cfpb debt collection rule summary

Join the conversation. But, again, a footnote suggests that there may be future attempts to extend the rule to first-party creditors. The Rule modernizes requirements covering debt collection communications, which have changed significantly since the FDCPA was passed in 1977. The Debt Collection Rule does not define any per se unusual places or inconvenient places. The Debt Collection Rule does not prohibit a debt collector from using a pre-recorded message to leave a limited-content message. For example, assume the servicing of a mortgage account was transferred to a mortgage servicer who is also a debt collector (as defined in the Rule) and who plans to use the Special Rule when providing the validation information. 12 CFR 1006.2(j). 3. Learn more about the rule for reporting a debt in collection. SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is issuing this final rule to revise Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA) . Turbulent times for the CFPB and industry may continue, in light of the possibility of a change in administration following the 2020 presidential election coupled with continued economic fallout of the COVID pandemic. At any unusual place or at a place that the debt collector knows or should know is inconvenient to the consumer. Examination Procedures Debt Collection CFPB Procedures 6 ii. Therefore, that telephone call is not included when determining whether the debt collector complied with the call frequency prong of the presumptions related to telephone call frequency. How to determine which periodic statement is the most recent periodic statement under the Special Rule is discussed in Debt Collection Validation Information: Residential Mortgage Debt Question 4. Debt Collection Practices (Regulation F) . As one of the most highly-anticipated developments, the Rule states that a debt collector is presumed to have complied with the FDCPAs and Rules prohibition on excessive calls if the debt collector does not place a telephone call to a particular person in connection with the collection of a particular debt more than seven times within seven consecutive days, or within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt. Yes. SUMMARY: In 2020, the Bureau of Consumer Financial Protection (Bureau) finalized two rules (together, the Debt Collection Final Rules) revising Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA). The telephone call is connected directly to a voicemail, even if the telephone does not ring and even if the debt collector is not able to leave a message. The term particular debt means each of a consumers debts in collection, except in the case of student loan debt. For more information about the presumptions related to telephone call frequency, see Debt Collection Telephone Call Frequency: Presumptions Question 1. Download a print-friendly version of the Debt Collection Rule FAQs, last updated July 27, 2022. Presumption of Violation Rebuttal Factors. The proposal seeks public comment on Federal rules governing the activities of debt collectors covered by the FDCPA. When the information is provided in writing or electronically, it is called a validation notice, and it will generally include information like: This notice is meant to help you identify whether you owe the debt and whether the collectors information about the debt is accurate. For more information about the definition of particular debt as it applies to student loan debt, see Section 7.1.1 in the Debt Collection Small Entity Compliance Guide . This rule clarifies how debt collectors can communicate with you, including what information theyre required to provide at the outset of collection about the debt, your rights in debt collection, and how you can exercise those rights. For example, if a debt collector has eight different telephone numbers associated with a consumer and places one unanswered call to each of the telephone numbers about the same debt within seven consecutive days, the debt collector is presumed to violate the call frequency prong of the presumptions related to telephone call frequency, as discussed in Debt Collection Telephone Call Frequency: Presumptions Question 1, unless an exception applies. Doing so may eliminate the FDCPA litigation risk if a voicemail communication is overhead by a third party (i.e., Foti risk) and provide an alternative to the lengthy voicemail message many companies use based on the script developed in Zortman v. J.C. Christensen & Assoc., Inc. These issues may be addressed in the CFPBs supplemental rulemaking on disclosures. SUPPLEMENTARY INFORMATION: The Rule establishes procedures that a debt collector may rely on to communicate by email or text message without risk of third-party disclosure. And deviation from those benchmarks could constitute a UDAAP. The CFPB was delegated authority to prescribe rules under the FDCPA by the Dodd-Frank Act. 227) regarding the use of pre-recorded messages that a debt collector may want to review before leaving a pre-recorded message. These presumptions are discussed in Debt Collection Call Frequency: Presumptions Question 1. The telephone call results in a message that the call cannot be completed as dialed or the dialed number is out of service. The most recent periodic statement for purposes of the Special Rule may be one that is provided by a debt collector (who is not a creditor), as long as that periodic statement was required by Regulation Z, 12 CFR 1026.41, at the time it was provided. Include this periodic statement in the same communication as the validation notice. The Debt Collection Rule does not impose a specific limit or cap on the frequency of telephone calls that a debt collector may place or conversations that a debt collector may have about a debt. As discussed in Debt Collection Limited-Content Messages Question 1, in order for a voicemail message to be a limited-content message under the Debt Collection Rule, the voicemail must contain certain required content, including a business name for the debt collector that does not indicate that the caller is in the business of collecting debts. No. A consumer is not required to use the debt collectors preferred or stated opt-out method, or the specific terms contained in the debt collectors opt-out instructions, to opt out of electronic communications from a debt collector about a debt. the itemization of the current amount of the debt (i.e., the interest, fees, payments, and credits since the itemization date) (12 CFR 1006.34(c)(2)(viii)). See generally 12 CFR 1006.6(b)(1), The