Blog LenderLaw Watch November 10, 2020

Consumer Financial Protection Bureau Issues New Final Rule Modernizing the Fair Debt Collection Practices Act

On October 30, 2020, the Consumer Financial Protection Bureau (CFPB) issued a new final rule implementing the Fair Debt Collection Practices Act (FDCPA).  According the CFPB’s press release, the new final rule is designed “to restate and clarify prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.”  In general, the CFPB’s revisions to Regulation F, 12 CFR part 1006, strengthen protections to consumers who communicate with debt collectors and clarifies the application of the FDCPA to newer communication technologies that have developed in the four decades since the FDCPA first passed in 1977.  In a blog post penned by CFPB Director Kathleen L. Kraninger, the Director writes that the new rule “provides clear consumer rights and limitations for debt collectors on using modern technologies to communicate with each other.”

The new rule includes important call frequency requirements.  Specifically, it clarifies that a debt collector is presumed to violate the FDCPA’s prohibition on repeated or continuous telephone calls if the debt collector places a telephone call to a person more than seven times within a seven-day period or within seven days after engaging in a telephone conversation with the person.  To address modern electronic communication methods such as email and text messaging, the new rule clarifies how consumers may set limits on debt collection communications to reflect their communication method preferences.  Debt collectors who communicate with consumers electronically must offer the consumer a reasonable and simple method to opt out of such communications at a specific email address or telephone number.  The rule also 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.

However, the new rule balances greater consumer protections with additional guidance for debt collectors on how to ensure compliance with the FDCPA.  For example, the rule clarifies that a debt collector is presumed to comply with the call frequency prohibitions if the debt collector places a telephone call not in excess of the aforementioned call frequencies.  The final rule also provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure of information concerning a consumer debt if the debt collector follows the procedures identified in the rule when communicating with a consumer by email or text message.  Finally, the rule defines a new term related to debt collection communications: limited-content message.  This definition identifies what information a debt collector must and may include in a voicemail message for consumers (with the inclusion of no other information permitted) for the message to be deemed not to be a communication under the FDCPA.

Goodwin is closely monitoring how the new rule is applied and litigated for its clients involved in FDCPA litigation.