CFPB Proposes New Rules to Modernize Application of the FDCPA

On May 7, 2019, the Consumer Financial Protection Bureau (CFPB) issued a notice of proposed rulemaking (NPRM) for application of the Fair Debt Collection Practices Act (FDCPA). The significance of this NPRM cannot be understated. The CFPB's proposed rules cover multiple aspects of debt collection and are one of most substantial developments in the debt collection industry since the enactment of the FDCPA in 1977. The proposed rules seek to modernize application of the FDCPA to match the sophistication of today's electronic communications (e.g., voicemails, text messages, and electronic mail) and provide safe harbors and prescribe prohibited conduct. We've highlighted some of the proposed rules that demonstrate the significant impact on both debt collectors and debtors below.

The Limited-Content Message

• 1006.2(j): The newly proposed category of communications called limited-content message is meant to address current situations where debt collectors call debtors, do not reach the debtor and do not leave a message based on privacy concerns. CFPB's proposed rule permits the debt collector to leave a limited-content message that includes: (i) the consumer's name; (ii) a request that the consumer reply to the message; (iii) the name or names of one or more natural person(s) whom the consumer can contact to reply to the debt collector; (iv) a telephone number that the consumer can use to reply to the debt collector, and (v) if applicable, an opt-out notice.

Definitions of Consumers and Communications

• 1006.6(a)(4): CFPB proposes a rule to amend the definition of a consumer to include the executor or administrator of the consumer's estate, if the consumer is deceased.
• 1006.2(d): Following creation of the limited-content message category of communications, CFPB proposes a rule limiting the definition of communicate or communication: "A debt collector does not convey information regarding debt directly or indirectly to any person if the debt collector provides only a limited-content message..."

Safe Harbors

• 1006.34(d)(2): CFPB proposes a rule creating a safe harbor for debt collectors who use the CFPB's Model Validation Notice Form under Appendix B. The use of the Model Form complies with the notice of validation of debt required under proposed rules §§ 1006.34(a)(1)(i) and (d)(1).
• 1006.18(g): CFPB proposes a rule that provides debt collector law firms and attorneys safe harbors in debt collection litigation submissions for conduct that could be claimed to be false, deceptive or misleading.

Prohibitions

• 1006.14(b): To reduce repetitive calls to consumers, CPFB proposes a rule limiting the frequency of phone calls or telephone conversations to debtors.
• 1006.14(b)(2): Placing telephone calls to a person in connection with a particular debt cannot be made: (i) more than seven times within seven consecutive days or (ii) within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt.
• 1006.26(b): Prohibits threatening to sue or suing on time-barred debts.
• 1006.30(a): Prohibits furnishing information about the debt to a consumer credit reporting agency before communicating with the consumer about the debt.
• 1006.30(b): Prohibits the sale, transfer or placement of collection of certain debts that the debt collector should have known that was paid, settled, discharge in bankruptcy or an identity theft report was filed.

This is not an exhaustive list of the proposed CFPB rules. Those impacted by the proposed changes should visit the CFPB website for more information and review the complete NPRM. You can also see the CFPB's published NPRM on the Office of the Federal Register website, along with instructions for submission of comments. The comment period runs from May 21, 2019 to August 19, 2019.