Debt Collection Rules requirements regarding consumer cease communication requests. For more information about the presumptions related to telephone call frequency, seeDebt Collection Telephone Call Frequency: Presumptions Question 1. Update (July 30, 2021): The Consumer Financial Protection Bureau (CFPB) announced on July 30, 2021, that the two final rules issued under the Fair Debt Collection Practices Act (FDCPA) will take effect as planned, on November 30, 2021. Subscribe to our email newsletter. The Rule applies to third-party debt collectors, but there may be opportunities for creditors to reduce UDAAP risk. The definition incorporates the United States Supreme Courts holding in Henson v. Santander Consumer USA, that a person who collects or attempts to collect defaulted debts that the person has purchased, but who does not collect or attempt to collect debts owed or due, or asserted to be owed or due, to another, and who does not have a business the principal purpose of which is the collection of debts, is not a debt collector. Proposals related to required notices about the debt fall short. [2] In the absence of the debt collectors knowledge of circumstances to the contrary, an inconvenient time for communicating with a consumer is before 8:00 a.m. and after 9:00 p.m. local time at the consumers location. With a new administration comes new priorities for federal agencies, and theConsumer Financial Protection Bureau(CFPB) is no different. Update: CUNA's summary of the rule is available here. The debt collector may count the calls for the purposes of the call frequency prong of the presumptions related to telephone call frequency in several different ways. 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 . Yes. If a debt collector wishes to send the consumer an automated communication at a previously designated inconvenient time using a different communication medium than the one the consumer used, the debt collector would need to obtain the consumers prior direct consent. 12 CFR 1006.2(j)(1). 12 CFR 1006.6(b)(1); Comment 6(b)(1)-2. No. The residential mortgage debt must be a mortgage loan as defined in Regulation Z, 12 CFR 1026.41(a)(1); and, The debt must be subject to the Mortgage Servicing Rules periodic statement requirements (Regulation Z, 12 CFR 1026.41). If the residential mortgage debt is covered by the Mortgage Special Rule, a debt collector who uses the Special Rule may omit the following from the validation notice: No other required validation information may be omitted under the Special Rule. Debt collectors must determine how to disclose its business name without indicating it is in the debt collection business. As finalized, the Debt Collection Final Rules had an effective date of November 30, 2021. A statement that, if the consumer replies, the consumer may speak to any of the companys representatives or associates. The Debt Collection Rule does not require the business name in a limited-content message to be the debt collectors legal name or registered DBA. Explore guides to help you plan for big financial goals, You can also learn more about your debt collection rights, Credit disputes: getting a clear statement of results from your furnisher, Transcript Withholding Holds Back Workers and Wages, CFPB Issues Guidance to Address Shoddy Investigation Practices by Consumer Reporting Companies, CFPB Takes Action to Address Junk Data in Credit Reports, Director Chopras Prepared Remarks at the CFPB Field Hearing on Nursing Home Debt Collection Practices, Debt Collection Town Hall in Philadelphia, PA. Public event about debt collection in Washington, D.C. Name and mailing information of the debt collector, Name of the creditor to whom the debt is owed, Account number (if any) associated with the debt, An itemization of the current amount of the debt that reflects interest, fees, payments, and credits since a particular date that you may be able to recognize or verify with records, The current amount of the debt as of when the validation notice is provided, Information about your debt collection rights including how to dispute the debt, More than seven times within a seven-day period, or, Within seven days after engaging in a phone conversation with you about a particular debt, Speak to you by telephone or in person about the debt, Mail a letter or send an electronic communication about the debt and wait for a reasonable amount of time, generally 14 days, in case it is returned as undeliverable, A business name that does not indicate the caller is a debt collector, Telephone number(s) you can use to return the call, A request that you reply and the name(s) of who you can contact to reply. When a consumer places a telephone call to a debt collector, that telephone call is not a telephone call placed by the debt collector. A debt collector may also respond one time to a consumer-initiated communication during a time or at a place previously described as inconvenient. The Consumer Financial Protection Bureau on Friday released a new resource related to its debt collection rule, this one aimed at helping smaller collection agencies comply with the rule once it goes into effect this November. A debt collector may now leave a limited content message without risk that the voicemail would be considered a communication under the FDCPA. Yes. The Official Interpretation provides valuable detail that should be read in conjunction with the regulation to fully appreciate the breadth and nuance of the Rule. However, if a person initiates contact with a debt collector using a medium of communication that the person previously requested the debt collector not use, the debt collector may respond once through the same medium of communication used by the person. However, a debt collectors employee may use an assumed name when communicating or attempting to communicate with a person, provided that the employee uses the assumed name consistently and that the debt collector can readily identify any employee using an assumed name. CFPB Releases Final Debt Collection Rule Posted by Chris Alarie on Mon, 11/02/2020 - 11:13 The Consumer Financial Protection Bureau (CFPB) released the final version of a debt collection rule that was last seen in proposed form back in May 2019. 