The Consumer Financial Protection Bureau issued its long-awaited Notice of Proposed Rulemaking (NPRM) for the Fair Debt Collection Practices Act, providing the first regulatory clarity in nearly 40 years after the law’s enactment. Once published in the Federal Register, the rule will be out for public comment for 90 days.
The American Collectors Association has long advocated for policymakers to modernize and clarify the severely outdated Fair Debt Collection Practices Act that does not account for modern consumer preferences and impedes the free flow of information.
Here are a few high-level takeaways after our first glance at the rule:
- The Limited Content Voicemail Message will help provide clarity for the industry. The proposal would define, and provide example language that a debt collector could send by, for example, voicemail or text. The content of a Limited-Content Message would not be considered a “communication” and, if heard or observed by a third party, it would not constitute a prohibited third-party disclosure.
- The model validation notice will help provide clarity and safe harbors. It includes certain disclosures, including an itemization of the debt and plain-language information about how a consumer may respond to a collection attempt, including by disputing the debt.
- The proposal acknowledges and seeks to address modern communication methods such as email and text messaging, and provides clarity to allow debt collectors to lawfully use newer communication technologies, such as voicemails, emails and text messages. It also provides methods by which collectors may provide required disclosures electronically, for example, by email or text massage.
- For emails and text messages – the proposed rule also identifies safe harbor procedures for debt collectors who unintentionally communicate with an unauthorized third party about a consumer’s debt when trying to communicate with the consumer by email or text message. The proposed rule would require a debt collector to include, in emails, text messages, and other electronic communications, an option for the consumer to unsubscribe from future such communications. So, consumers have the right to opt out.
- Workplace email – the proposed rule would prohibit a debt collector from contacting a consumer using an email address that the debt collector knows or should know is provided by the consumer’s employer. For example, if a debt collector knows where the consumer works and that the email address appears to be a work email address, the debt collector knows or should know the email address is provided by the consumer’s employer.
- Social media – the proposed rule would prohibit debt collectors from contacting consumers through social media platforms except through a private messaging function.
- The Bureau also proposes a cap of seven calls per week. The proposal includes a limit on the number of calls a debt collector may place to a consumer about a particular debt within a seven-day period, subject to certain exceptions. The proposal would prohibit a debt collector from calling a consumer about a particular debt more than seven times within a seven-day period.
- The rule also prohibits suits and threats of suit on time-barred debts and requires communication with the consumer before credit reporting.
- The rule also requires a debt collector to refrain from reporting a debt to a consumer reporting agency unless the debt collector has already communicated with the consumer.