WASHINGTON—The Consumer Financial Protection Bureau has issued a final rule to restate and clarify prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.
The rule primarily applies to third parties collecting debt, and not first parties, such as credit unions, collecting on debts owed by members.
Both CU trade groups indicated they are reviewing the rule, which comes in at more than 600 total pages.
“Credit unions treat members with respect during the debt collection process,” said CUNA President/CEO Jim Nussle. “While this rule is designed to implement the FDCPA, we remain concerned about the potential impacts the rule could have on the credit ecosystem. Because they are the owners of the credit union, credit union members have an interest in debt collection practices that are effective, fair and efficient. We will continue to evaluate the rule to determine its full impact on credit unions and their partners.”
The Focus
According to the CFPB, the rule focuses on debt collection communications and gives consumers more control over how often and through what means debt collectors can communicate with them regarding their debts. The rule also clarifies how the protections of the Fair Debt Collection Practices Act (FDCPA), which was passed in 1977, apply to newer communication technologies, such as email and text messages, the CFPB added.
According to the Bureau, the rule is “the result of a deliberative, thoughtful process spanning more than seven years and reflects engagement with consumer advocates, debt collectors, and other stakeholders. Further, in developing the final rule, the Bureau considered the more than 14,000 comments received during the public comment and rulemaking process,” the Bureau said in a statement. “As a result of this feedback, for example, the rule establishes a presumption on the number of calls debt collectors may place to reach consumers on a weekly basis. A debt collector is presumed to violate federal law if the debt collector places telephone calls to a particular person in connection with the collection of a particular debt more than seven times within seven consecutive days or within seven consecutive days of having had a telephone conversation about the debt.”
What the Rule Does
In addition, the CFPB said the rule further clarifies how consumers may set limits on debt collection communications to reflect their preferences and the limits on communicating with third parties about a consumer’s debt. The rule:
- Requires debt collectors that communicate electronically to offer the consumer a reasonable and simple method to opt out of such communications at a specific email address or telephone number.
- Provides that consumers may, if the debt collector communicates through a medium of electronic communications, use that medium of electronic communications to place a cease communication request or notify the debt collector that they refuse to pay the debt.
- Clarifies that the FDCPA’s general prohibition on harassing, oppressive, or abusive conduct applies to telephone calls as well as other communication media, such as email and text messages, and provides examples demonstrating how the prohibition restricts emails and text messages.
- Generally restates the FDCPA’s prohibitions regarding false, deceptive, or misleading representations or means and unfair or unconscionable means, the agency said.
‘Great Deal of Feedback’
“Finally, to address one of the topics on which the Bureau received a great deal of feedback, the Bureau is not finalizing the proposed safe harbor for debt collectors against claims that an attorney falsely represented the attorney’s involvement in the preparation of a litigation submission,” the CFPB said.
According to the Bureau, that provision was proposed to bring greater clarity to the issue but, after receiving questions and comments from many stakeholders concerning the proposal the agency said it has decided not to finalize that provision.
“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 Director Kathleen L. Kraninger. “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.”
Other Provisions
The final rule also contains provisions on disputes, and record retention, among other topics. The Bureau said it intends to issue a second debt collection final rule focused on consumer disclosures in December 2020.
The final rule can be found here.