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[UPDATING] CFPB Releases Proposed Debt Collection Rule

The Consumer Financial Protection Bureau has released its long-await proposed debt collection rule.

A copy of the proposed rule — all 538 pages of it — can be accessed by clicking here.

“The Bureau is taking the next step in the rulemaking process to ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations,” said CFPB Director Kathleen L. Kraninger, in a statement. “As the CFPB moves to modernize the legal regime for debt collection, we are keenly interested in hearing all views so that we can develop a final rule that takes into account the feedback received.”

From a CFPB press release about the rule:

  • Establish a clear, bright-line rule limiting call attempts and telephone conversations: The proposed rule generally would limit debt collectors to no more than seven attempts by telephone per week to reach a consumer about a specific debt. Once a telephone conversation between the debt collector and consumer takes place, the debt collector must wait at least a week before calling the consumer again. 
  • Clarify consumer protection requirements for certain consumer-facing debt collection disclosures: The proposed rule would require debt collectors to send consumers a disclosure with certain information about the debt and related consumer protections. This information would include, for example, an itemization of the debt and plain-language information about how a consumer may respond to a collection attempt, including by disputing the debt. The proposal would require the disclosure to include a “tear-off” that consumers could send back to the debt collector to respond to the collection attempt. 
  • Clarify how debt collectors can communicate with consumers: The proposed rule would clarify how debt collectors may lawfully use newer communication technologies, such as voicemails, emails and text messages, to communicate with consumers and would protect consumers who do not wish to receive such communications by, among other things, allowing them to unsubscribe to future communications through these methods. The proposed rule would also clarify how collectors may provide required disclosures electronically. In addition, if consumers want to limit ways debt collectors contact them, for example at a specific telephone number, while they are at work, or during certain hours, the rule clarifies how consumers may easily do so.     
  • Prohibit suits and threats of suit on time-barred debts and require communication before credit reporting: The proposed rule would prohibit a debt collector from suing or threatening to sue a consumer to collect a debt if the debt collector knows or should know that the statute of limitations has expired. The proposed rule also would prohibit a debt collector from furnishing information about a debt to a consumer reporting agency unless the debt collector has communicated about the debt to the consumer, such as by sending the consumer a letter. 

The CFPB will accept comments on the proposed rule for 90 days, after which it will analyze the comments and develop a final rule. The final rule would not go into effect until one year after it is published in the Federal Register.

To account for new communication channels, like email and text messages, the CFPB is proposing the creation of what it calls a “limited content message,” which would detail the information that may be left in a message but not be subject to the FDCPA.

The limited content message would include:

  • The consumer’s name;
  • 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;
  • A telephone number that the consumer can use to reply to the debt collector; and
  • If applicable, an opt-out message when making electronic communications

The Bureau is also proposing the creation of a model validation notice that collectors could use to send to individuals.

If enacted, gone will be the days of the “least sophisticated consumer,” which the CFPB proposes to replace with the term “unsophisticated consumer.”

Along with the provisions of the proposed rule, the CFPB also includes examples and scenarios under which certain exceptions might be made. For example, based on the provision that a collector must wait seven days to contact a consumer once a conversation has been had, there are certain situations where a call may need to be made before that seven-day-period has elapsed.

On Friday, April 5, a debt collector places a telephone call to a consumer. During the ensuing telephone conversation in connection with the collection of a debt, the consumer requests that the debt collector call back at a later time. While § 1006.14(b)(2) otherwise would prohibit the debt collector from placing a telephone call to the consumer again until Friday, April 12, § 1006.14(b)(3)(ii) provides that the debt collector may place telephone calls pursuant to the consumer’s prior consent before the following Friday. Assume further that the debt collector calls the consumer back on Monday, April 8, and that they have a telephone conversation on that date. Thereafter, the exception in § 1006.14(b)(3)(ii) does not apply to subsequent telephone calls placed by the debt collector to the consumer, unless the consumer again provides prior consent directly to the debt collector.

Text messages and emails would not be subject to the communication caps, as long as the collection agency provides opt-out instructions in each communication.

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