The Consumer Financial Protection Bureau today released its debt collection rule, continuing its process of modernizing the regulation of the accounts receivable management industry.
The rule — all 653 pages of it — can be accessed by clicking here.
The changes announced today will go into effect one year after they are published in the Federal Register.
The final rule allows for using text messaging and email when collecting on debts, provided that instructions about how to opt out are included in each message. The final rule also includes a safe harbor from third-party disclosure violations if certain procedures are followed.
For the first time, there would be a nationwide cap on the number of communication attempts that collectors could make when attempting to get in touch with individuals on the phone. Collectors would be prohibited from making more than seven calls in a seven-day period and may not call for seven days after having a telephone conversation with an individual. There are certain exceptions to this provision.
Collectors may may also use what is known as a limited content message which can be used when leaving voicemails for consumers. That message should include:
- A business name for the debt collector that does not indicate that the debt collector is in the debt collection business;
- 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 telephone number or numbers that the consumer can use to reply to the debt collector
The final rule did not include a model validation notice, which was part of the proposed rule, although the CFPB said it was planning on issuing another rule to cover that provision. That is scheduled to be released in December.
The law that most directly regulates the debt collection industry is the Fair Debt Collection Practices Act, which went into effect more than 40 years ago and has remained largely untouched since then. The CFPB’s debt collection rule is the most impactful changes to industry regulation on a national level in the decades since the FDCPA became law. Modernizing debt collection regulation should have the effect of giving collection agencies a bright line of what is allowed and what is not allowed and prevent the courts from having to make many of those determinations, at great expense to companies in the industry.
“With the vast changes in communications since the FDCPA was passed more than four decades ago, it is important to provide clear rules of the road,” said CFPB Director Kathleen L. Kraninger, in a statement. “Our debt collection rulemaking provides limits on debt collectors and provides clear rights for consumers. With this modernized debt collection rule, consumers will have greater control when communicating with debt collectors.”
More than 12,000 comments were filed after the release of the proposed rule. Consumer advocates were very critical of the proposed rule, saying it did not provide enough consumer protections.