Consumer Financial Protection Bureau issues final rule implementing Fair Debt Collection Practices Act – Finance and Banking


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The rule takes effect one year after it is published in the Federal Register.

On October 30, 2020, the Consumer Financial Protection Bureau (CFPB) published a final rule revising Regulation F, 12 CFR part 1006, which implements the Federal Fair Debt Collection Practices Act, 15 USC 1692, et seq. (FDCPA).

The final rule expressly applies to “debt collectors”, but the changes may also be of interest to financial institutions and creditors if, for example, a state’s definition of “debt collector” extends to creditors in business. collection activities, the creditor voluntarily chooses to adhere to the new standards and / or the creditor wishes to know the rules that apply to its collection providers.

As detailed below, the final rule:

  • Reaffirms and clarifies the prohibitions on harassment and abuse, false or misleading representations and unfair practices by debt collectors when collecting consumer debts;
  • Focuses on debt collection communications and gives consumers more control over how often and by what means debt collectors can communicate with them about their debt; and
  • Explains how FDCPA’s protections apply to new communication technologies, such as email and SMS.

Below is a summary of some of the most important provisions of the Final Rule.

Compliance deadline

The rule becomes effective one year after its publication in the Federal Register.

Electronic communications with consumers

Perhaps the most significant change in the final rule concerns the way debt collectors can communicate with consumers electronically, namely by email, SMS or other electronic means. Under the final rule, email and text messages to consumers are allowed, but the rule sets out certain limitations designed to protect consumer privacy and protect consumers from harassment or abuse.

Notably, the rule requires debt collectors who communicate electronically with consumers to include in those communications a clear and visible statement describing a simple and reasonable method for opting out of receiving further emails or text messages. Additionally, if a debt collector chooses to communicate with consumers through electronic communications, this opens the door for the consumer to use electronic communications to make a cease communication request or to notify the debt collector that the consumer refuses to pay the debt.

Contact limits for telephone calls with rebuttable presumptions

The final rule also implements somewhat controversial “contact caps” for debt collectors who contact consumers by phone. Under the new rule, a debt collector is presumed to be in breach of the FDCPA’s ban on repeated or continuous phone calls if they call a person more than seven times in a seven-day period, or within seven consecutive days after having had a telephone conversation with the person. On the other hand, a debt collector is presumed to be in compliance with the FDCPA if they make phone calls that do not exceed either of these limits.

The final rule also provides non-exhaustive lists of factors that can be used to rebut the presumption of conformity or violation. By comparison, electronic communications do not have a specific number limit, but such communications are still subject to the standard prohibitions of harassment and abuse.

Other communications provisions

The final rule also clarifies the restrictions on when and where a debt collector can communicate with a consumer, including clarifying that a consumer does not need to use specific words to say that a time or a not suitable for debt collection communications.

The final rule also defines a new term for debt collection communications: “limited content message”. Content-limited messages are voicemail messages left with a consumer, and the final rule identifies what information a debt collector should and can include in such a message. If a voicemail message includes only authorized content, it is not a “communication” under the FDCPA.

Social media contacts

Under the final rule, a debt collector cannot communicate or attempt to communicate with a person regarding the collection of a debt through a social media platform if the communication is visible to the general public or the person’s contacts. on social networks.

Record retention requirements

The final rule also includes provisions clarifying the obligations of debt collectors to keep documents proving compliance or non-compliance with the FDCPA and Regulation F. A debt collector must retain documents from the date on which he begins collection activity up to three years after the last collection activity of the debt collector. If a debt collector records phone calls, he or she must keep the record of each call for three years after the date of the call.

Restrictions on the sale of certain receivables

The final rule prohibits the sale, assignment for value or investment for the collection of certain debts, namely debts which the collector knows or should know have been paid or settled or discharged in the event of a loss. bankruptcy.

Persistent uncertainty over model validation notices

In the regulatory proposal notice process, the CFPB provided a template validation notice that would serve as a safe haven for debt collectors from a barrage of FDCPA lawsuits. The CFPB says it intends to publish a final disclosure-focused rule in December 2020 to clarify what information a debt collector must provide to a consumer at the start of debt collection and to provide a template for debt collection. notice containing the information required by article 809 of the FDCPA. (a).

Prescribed Debt Disclosures

The final rule did not address the issue of collection of time-barred debts. But, the CFPB has indicated that its next final rule focused on disclosure will address this issue as well.

Warning: This alert has been prepared and posted for informational purposes only and is not offered, nor should it be construed as legal advice. For more information, please consult the full warning.

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