CFPB Debt Collection Rule Resource Guide

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Section 1006.6 Communication in connection with debt collection

The following perspective was provided by Shannon Miller of Maurice Wutscher.

One of the more interesting aspects of the CFPB’s FDCPA Final Rule (the “Rule”) is its acknowledgement that in today’s day and age, there are significantly more avenues available for facilitating communications between consumers and debt collectors than could have possibly been anticipated when the FDCPA was enacted in 1978. The Rule specifically acknowledges email and text communications as permissible and that many consumers may prefer communicating electronically rather than via telephone or written correspondence. Technically, nothing in the FDCPA had ever prohibited communicating with a consumer via email or text, however the Rule now anticipates and regulates such communications. While the Rule’s “blessing” may facilitate email and text communications with consumers for the collection industry, doing so is not without certain considerations and areas of concern.
Initially, email and text communications, like traditional telephone calls, can violate the FDCPA and the Rule if they are made at any unusual time or unusual place. See, § 1006.6(b)(1). The Rule interprets the time of an electronic communication to be when it was sent, not when the consumer receives it. Thus, for example, automated emails must be scheduled to be sent between the hours of 8 am and 9 pm or during other designated hours which the consumer has identified as convenient. See, §1006.6(b)(1)(i). Devices that, for example, were programmed to send communications at 12:01 am with the anticipation that such email would not be opened by the consumer until the morning would violate the Rule.

Prior to the wide-scale adoption of cell phones, communicating via landline telephones brought with it reasonable assurance of the “place” where a consumer would receive the call. Even with the mobility provided by cell phones, the consumer’s cell number was tied to an area code and, absent the debt collector’s knowledge that the consumer was somewhere other than the area code she had been assigned, the debt collector could reasonably rely on the consumer’s location by reference to the area code of a telephone number being dialed. Those assurances are not readily present when sending emails. An email can be received anywhere the consumer chooses to access it and ensuring that a communication is not made to a consumer at an inconvenient time or place could present a challenge. For example, if a consumer had advised that communicating with him/her at work was inconvenient, an easy fix is to make sure any telephone number for their place of employment was not called. However, debt collectors would also have to be careful texting a consumer’s cell phone or sending an email during known work hours because of the consumer’s ability to receive such communications on their cell phone or other device while they are at work.

Furthermore, under the Rule, debt collectors must provide for a consumer to “opt-out” of specific electronic communications including via email and text. Specifically, any communication made to a consumer by use of email or text must include a “clear and conspicuous” notice regarding the availability to opt-out as well as the procedure for effectuating such an opt-out. See, § 1006.6(e). Diverging from the proposed rule, the Rule no longer requires any consumer opt-out to be made “in writing” but instead directs that the notice to be provided by a debt collector must describe a “reasonable and simple” method by which a consumer can opt-out of receiving such communications.

While what qualifies as “reasonable and simple” is not specifically provided for in the Rules, the CFPB is adopting commentary which provides examples, informed by suggestions from commenters, of opt-out methods that comply with the Rules’ “reasonable and simple” standard. Specifically, comment 6(e)–1 clarifies that, in the context of text message communications, the standard is satisfied if a consumer can opt-out by replying “stop” to the debt collector. Comment 6(e)–1 also clarifies that, in the context of email communications, the standard is satisfied if a consumer can opt-out by clicking on a link in the email or replying with the word “stop” in the subject line. Additionally, the Rules do identify what is not “reasonable and simple”. This includes requiring a consumer pay a fee or provide any information other than their opt-out preferences to effectuate an opt-out.

Although the “reasonable and simple” requirement does provide a debt collector some leeway regarding how they dictate that a consumer opts-out, similar to interpreting if a dispute of a debt has been made for purposes of the FDCPA or if consent has been revoked pursuant to the TCPA, the inquiry will not end there. Whether a consumer has complied with the requisite method for opting-out and whether the method is “reasonable and simple” under the circumstances will be a fact sensitive issue. Debt collectors should be aware of this when crafting their “reasonable and simple” opt-out method.

Finally, the inherent risks of sending a text or an email which discloses information regarding a debt to a third party, in violation of the Rule, § 1006.6(d)(1), is greater, for instance, than placing a telephone call which, if received by the wrong party, can be terminated prior to disclosure of any information regarding the debt. However, the Rule has made available the bona fide error defense found in the FDCPA at § 1692k(c) but to secure it the debt collector must satisfy certain prerequisites when sending texts and emails to contact information that an entity may have on file for a particular consumer that demonstrate “procedures reasonably adapted to avoid” an inadvertent third-party disclosure.

Generally, the bona fide error defense may be available if the debt collector texts the consumer at a telephone number or emails the consumer at an address 1) previously used by the consumer to communicate with the collector about the debt and the consumer has not opted out of receiving texts/emails to that number or address, or 2) the collector has received consent directly from the consumer to send text/email communications about the debt and the consumer has not revoked consent.

As you can see, while electronic communications via text and email certainly offer a wealth of potential, they also come with their fair share of perils. Any member of the industry contemplating the use of such communication should be sure to thoroughly analyze the Rule and implement policies and procedures to ensure that such communications comply with all requirements of the Rule.