The FDCPA provides a good faith defense of error for debt collectors who can demonstrate by a preponderance of evidence that their breach was unintentional and results from a good faith error notwithstanding the maintenance of reasonably adapted procedures to avoid such error. 15 USC §1692k (c). Historically, debt collectors have been shrewd in its use. While this is a powerful tool, it sheds light on the policies and procedures of a debt collector and hence the stakes are high. If a debt collector’s policies are found to be insufficient, it can expose the debt collector to liability not only in this action, but potentially to a swarm of subsequent litigation. On the flip side, if the debt collector can safely navigate the defense with strong policies and procedures, they can delay pending action, as well as future litigation.
With the enactment of the Debt Collection Rule, debt collectors now have a map of some best practices that can help them better inform their policies and procedures. Assuming they shape their actions to conform to the same, the rule can now provide a more effective shield in actions under the FDCPA. Scattered throughout the Rule like little nuggets of gold, the CFPB provided havens which, together with the defense against good faith errors, should allow savvy debt collectors to better leverage the defense against errors. good faith mistakes. This article examines those nuggets which, if incorporated into a debt collector’s policies and procedures, can be an effective defense against good faith mistakes.
Messages with limited content. “Limited content messages” are a new concept introduced by the rule in its Definitional Section (1006.1) and are intended to provide a secure way for debt collectors to leave non-substantial messages to a consumer requesting a return call without inadvertently disclose debt. to third parties. The Rule and its Commentaries state that Limited Content Posts are not communications about a debt. To be considered a limited content message, the message must be left by voicemail and contain only the specified limited content stated explicitly in section 1006.1 (j). A limited content message can only include: (a) a business name for the Debt Collector that does not indicate that the Debt Collector is in the debt collection business; (b) a request that the consumer respond to the message; (c) the name or names of one or more natural persons whom the consumer can contact; (d) one or more telephone numbers that the consumer can use to answer the debt collector; and (e) some very limited and specified optional content. Communications are distinguished by the fact that they convey information about a debt.
Although it is not a through se safe haven, the official rule comments contain sample scripts that, if used, would conform to the rule. The use of these scripts can therefore provide an implicit safe harbor. Debt collectors should consider incorporating these scripts into their best practices to help mitigate risk with respect to 15 USC §§1692c and 1692e (11). See, for example, Comment 2 (j) (1) -1; Commentary 2 (j) (2) -2.
Electronic communications. As a general concept, the Rule provides a general roadmap for compliance with the FDCPA with respect to electronic communications in Section 1006.6. More specifically, the Rule sets out specific procedures which, if followed (including provisions for consumer withdrawals), provide the debt collector with a safe harbor with respect to electronic communications and unintentional electronic communications of third.
The rule allows the use of email and SMS communications and sets out procedures that provide a safe haven for the debt collector if they are followed. Specifically, section 1006 (d) (4) permits email communications to the consumer: first, by allowing the use of an email address that the consumer has to be used to communicate with the debt collector (and not ‘is not subsequently unsubscribed) or the consumer has provided express consent prior to the use and on the other hand, authorizing an email address previously used by the creditor or a former debt collector subject to certain limitations and conditions. Section 1006 (d) (5) allows text messaging subject to similar conditions. Additionally, the official comments contain sample language for unsubscribe notices which, if used, are likely to provide an implied safe harbor. See, for example, Commentary 6 (d) (4) (ii) (C) -2) (i) – (ii); Comment 6 (e) -1 (i) – (ii). Debt collectors who plan to use electronic communications should incorporate it into their policies and procedures to mitigate risk.
Unintentional communications with third parties. On a related note, what happens when the communication is received by an unauthorized third party? Section 1006.6 (d) (3) provides a defense of good faith error in cases where the debt collector can meet two conditions. First, there must be procedures in place to reasonably confirm and document that communications comply with 1006.6 (d) (4) or (5) (see discussion above). Second, the debt collector’s procedures must include steps to confirm and reasonably document that the debt collector has not contacted the consumer at an email address or phone number that the collectors know has led. communication with an unauthorized third party. Additionally, section 1006.22 (g) provides a safe harbor under 15 USC §1692f for emails and text messages sent under 1006.6 (d) (3) that reveal the name of the debt collector or d ‘other information indicating that the communication relates to the collection of a debt.
