cfpb debt collection rule summary

While online motor vehicle sales and financing transactions were already prevalent before COVID-19, the pandemic accelerated the growth of that sector. 12 CFR 1006.14(b)(2). Bowing to industry and political pressure for greater transparency, the CFPB announced on May 20 . 12 CFR 1006.6(d). The Fair Debt Collection Practices Act makes it illegal for debt collectors to harass or threaten you when trying to collect on a debt. Payment Processors. If the consumer provides their consent for an automatically generated email confirmation at the time of payment, then the debt collector could immediately send a confirmation email without violating the prohibition on communicating at an inconvenient time. At any unusual place or at a place that the debt collector knows or should know is inconvenient to the consumer. Like the FDCPA, the Rule prohibits debt collectors from communicating or attempting to communicate with a consumer at unusual times or places, or at a time or place that the debt collector knows or should know is inconvenient to the consumer. May 2019. Executive Summary of the October 2020 Debt Collection Final Rule On October 30 , 20 20, the Consumer Financial Protection Bureau (Bureau) issued a final rule (Debt Collection Rule or Rule ) implementing the Fair Debt Collection Practices Act (FDCPA) . For more information about the call frequency prong of the presumptions related to telephone call frequency, see Debt Collection Telephone Call Frequency: Presumptions Question 1. A business name for the debt collector that does not indicate that the caller is in the business of collecting debts; A request that the consumer reply to the message; The name or names of one or more natural persons whom the consumer can contact to reply to the debt collector; and. A final rule focusing on communications between consumers and debt collectors under the Fair Debt Collection Practices Act (FDCPA) was released Friday by the Consumer Financial Protection Bureau (CFPB), with that final rule scheduled to take effect one year following its publication in the Federal Register. 12 CFR 1006.2(d) and Comment 2(d)-1. Click below to jump down to the following sections: There are numerous, subtle differences in how a debt collectors interactions with debtors and third parties are regulated under the Rule and the FDCPA. The Eleventh Circuit released an Opinion on April 21, 2021, related to the Fair Debt Collection Practices Act (FDCPA), which is a must-read for all in the business of servicing loans or collecting debts. Thus, a limited-content message is subject to the requirements and prohibitions that apply to attempts to communicate but not to the requirements and prohibitions that apply only to communications. In addition, certain telephone calls are excluded from the presumptions related to telephone call frequency. In total, ACA presented 22 comprehensive ACA Huddle webinars on the CFPB's final debt collection rule. The safe harbors require that the collector adhere to detailed processes ensuring that the consumer wishes to receive collection communications via email or text. 249 0 obj <>/Filter/FlateDecode/ID[<0BEF8CCC6CF5A8459649A9D443F0CF92><124AE9DB6AE5EE48BCF24353D2783F06>]/Index[233 23]/Info 232 0 R/Length 83/Prev 201882/Root 234 0 R/Size 256/Type/XRef/W[1 2 1]>>stream However, if a debt collector has a conversation with the consumer about a debt (no matter which party initiated the call), and the debt collector then places a telephone call to the consumer to discuss the same debt within the next seven days, the debt collector is presumed to violate the conversation frequency prong of the presumptions related to telephone call frequency, unless an exception applies. However, following this process does not affect a debt collectors potential liability under the Telephone Consumer Protection Act. Part 1 of the CFPB's final debt collection rule, which was released October 30, applies only to "debt collectors" as defined by the FDCPA, as was the case with the . The CFPB explained that between the FDCPAs cease and desist requirement and the new Rule, the goal is to afford a consumer greater control over the communications they receive from a debt collector. Consumer confusion prompts 22% increase in vehicle finance complaints to CFPB in 2020, The 2020 Elections: What to Expect in Consumer Finance in 2021 and Beyond. See Comments 14(b)(4)-1.ii. These rules were the result of a 7-year long process and represent the first major rulemaking under the Fair Debt Collection Practices Act (FDCPA) since the law's inception over 40 years ago. For more information about the definition of communication, see Section 3.3 in the Debt Collection Small Entity Compliance Guide . The rule appeared in the Federal Register on Saturday with a Nov. 30 publication date indicated in the document details. For more information on the exception to this prohibition, see Debt Collection Unusual or Inconvenient Times or Places Question 5 and Section 4.4 in the Debt Collection Small Entity Compliance Guide . 1700 G Street NW, Washington, DC 20552 . If a state law requires additional or different information to be included in a voicemail message left by a debt collector, a debt collectors voicemail message in that state would not be a limited-content message. For example, if the consumers inquiry provided direct prior consent, the return telephone call was placed by the debt collector within seven days of the consumers inquiry, and the consent has not otherwise expired, the debt collectors return call is excluded from the telephone call frequencies. If you have a debt in collection, its often a challenging time. Voicemails that dont follow these rules are not considered limited-content messages. 