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. The CFPB will finalize a second part of its debt collection rulemaking in December that will include time-barred debt collection, parking debts on credit reports, model notices to consumers about validating the debt, and language access provisions. Comment 14(h)(1)-1. See the. However, as discussed in Debt Collection Telephone Call Frequency: Excluded Calls Question 1, once the debt collector has a telephone conversation with the consumer regarding the debt, the consumers direct prior consent expires. This specific prohibition related to telephone calls and telephone conversations will be referred to as the prohibition against repeated or continuous telephone calls or conversations throughout these FAQs. For more information about the conversation frequency prong of the presumptions related to telephone call frequency, see Debt Collection Telephone Call Frequency: Presumptions Question 1. Comment 14(b)(2)(ii)-2.iv.B. State licensing or other laws, however, may require a debt collector to use their registered DBA when leaving messages for consumers. 12 CFR 1006.18(a). 255 0 obj <>stream For more information about the prohibition against repeated or continuous telephone calls or conversations, see Section 7 in the Debt Collection Small Entity Compliance Guide . 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 . 1026.41. Under the Debt Collection Rule, certain telephone calls are excluded from the telephone call frequencies. Executive Summary. The CFPB reserved space to address time-barred debt and consumer disclosure issues, including Bureau-approved model disclosures. For more information about calls that are excluded from the telephone call frequencies, see Debt Collection Telephone Call Frequency: Excluded Calls Question 1. SUMMARY: The Bureau of Consumer Financial Protection (Bureau) proposes to amend Regulation F, 12 CFR part 1006, which implements the Fair Debt Collection . For example, it is common for collection agencies to include collection service or receivable in their business name. 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. Count all four of the calls as calls placed in connection with the collection of the medical debt and the credit card debt. Not surprising, some of the consumer-protection regulations that historically apply to communications also apply to an attempt to communicate. over "larger participants" of markets for consumer debt collection, as the CFPB defines by rule, and their service providers. Until the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was passed . For more information about limited-content messages under the Debt Collection Rule, see Section 3.3.3 in the Debt Collection Small Entity Compliance Guide . The debt collector has had a conversation with the consumer with respect to the medical debt and the credit card debt. 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. (Jan. 22, 2021) The latest summary from NASCUS focuses on the new rule from CFPB on debt collection practice, which revises Regulation F (which, in turn, implements the Fair Debt Collection Practices Act, FDCPA). On April 19, 2021, the CFPB announced that it issued an interim final rule in support of the CDCs residential eviction moratorium, effective May 3, 2021, which requires debt collectors to provide written notice to tenants of their rights under the CDC Order and prohibits debt collectors from misrepresenting tenants eligibility for protection from eviction under the moratorium. No. Additionally, editable formats of the model validation notice are available on the Debt Collection Rules GitHub page . 12 CFR 1006.6(e). 12 CFR 1006.14(b)(2). If a debt collectors telephone call is connected to a voicemail or other recorded message, it is considered connected. Inconvenient places depend on whether a debt collector knows or should know that a place is inconvenient. See Comments 14(b)(4)-1.ii. If you still have a question, you may submit it using the link below. However, the Rule specifically declined to expand the rule to apply to first-party debt collectors who are not FDCPA debt collectors, and it also declined to clarify whether any particular actions taken by a first-party debt collector who is not an FDCPA debt collector would constitute an unfair, deceptive, or abusive practice. The CFPB issued Part II of its final collection rule on December 18, 2020. However, the presumptions related to telephone call frequency, discussed in Debt Collection Telephone Call Frequency: Presumptions Question 1, apply to all persons, not just to the consumer or the person who owes or allegedly owes the debt. No. Thus, the calls placed do count toward the presumptions related to telephone call frequency for the person who actually received the call attempt. Within a medium of communication, a person may request that a debt collector not use a specific email address or telephone number. Similarly, if a consumer opts out of receiving emails at a particular email address or text messages at a particular telephone number, the consumer has requested that the debt collector not use that email address or telephone number to electronically communicate with the consumer. However, a debt collector could try to rebut the presumption of a violation by showing that it placed the call in response to the consumers request for additional information. 12 CFR 1006.2(j)(1). No. The standard considers the number of calls per debt, not per consumer, with the exception of student loans serviced under a single account number. The telephone call causes a telephone to ring at the dialed number, but the call does not connect to a voicemail. implements the Fair Debt C ollection Practices A ct (FDCPA). Such a statement would indicate that the time or place is inconvenient for the current communication or attempt to communicate. 12 CFR 1006.34(d)(2)(ii). The questions and answers below pertain to compliance with the Debt Collection Rule. A limited-content message is a type of voicemail that a debt collector may leave for you that must include specific information. During the Trump administration, the Bureau focused on educating consumers. Comment 14(b)(2)(ii)-2.iii. Under the Special Rule, the debt collector may provide a required periodic statement as a substitute for the Itemization-Related Information. A limited content message is a voicemail message for a consumer that must include all of the following information: (i) a business name for the debt collector that does not indicate that the debt collector is in the debt collection business; (ii) a request that the consumer reply to the message; (iii) the name or names of one or more natural persons whom the consumer can contact to reply to the debt collector; and (iv) a telephone number or numbers that the consumer can use to reply to the debt collector.

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