Unsubscribe - The proposal would require a debt collector to include, in emails, text messages, and other electronic communications, an option for the consumer to unsubscribe from future such communications.
- Communication Media Restrictions - The proposal would prohibit a debt collector from communicating or attempting to communicate with a consumer through a medium of communication that the consumer has requested the debt collector not to use.
- Time and Place Restrictions for Electronic Communications - The proposal would clarify that calls to mobile telephones and electronic communications, such as texts and emails, are subject to the FDCPA's prohibition on communicating at unusual and inconvenient times and places.
- Use of Workplace Email Addresses - Unless an exception applies, the proposal would prohibit a debt collector from contacting a consumer by using an email address that the debt collector knows or should know is provided by the consumer's employer.
- Social Media Platforms - The proposal would prohibit debt collectors from contacting consumers through social media platforms, except through a private messaging function.
- Telephone Call Frequency Limits - The proposal includes a limit on calling a consumer more than seven times within a seven-day period for a particular debt, subject to certain exceptions. The proposal would also prohibit a debt collector from engaging in more than one telephone conversation with a consumer about a particular debt within a seven-day period. Under the proposal a debt collector who stays within the proposed limits would not have engaged in repeated or continuous telephone calls or conversations with intent to harass, as prohibited by the FDCPA.
- Decedent Debt - The proposal would clarify how and with whom a debt collector can communicate about a deceased consumer's debt, as well as how the requirements regarding validation notices and disputes apply after a consumer passes away.
- Time-Barred Debt - The proposal would prohibit a debt collector from bringing a legal action or threatening legal action for debts for which the debt collector knows or should know the applicable statute of limitations has expired.
- Communicating Before Credit Reporting - The proposal would prohibit a debt collector from reporting collection items to consumer reporting agencies unless the debt collector has already communicated with the consumer, by, for example, sending a letter to the consumer.
- Transfers of Debt - Unless limited exceptions apply, the proposal would prohibit a debt collector from transferring to another debt collector a debt that the debt collector knows or should know is settled, discharged in bankruptcy, or contested via an identity theft report.
- Providing Required Disclosures Electronically - The proposal generally would require a debt collector to provide required disclosures in a manner that is reasonably expected to provide actual notice and in a form that the consumer may keep and access later. A debt collector who provides the required disclosures electronically would need to comply with either the E-SIGN Act or a set of alternative procedures. The CFPB has published a "Debt collection proposed rule electronic disclosure options" flow chart outlining how debt collectors could provide the required disclosures electronically under the E-SIGN Act.
- Validation Notices - The proposed rule would require validation notices, which are required by section 1692(g) of the FDCPA, to disclose additional information pertaining to the debt, such as account number and details, certain information about consumer protections, and a consumer response form that contains dispute and information request prompts. Sending a validation notice would also satisfy the proposed requirement that debt collectors first communicate with a consumer prior to furnishing information to a credit reporting agency regarding a debt.
- Validation Notice – Language Disclosure and Access - The proposal would permit a debt collector to include statements in the validation notice informing consumers about how they may request the notice in Spanish, if the collector chooses to provide a Spanish-language translation. The proposal would permit a debt collector to provide a validation notice translated into any language, if the debt collector also sends an English-language validation notice in the same communication or if the debt collector has previously sent an English-language validation notice.
Proposed Model Form
The proposal would permit a debt collector to comply with FDCPA section 809(a)'s and the Proposed Rule's disclosure requirements by using a proposed "Model Form B-3" available in Appendix B of the NPRM.
For more information on the Proposed Rule, including a "Fast Facts" summary of the proposal, see: http://www.consumerfinance.gov/policy-compliance/guidance/implementation-guidance/.
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