On Friday, October 30, 2020, the Consumer Financial Protection Bureau (CFPB) issued a final rule to implement the Fair Debt Collection Practices Act. This rule focuses on debt collection communications and gives guidelines on what is considered harassment, false or misleading representations, and unfair practices. This new final rule will take effect one year from the date of publication in the Federal Register.
The rule is aimed at third-party debt collectors and debt buyers (firms or companies that buy defaulted debt). The rule is not directly applicable to creditors who are collecting their own debts. However, the rule would apply to third-party debt collectors hired by a creditor. Furthermore, the rule addresses the use of technology in debt collection, including email and text messages. The rule provides guidance on the use of these technologies, offers clarification on what type of behavior constitutes harassment, provides guidance to creditors on best practices, and gives guidance on how to avoid harassment claims.
In helping to clarify what behavior constitutes harassment, the rule places a limit of seven calls by a debt collector within a week to a consumer and states no calls are to be made to a consumer during the week after the debt collector has a telephone conversation with the consumer. Additionally, the rule grants a consumer the right to limit or prohibit communication through a particular medium. The rule states a debt collector shall not communicate with a consumer who provides notice in writing that he or she refuses to pay the debt. The rule also requires that the consumer apply payments on multiple debts in accordance with the consumer’s directions.
In the press release, the CFPB indicated that it intends to release a second debt collection final rule in December 2020. The second final rule will focus on consumer disclosures. A full copy of the rule, including all applicable commentary can be found here.
SVL intends to provide more details on the rule in a future virtual educational event. Additional details will be released in the next week or two. Should you have questions about the rule, please do not hesitate to contact a lawyer at SVL.