Appendix C – Issuance of Advisory Opnions
The following perspective was provided by Patrick Newman of Bassford Remele.
The Debt Collection Rule includes a mechanism for seeking an advisory opinion from the Bureau as Appendix C to Part 1006. This is a promising development in terms of regulatory compliance.
The FDCPA itself provides that “[n]o provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with an advisory opinion of the Bureau ….” 15 U.S.C. § 1692k(e). In other words, if, in response to a lawsuit, a debt collector can affirmatively establish it complied with an advisory opinion from the CFPB, the collector cannot be held liable for a claimed FDCPA violation. This provision also existed under the FDCPA when the Fair Trade Commission was in charge of enforcing it, but the Commission did not publish a great deal of opinions that actually allowed collectors to avail themselves of the defense—or at least not as many as the industry would have liked.
There is hope now that the Bureau will more readily provide advisory opinions that the industry can use to tailor its compliance practices and, in a worst-case scenario, defend itself against the ever-increasing deluge of consumer lawsuits.
Advisory opinions are not rules; they cannot be used to change the Debt Collection Rule or the FDCPA itself. Instead, the opinion applies a particular regulation to a specific set of facts to provide guidance. Think of it this way: the speed limit (i.e., the “rule”) is 70; a motorist might seek an advisory opinion as to whether there would be an exception to liability for exceeding the speed limit if they were rushing their pregnant spouse to the hospital.
Not all factual circumstances or interpretive issues make for good advisory opinions. In fact, the Bureau has previously outlined factors it finds relevant in determining whether to provide an advisory opinion:
- Are there open questions within the Bureau’s purview that can be addressed by an advisory opinion?
- Has the interpretive issue been noted previously by the Bureau during investigations or enforcement actions as one that might benefit from further guidance or interpretation?
- Is the clarification sought one of substantive importance—will it affect a large group of stakeholders?
- Would the advisory opinion provide clarity on an ambiguity that the Bureau has not previously addressed?
The Bureau is unlikely to provide an advisory opinion if the issue presented is the subject of an ongoing investigation, enforcement action, or rulemaking process, or if the issue is better suited to the rulemaking process or is already subject to “clear” judicial precedent or regulation.
In sum, the Bureau is dusting off an old tool and giving it a fresh look. Obtaining an advisory opinion presents the possibility of relief from regulatory ambiguity, but there is also a “be careful what you wish for” component, too. Just like an issue you might consider testing in a court of law, you may not like the answer you get from the Bureau on your issue. You might be a hero to the industry, or you might be a goat, if the Bureau decides to issue an advisory opinion on your issue, depending on the outcome.
To avoid muddying the waters for the industry, apply the same strategic calculus as you would in deciding whether to fight a FDCPA lawsuit:
- Is the issue one of institutional significance (e.g., client requirement, conflict in laws or rules, revenue generating)?
- Are the facts good for us? (In the case of a request for an advisory opinion, is the issue narrow enough for the CFPB to consider?)
- Would a favorable decision (or opinion) give us what we want?
- What are the worst-case scenarios if we get a bad decision (or opinion)?
And be sure to follow the supervisory opinions as the Bureau publishes them. Even if they don’t provide an affirmative defense in a lawsuit, they can still be used as persuasive authority in the courts and in negotiating or otherwise dealing with regulatory authorities, as well as provide insight into the Bureau’s mindset on particular topics.