Place and time.With the advent of new technologies, preventing communications at a time and place that are known or should be known to be troublesome has become a challenge for debt collectors. The Rule attempts to address these challenges in Section 1006.6 and its Official Commentaries. Section 1006.6 provides that an inappropriate time for communication with the consumer is before 8:00 a.m. and 9:00 p.m. local time at the consumer’s location. Official reviews then provide refuge and advice on how to deal with conflicting or ambiguous information about a consumer’s location. In these cases and in the absence of knowledge to the contrary, Commentary 6 (b) (1) -2 provides that the debtor-collector complies with the Rule (in particular, 1006.6 (b) (1) (i)) if he communicates or tries to communicate with the consumer at a time that would be convenient for all places where information from the debt collector indicates the consumer might be.
Call frequency.Section 1692d (5) of the FDCPA prohibits a debt collector from repeatedly or continuously ringing a telephone and engaging a person in telephone conversations with the intent to annoy, abuse or harass. Section 1006.14 establishes a clear line by placing numerical limits on making telephone calls. In doing so, the Rule creates presumptions of compliance and violation. Although not a safe harbor in itself, article 1006.14 creates a presumption of conformity with 15 USC §1692d (5) where the debt collector complies with the appeal limitations set out in §1006.14 (b) (2). Of course, this will require documenting policies and procedures that establish frequencies that meet the requirements of the Rule.
Debt validation notice. Section 1692g of the FDCPA requires debt collectors to provide consumers with a validation notice that includes the name of the creditor, the amount of the debt, and the disclosure of certain statutory consumer protection rights. Rule 1006.34 reinvents the Debt Validation Notice by requiring much stronger disclosures. These disclosures fall roughly into three categories: (a) information to help consumers identify debt; (b) information on consumer protection; and (c) information to help consumers exercise their rights, including a tear-out dispute form with prescribed prompts.
The Rule provides havens for compliance with the information and form requirements set out in section 1006.34 (c) and (d) (1) for debt collectors who use the pattern validation notice, specified variations of this or a substantially similar notice. In addition, debt collectors using the pattern validation notice are given a safe harbor with respect to the concealment prohibition in 15 USC §1692g (b). See 1006.38 (b). Further, assuming the Debt Collector does not receive a Notice of Undeliverability, Commentary 42 (a) (1) -3 makes it clear that a Debt Collector has sent the disclosures required for the purposes of the Rule. if the debt collector is mailing a printed copy of any required disclosures to a consumer’s last known address unless the debt collector, at the time of mailing, knows or should know that the consumer is not resident currently or not receiving mail at this location.
Credit report. While Section 1692d (3) of the FDCPA permits credit reports, the rule now limits the circumstances and timing of credit reports and prohibits the practice of passive debt collection through credit reports. Section 1006.30 (a) prohibits debt collectors from providing information to a consumer reporting agency about a debt before the debt collector speaks to the consumer about the debt in person or by telephone or sends their notice of debt. validation, and then wait a reasonable amount of time to receive an undeliverable notice. Commentary 30 (a) (1) -2 provides a safe harbor for debt collectors as to what constitutes a “reasonable time”. Specifically, Commentary 30 (a) (1) -2 provides a safe harbor by interpreting a “reasonable period of time” to mean a period of 14 consecutive days after the date the debt collector sends a letter by post or send a message.
As the CFPB intends to extend the effective date of the rule by sixty (60) days, compliance teams should review the rule and the comments to assess what changes will need to be made to practices and procedures. of the agency. As part of this process, collectors should consider incorporating the safety rules, implicit and express, set out in the Rule to allow for future risk mitigation.