The Fair Debt Collection Practices Act (FDCPA) was enacted in 1977 to curb the abusive practices of debt collectors. The law has been used in court many times and has had many interpretations over time.
The CFPB has been charged with enforcing the law and guiding debt collectors and consumers with regard to the Fair Credit Reporting Act (FCRA) and the FDCPA. Two new final rules clarifying these practices were recently issued by the CFPB in regards to the way debt collectors must deal with consumers.
Rule issued on Oct 30, 2020
This rule clarifies how debt collectors can use email, text messages, social media, and other contemporary methods to communicate with consumers. The rule will allow consumers, if they prefer, to limit the ability of debt collectors to communicate with them through these newer communication methods.
- Debt collectors will be 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 with that person about the debt.
- Consumers must have the option to unsubscribe from receiving text messages and emails from debt collectors or otherwise limit ways debt collectors contact them. It also clarifies the use of voicemails and other messages left by debt collectors.
- A debt collector is prohibited from communicating or attempting to communicate with a person, in connection with the collection of a debt, through a social media platform if the communication or attempt to communicate is viewable by the general public or the person’s social media contacts.
- A debt collector is prohibited from selling, transferring for consideration, or placing for collection a debt if the debt collector knows or should know that the debt has been paid or settled or discharged in bankruptcy.
- Link to the text of the final rule.
- The Final Rule will become effective one year after publication in the Federal Register, November 30, 2021.
Rule issued on December 18, 2020
This rule covers initial communication with the consumer, prohibits collection activities for time-barred debts and prohibits debt collection activities on accounts held by deceased persons. Specifically, the final rule prohibits a debt collector from:
- Suing or threatening to sue a consumer to collect time-barred debt.
- Prohibits a debt collector from furnishing information about a debt to a consumer reporting agency before engaging in specific outreach to the consumer about the debt.
- Addresses certain other disclosure-focused provisions, such as clarifying how a debt collector may respond to a consumer’s request for original-creditor information if the original creditor is the same as the current creditor. Here is an example of the new letter which must be sent by collection agencies.
- Additionally, the final rule interprets the definition of consumer under the FDCPA to include deceased natural persons and, relatedly, provides that, if a debt collector knows or should know that the a consumer is deceased, and the debt collector has not previously provided the validation information to the deceased consumer, the debt collector must provide that information to a person who is authorized to act on behalf of the deceased consumer’s estate.
- Link to the new final rule.
Are the New Rules Legally Enforceable?
The actual text of the FDCPA has not changed since 2010,but interpretations of the law are ever-evolving. The CFPB is issuing these final rules primarily pursuant to its authority under the FDCPA and the Dodd-Frank Act. As amended by the Dodd-Frank Act in 2010, FDCPA section 814(d) provides 18 that the Bureau “may prescribe rules with respect to the collection of debts by debt collectors,” as defined in the FDCPA. 43 Section 1022(a) of the Dodd-Frank Act provides that “[t]he Bureau is authorized to exercise its authorities under Federal consumer financial law to administer, enforce, and otherwise implement the provisions of Federal consumer financial law.”
The CFPB enforces the law by filing lawsuits against those debt collectors who have violated provisions of the FDCPA. It uses final rules to provide legal interpretation of those violations. To learn more about the process of rule development, go to the CFPB website.