12 CFR 1006.2(j). Proposals related to required notices about the debt fall short. Questions 2 through 4, as well as Section 12.1.3 of the Debt Collection Rule Small Entity Compliance Guide. A telephone number or numbers that the consumer can use to reply to the debt collector. For more information on the prohibition on communicating at unusual or inconvenient times and places, see Debt Collection Unusual or Inconvenient Times or Places Questions 1-3 and Section 4.1 in the Debt Collection Small Entity Compliance Guide . Comment 6(b)(1)-1.iii. Debt collectors will need to consider if they can truly deliver limited purpose messages or consider options to utilize this communication method. The debt collector may ask follow-up questions regarding preferred communication media to clarify a persons statements. For more information on the prohibition on communicating at unusual or inconvenient times or places, see Debt Collection Unusual or Inconvenient Times or Places Questions 1 and 2 and Section 4.1 in the Debt Collection Small Entity Compliance Guide . For the debt to be covered by the Special Rule, the following must be true: If the debt is covered and a debt collector chooses to use the Special Rule, the debt collector must do the following: For more information about what validation information may be omitted under the Special Rule, see Debt Collection Validation Information: Residential Mortgage Debt Question 2, below. ACA attorney member Caren Enloe provides insights on preparing for compliance with the CFPB's debt collection rule. The Debt Collection Rule does not prohibit a debt collector from using a pre-recorded message to leave a limited-content message. SUMMARY CFPB PROPOSES DEBT COLLECTION RULE The Consumer Financial Protection Bureau ("CFPB" or "Bureau") proposes to amend Regulation F, 12 CFR part 1006, which implements the Fair Debt Collection Practices Act ("FDCPA"). 12 CFR 1006.14(a). This may be a statement provided by a debt collector under the Rule (as long as that periodic statement was required by Regulation Z, 12 CFR 1026.41 at the time the debt collector provided it). 12 CFR 1006.14(b)(2)(i) and (ii). Comment 6(b)(1)(i)-2. Perhaps of greater interest, the CFPB states that it will continue to closely monitor the use of social media by debt collectors. An act to initiate a communication or other contact about a debt is an attempt to communicate regardless of whether the attempt, if successful, would be a communication that conveys information regarding a debt directly or indirectly to any person. These issues may be addressed in the CFPBs supplemental rulemaking on disclosures. The Debt Collection Rule does not address whether debt collectors may leave the voicemail message from Zortman v. J.C. Christensen & Assocs., Inc. (870 F. Supp. Additionally, a debt collector must also comply with all other applicable provisions of the Debt Collection Rule when disclosing their business name in a limited-content message, such as the prohibition against using false, deceptive, or misleading representations or means in connection with the collection of any debt. See the Fair Debt Collection Practices Act (FDCPA) exam procedures. The questions and answers below pertain to compliance with the Debt Collection Rule. Telephone calls that are not connected to the dialed number are excluded from the telephone call frequencies. The CFPB reserved space to address time-barred debt and consumer disclosure issues, including Bureau-approved model disclosures. In this scenario, the consumer designated Fridays as inconvenient and then contacted the debt collector on a Friday. Thus, owners of debt, even if purchased after a default, would continue under the Supreme Court's decision in Henson v. The telephone call causes a telephone to ring at the dialed number, but the debt collector hangs up before anyone answers the call or the call connects to a voicemail. The Bureau publish ed a Policy As a qualitative study, the survey's results are not necessarily representative of the debt collection . The Bureau provides a list of commonly asked questions and answers on particular topics to assist in understanding and complying with the Debt Collection Rule. Generally, the Debt Collection Rule requires a debt collector to provide a consumer who owes, or allegedly owes, a debt five categories of validation information: A model validation notice that provides one way to comply with these content requirements is provided in Appendix B to the Rule. Learn more about the rules for how often a debt collector can call you. The Rule would not necessarily prohibit that additional content, as long as the other requirements and prohibitions in the Rule and the FDCPA are met, such as the prohibition against overshadowing the consumers rights to dispute or request original-creditor information. This is true regardless of which party (the debt collector or the consumer) initiated the telephone call or the discussion of each debt. Key topics to be discussed: However, the Debt Collection Rule does not require a debt collector to construe a consumers statement that the consumer is busy or cannot talk right now (without anything further) to mean that the consumer is generally designating a time or place as inconvenient for future communications. Explore guides to help you plan for big financial goals, Providing Equal Credit Opportunities (ECOA), Annual Percentage Rate Tables (Regulation Z). 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 short history of the Consumer Financial Protection Bureau (CFPB) has resulted in a wild ride for the financial sector with respect to rulemaking and enforcement of consumer finance laws. For more information on the exception to this prohibition, seeDebt Collection Unusual or Inconvenient Times or Places Question 5 and Section 4.4 in the Debt Collection Small Entity Compliance Guide . 12 CFR 1006.14(h)(2)(ii). Comment 14(b)(4)-1.ii. Such a statement would indicate that the time or place is inconvenient for the current communication or attempt to communicate. Appeals court decision potentially up-ends debt collection practices, CFPBs Interim Final Rule: Pandemic Debt Collection Practices Effective May 3. For more information, see 12 CFR 1006.6(d)(1)-(3) and Section 6.2 in the. Protect Consumers, Not Abusive Collectors . Further, a debt collector who does not correctly comply with the Special Rule may violate the Debt Collection Rule. For example, if a person has two mobile telephone numbers, the person may request that the debt collector not use one or both mobile telephone numbers. See generally 12 CFR 1006.18(d) and Section 8.3 in the, The Debt Collection Rules prohibition on using an employer-provided email address. The Debt Collection Rule generally prohibits debt collectors from communicating with consumers through a medium of communication, including a medium of electronic communication, if the consumer requests that the debt collector not use that medium. Note that while the Itemization Table on the model validation notice includes the validation information that may be omitted, it also includes the current amount of the debt, which is validation information that may not be omitted from the validation notice under the Special Rule. Presumption of Violation Rebuttal Factors. More information about the validation information that may be omitted and substituted with the periodic statement under the Special Rule is discussed in Debt Collection Validation Information: Residential Mortgage Debt Question 3, below. 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