Consumer Financial Protection Bureau proposes new regulations: the Fair Debt Collection Practices Act

by Chris Sorens

There is substantial news in the debt collection market as the Consumer Financial Protection Bureau (CFPB) recently proposed new regulations as to the rights of debtors and the limitations of collectors. It comes in the form of implementing new understandings of the Fair Debt Collection Practices Act (FDCPA) of 1977.

The CFPB is the governing body that interprets the FDCPA, as of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (also known as the Dodd-Frank Act).

As Consumer Finance reports, the new proposed implementation is aiming to address new technologies and means of communication that have arisen since the Fair Debt Collection Practices Act was signed into law in 1977, specifically looking at the rights of consumers and the limitations of collectors agencies.

The CFPB is open to views regarding the Fair Debt Collection Practices Act

A statement from Kathleen L. Kraninger, CFPB Director, reads: “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.” She continued, saying: “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.”

Fair Debt Collection Practices Act - New CFPB proposed regulations

The purpose and some details of the rule proposal

While we’ve touched upon the overarching goals of the rule proposal, let’s take a slightly more detailed look.

Clearly defined rule limiting the number of call attempts

The CFPB proposal will establish a clearly defined rule limiting the number of call attempts and telephone conversations.

The new, proposed rule will by and large limit debt collectors to seven attempts by telephone per week to reach a consumer about a specific debt. After successfully reaching the debtor and having a conversation over the phone, the debt collector cannot call the consumer again within the following 7 days.

Clarifying disclosures and consumer protection requirements

Clarify certain consumer-facing debt collection disclosures relating to consumer protection requirements.

The proposed rule requires debt collectors to send consumers a disclosure with information about the debt consumer protections and other relevant information. 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. The information debt collectors would need to send could include:

  • An itemization of the debt
  • Plain-language information about how a consumer may respond to a collection attempt
  • Plain-language information about how a consumer may dispute the debt.

Clarifying lawful means of communication

The CFPB aims to clarify what means of communication between debt collectors and debtors is allowed.

The proposed rule to the Fair Debt Collection Practices Act would clarify how debt collectors may lawfully communicate with consumers using newer communication technologies, such as:

  • voicemails
  • emails
  • text messages

This would protect consumers who do not wish to receive such communications. For example, they will be able to unsubscribe to future communications through such methods. The proposed rule would also clarify how collectors may electronically provide the required disclosures. There are further restrictions and specifications you can read here.

Statute of limitations and prohibiting suits and threats of a suit

The new regulation aims to prohibit suits, and threats of a 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 in order to collect a debt if the debt collector knows or should know that the statute of limitations has expired. The proposed rule to the Fair Debt Collection Practices Act also would prohibit a debt collector from furnishing information about a debt to a consumer reporting agency. That is, unless the debt collector informs the consumer of the debt.

As we mentioned earlier, the CFPB is open to views by the public. You can submit written feedback on the proposed rule. They will carefully consider the feedback before issuing a final regulation.

For more information about the Fair Debt Collection Practices Act: You can read the rule proposal in full here.

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