As indicated in our two previous alerts, “The CFPB publishes finalized modifications to Regulation F to implement the law on fair debt collection practices”, on December 16, 2020, and “The CFPB proposes two measures to address the concerns ongoing in the event of a COVID-19 pandemic ”on May 13, 2021, the Consumer Financial Protection Bureau (“CFPB”) final rule (“Final rule”) which amends regulation F, 12 CFR part 1006 (“Amended F Regulation”), which implements the Fair Debt Collection Practices Act, 15 USC §§ 1692, et seq. (“FDCPA”), comes into effect on November 30, 2021 (on September 1, 2021, the CFPB withdrew its earlier proposal to extend the date of entry into force of the final rule to January 29, 2022).
On October 29, 2021, the CFPB issued guidance on how debt collectors (as defined in the FDCPA) can provide both information on a consumer debt (defined as “[a]any obligation or purported obligation of a consumer to pay money resulting from a transaction in which the money, goods, insurance or services which are the subject of the transaction are primarily intended for personal use, family or household, whether or not such obligation has been reduced to judgment ”, 15 USC § 1692a (5)) on a particular date and the current amount of the consumer’s debt (detailed information) in a required debt validation notice by the final rule. This alert complements our alert of December 16, 2020 which dealt with the final rule in detail and which is hereby referred to.
While the final rule does not change existing law under the FDCPA that creditors collecting their own consumer debts are exempt from the FDCPA rules and regulations, the final rule will affect creditors who use debt collectors by regulating the information that these creditors must provide to their debt collectors. . This alert focuses on these issues.
Debt collectors cannot pursue prescribed consumer debts.
The final rule provides that “[a] the debt collector must not bring or threaten to take legal action against a consumer to collect a prescribed debt ”, defined as“ a debt for which the applicable limitation period has expired ”. 12 CFR § 1006.26. However, this limitation “does not apply to proof of claim filed in bankruptcy proceedings”. Identifier.
Information needed by debt collectors for debt validation notices.
The FDCPA requires that the consumer debtor receive certain written information at the same time as, or within five days of the first communication from the debt collector. 15 USC § 1692g (a). Written communication providing this information is commonly referred to as a “validation notice”. The final rule significantly expands the information that must be disclosed to a consumer in a validation notice during that five-day period. Specifically, the debt collector must now provide a long list of additional disclosures (including a detailed breakdown of the gain) to help the consumer identify the debt involved and how the balance was calculated. See 12 CFR §§ 1006.6 – 1006.42. Fortunately, the final rule includes a notice form that can be used as a “safe harbor” to avoid violations of the new rule. See 12 CFR § 1006.34 (d) (2) and Annex B to Part 1006, B-1 “Standard Form for Notice of Validation”. However, to fully comply with the Final Rule and correctly complete the standard Safe Harbor form, creditors will need to work closely with their attorneys and / or debt collectors to ensure that the latter have put in place. up internal processes and are ready to follow the necessary information.
Obligation to keep records.
The Final Rule requires a debt collector to keep records that prove compliance or non-compliance with the FDCPA and the Final Rule from the date the debt collector begins the debt collection activity. a debt, up to three years after the debt collector’s last collection activity. 12 CFR § 1006.100 (a). In addition, if a debt collector records telephone calls made in connection with the collection of a debt, he or she must keep the record of each such telephone call for three years after the date of the appeal. 12 CFR § 1006.100 (b).
Take away food : While not directly applicable to creditors collecting their own consumer debts, the obligations that the Final Rule places on debt collectors will require creditors using debt collectors to coordinate with their debt collectors to ensure that these agents are given the information they will need to comply with the Rule. For this reason, it makes sense for these creditors to discuss the final rule with their legal advisor to ensure these creditors are well prepared when the final rule goes into effect on November 30, 2021.