The Consumer Financial Protection Bureau Issues Final Rule on Debt Collection Pratices
The Consumer Financial Protection Bureau, the CFPB, has finalized part one and part two of its debt collection rule under the federal Fair Debt Collection Practices Act, FDCPA. Regulation F, as it is referred to, implements the FDCPA and prescribes Federal rules governing the activities of debt collectors. The final rule addresses, among other things, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection. It clarifies the information that a debt collector must provide to a consumer at the outset of debt collection communications.
In November of 2020, the CFPB published the November 2020 Final Rule which revised Regulation F into four subparts. A includes general provisions including definitions of relevant terms, B contains rules for debt collectors, C includes information for any future debt collection rule-makings and D holds other miscellaneous provisions. The final rules amends sections A, B and D.
Section 809 (a) of the FDCPA requires that a debt collector send a written notice containing certain general information about the debt and actions the consumer may take in response t a consumer within five days of the initial communication. As stated in the Federal Registrar, “the final rule clarifies the information about the debt and the consumer's rights with respect to the debt that a debt collector must provide to a consumer at the outset of debt collection communications, including (if applicable) on a validation notice. The final rule also requires a debt collector to provide prompts that a consumer can use to dispute the debt, request information about the original creditor, or take certain other actions. The final rule provides a safe harbor for compliance with these disclosure requirements for debt collectors who use the model validation notice or certain variations of the notice”.
Additionally, the final rule states that a debt collector cannot sue or threaten to sue a consumer to collect time-barred debt. Debt collectors are also prohibited from furnishing information about a debt to a consumer reporting agency before engaging in specific outreach to the consumer about the debt. For more information regarding the changes and amendments, please see here.