WASHINGTON–The Consumer Financial Protection Bureau has issued a Notice of Proposed Rulemaking (NPRM) to implement the Fair Debt Collection Practices Act (FDCPA). According to the CFPB, the proposal would provide consumers with clear protections against harassment by debt collectors and straightforward options to address or dispute debts.
Among other things, the agency said the NPRM would set clear, bright-line limits on the number of calls debt collectors may place to reach consumers on a weekly basis; clarify how collectors may communicate lawfully using newer technologies, such as voicemails, emails and text messages, that have developed since the FDCPA’s passage in 1977; and require collectors to provide additional information to consumers to help them identify debts and respond to collection attempts.
“The Bureau is taking the next step in the rulemaking process to ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations,” said CFPB Director Kathleen L. Kraninger in a statement. “As the CFPB moves to modernize the legal regime for debt collection, we are keenly interested in hearing all views so that we can develop a final rule that takes into account the feedback received.”
In response, NAFCU Director of Regulatory Affairs Ann Kossachev said, “We appreciate the Bureau working to ensure consumers are provided with clear, upfront disclosures on the terms, conditions and obligations of their loans. However, NAFCU will carefully review the proposal to gauge any impact on our members, in particular where credit unions may work with third parties.”
The CFPB said prior to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Congress had not delegated to any agency the authority to issue substantive rules to interpret the FDCPA. The Dodd-Frank Act delegated that authority to the Bureau.
“Even though the proposed rule covers only third-party collectors, many credit unions use third-party collectors so it could indirectly impact credit unions," said CUNA's chief advocacy officer, Ryan Donovan. "As we review the proposal and prepare our comment, we will carefully consider the extent of this indirect impact on credit union. However, we are pleased that the Bureau is taking steps to promulgate rules on a segment of the industry that has operated without adequate regulation and has been subject to judicial orders for several decades. This should bring some certainty to the operation of third-party collectors and may provide consumers with additional protections.”
What Proposal Would Do
According to the CFPB, the proposal would:
- Establish a clear, bright-line rule limiting call attempts and telephone conversations: The proposed rule generally would limit debt collectors to no more than seven attempts by telephone per week to reach a consumer about a specific debt. Once a telephone conversation between the debt collector and consumer takes place, the debt collector must wait at least a week before calling the consumer again.
- Clarify consumer protection requirements for certain consumer-facing debt collection disclosures: The proposed rule would require debt collectors to send consumers a disclosure with certain information about the debt and related consumer protections. This information would include, for example, 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 would require the disclosure to include a “tear-off” that consumers could send back to the debt collector to respond to the collection attempt.
- Clarify how debt collectors can communicate with consumers: The proposed rule would clarify how debt collectors may lawfully use newer communication technologies, such as voicemails, emails and text messages, to communicate with consumers and would protect consumers who do not wish to receive such communications by, among other things, allowing them to unsubscribe to future communications through these methods. The proposed rule would also clarify how collectors may provide required disclosures electronically. In addition, if consumers want to limit ways debt collectors contact them, for example at a specific telephone number, while they are at work, or during certain hours, the rule clarifies how consumers may easily do so.
- Prohibit suits and threats of suit on time-barred debts and require communication before credit reporting: The proposed rule would prohibit a debt collector from suing or threatening to sue a consumer to collect a debt if the debt collector knows or should know that the statute of limitations has expired. The proposed rule also would prohibit a debt collector from furnishing information about a debt to a consumer reporting agency unless the debt collector has communicated about the debt to the consumer, such as by sending the consumer a letter.
The proposed rule can be found at: https://files.consumerfinance.gov/f/documents/cfpb_debt-collection-NPRM.pdf