The recent final rule (the “Rule”) implementing the Fair Debt Collection Practices Act (“FDCPA”) only directly governs parties defined as “debt collectors” by the FDCPA, principally meaning those who collect delinquent debt for others.[1] However, this Rule from the Consumer Financial Protection Bureau, accompanied by a 560-page Preamble, will also likely influence the collection activities of “creditors” — i.e., those collectors that fall outside that “debt collector” definition — in various ways.[2] The Rule also will affect how creditors should work with the debt collectors they hire. In this Alert, we focus specifically on these different impacts of the Rule on creditors. The Rule will take effect one year from the date it is published in the Federal Register.
Continue Reading What Creditors Need to Know About the Final Debt Collection Rule
The CFPB’s Debt-Collection Proposal: Key Details and Webinar
This post follows up on our earlier “primer” and flash alert on the Consumer Financial Protection Bureau’s proposed rule (the proposal) to implement the Fair Debt Collection Practices Act, which the CFPB released with a Fact Sheet and a Table of Contents to the proposal. Below, we describe key details of the proposal, and provide further information from stakeholders and the CFPB that has become available since the proposal’s publication.
McGuireWoods also will host a free webinar on the proposal in the coming weeks; a date will be announced soon.
Comments on all aspects of the proposal are due 90 days after it appears in the Federal Register, which should be any day now.
I. Summary of Key Points
- The proposal would apply only to “debt collectors” as defined by the FDCPA. Importantly, owners of debt — even debt in default when purchased — would continue to fall outside the branch of the “debt collector” definition that covers those who regularly collect debts “owed or due, to another.” As a practical matter, this means that the only “first-party” collectors (i.e., collectors who own the debt) who would generally be regulated as “debt collectors” would continue to be those who operate a “business the principal purpose of which is the collection of debts.”
- Nonetheless, many of the proposal’s requirements regarding what is unfair, deceptive or abusive under the FDCPA likely would be viewed as informing the UDAAP/UDAP analysis that applies to every person collecting consumer debts.
- The proposal would regulate communications by debt collectors in several key ways. In particular, it would:
- cap at seven the number of telephone calls that debt collectors may place to consumers within a seven-day window about a particular debt;
- impose a waiting period of seven days after a debt collector has a telephone conversation with a person about a particular debt;
- permit unlimited electronic communications about a debt, but require a debt collector to include in any e-mail, text message or other electronic communication a clear and conspicuous statement describing a way for the consumer to “opt out” from receiving any further messages through that particular medium;
- prohibit communications about a debt via a workplace email addresses (with exceptions) and through public-facing social media platforms; and
- create an exception to communications limits and requirements for messages satisfying the definition of a new term, “limited content message.”
- The proposal would standardize the “debt-validation” disclosures to consumers long required by § 809 of the FDCPA.
Continue Reading The CFPB’s Debt-Collection Proposal: Key Details and Webinar
Primer on the CFPB’s Imminent Fair Debt Collection Practices Act Rule Proposal
As soon as next week, the Consumer Financial Protection Bureau (CFPB) is expected to propose the first substantive regulations under the Fair Debt Collection Practices Act (FDCPA) since the law’s enactment in 1977. This rulemaking has the potential to substantially clarify and modernize many of the FDCPA’s requirements, with important implications not only for debt collection agencies and others who fit the law’s narrow definitions of “debt collector,” but for any entity engaged in the collection or sale of consumer debts.
Interest among industry and consumer-group stakeholders likely will be intense: An earlier agency notice about possible subjects for FDCPA rulemaking drew over 23,000 written comments to the CFPB, and a concrete proposal like the one forthcoming could generate many more. That level of interest is not surprising, given that debt collection activities consistently have ranked either first or second on the list of areas generating the highest number of consumer complaints to the Bureau. According to some press reports, the proposal may be released Wednesday, May 8, in connection with a CFPB Town Hall hosted by Director Kraninger.
Given the likely implications and widespread interest in the proposal, this alert serves as a primer on the anticipated rulemaking, both by placing it in context through a brief summary of its background, and by focusing on topics that the proposal is likely to cover.
Continue Reading Primer on the CFPB’s Imminent Fair Debt Collection Practices Act Rule Proposal