In a novel move in the debt collection industry, the Consumer Financial Protection Bureau (CFPB) issued a final rule[1] regulating the scope of the Fair Debt Collection Practices Act (FDCPA).[2] The first part of this rule, issued on October 30, 2020, provides long-awaited clarification on how and when debt collectors may communicate with consumers.[3]
The FDCPA was enacted in 1977 with the intention of “eliminat[ing]abusive, deceptive, and unfair debt collection practices.”[4] Today, over 8,000 debt collection firms amass a multibillion dollar industry.[5] All the while, the capacity and functions of technology have expanded, and court opinions have provided different interpretations of how the FDCPA applies to these ongoing developments.[6] After seven years of rulemaking, the creation and implications of this rule are momentous, whether one agrees with them or not.[7]
The intent of the first-released portion of this new rule is twofold: it provides clarification on how debt collectors may communicate with consumers, and it provides consumers with greater control regarding the frequency and means by which debt collectors can contact them.[8] Particularly noteworthy, consumers have no obligation to use specific words when identifying a time or place in which debt collection communication is inconvenient.[9] Consumers may also place particular media off-limits to debt collector communications, thus prohibiting contact through methods such as email.[10] Further, per the new rule, debt collectors that call an individual more than seven times in the span of seven days, or that call an individual within seven days after a telephone conversation, are presumed to be in violation of the FDCPA’s prohibitions against repeated or continuous telephone calls.[11] Call volumes less than these higher-than-desired thresholds are presumed to be compliant with the same.[12] However, presumed compliance or violations on these bases are not absolute, and the rule offers factors that, among others, may be used in rebuttal.[13]
While the final rule, which is far more expansive than this initial analysis covers, appears more consumer-friendly than the proposed rule and provides insight on a variety of ambiguities of the FDCPA, there is room for improvement yet.[14] This is especially relevant given that in a country where 31% of adults with a credit report have debt in collection,[15] this rule is not without impact. Consumers that owe multiple debts may be subject to multiple calls a day,[16] as the call number restrictions apply on a per debt basis.[17] Additionally, the new rule confirms that, even without consumer consent, debt collectors may use technologies that have developed since the enactment of the FDCPA over 40 years ago, such as email, social media, and text messages, to communicate with consumers.[18] The risk follows that messages sent to old or de-activated accounts are more likely to get lost.[19] Debt collectors may also leave voicemails for consumers, potentially exposing one’s financial challenges to third parties that happen to overhear.[20]
Given the concerns of debt collectors and those of consumers, this rule bridges significant gaps on previously unclear standards.[21] It also arrived at a time characterized by incredible financial uncertainties, especially among lower income individuals, directly attributed to the unrelenting forces of the COVID-19 pandemic.[22] It then seems only reasonable to endeavor for a regulatory scheme that errs more on the side of forgiveness, tempers repayment urgency, and reels in persistency, in favor of empathy. While not nearly wholly unbalanced, and even positive in part, the provisions of this new rule fall short.
[1] See CFPB, Collection Practices (Regulation F) Final Rule (Oct. 30, 2020), https://files.consumerfinance.gov/f/documents/cfpb_debt-collection_final-rule_2020-10.pdf.
[2] Eamonn K. Moran et al., CFPB Issues Final (And First Ever) Debt Collection Rule, Morgan Lewis (Nov. 9, 2020), https://www.morganlewis.com/pubs/2020/11/cfpb-issues-final-and-first-ever-debt-collection-rule#:~:text=The%20rule%2C%20which%20is%20set,with%20them%20regarding%20their%20debts.
[3] See Consumer Financial Protection Bureau Issues Final Rule to Implement the Fair Debt Collection Practices Act, CFPB (Oct. 30, 2020), https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-issues-final-rule-implement-fair-debt-collection-practices-act/ [hereinafter CFPB].
[4] Fed. Rsrv. Sys., Federal Debt Collection Practices Act, in Consumer Compliance Handbook (2017), https://www.federalreserve.gov/boarddocs/supmanual/cch/fairdebt.pdf.
[5] Moran, supra note 2.
[6] See id.
[7] See id.
[8] Moran, supra note 2.
[9] See id.
[10] See id.
[11] See id.
[12] See id.
[13] See id.
[14] See CFPB Debt Collection Rule a Mixed Bag for Consumers, Nat’l Consumer L. Ctr. (Oct. 30, 2020), https://www.nclc.org/media-center/cfpb-debt-collection-rule-a-mixed-bag-for-consumers.html [hereinafter NCLC].
[15] Breno Braga et al., Debt in America: An Interactive Map, The Urban Inst. (Dec. 17, 2019), https://apps.urban.org/features/debt-interactive-map/?type=overall&variable=pct_debt_collections.
[16] See NCLC, supra note 14.
[17] See Stefanie Jackman & Rene T. McNulty, The CFPB’s Final Collections Rule: Contact Frequency Limitations and Limited Content Messages, Ballard Spahr (Nov. 5, 2020), https://www.consumerfinancemonitor.com/2020/11/05/the-cfpbs-final-collections-rule-contact-frequency-limitations-and-limited-content-messages/.
[18] See NCLC, supra note 14.
[19] See id.
[20] See id.
[21] See Jonathan L. Pompan et al., Final Debt Collection Rule Issued by CFPB, Venable (Nov. 2, 2020), https://www.venable.com/insights/publications/2020/11/final-debt-collection-rule-issued-by-cfpb.
[22] Kim Parker et al., Economic Fallout From COVID-19 Continues to Hit Lower-Income Americans the Hardest, Pew Rsch. Ctr. (Sept. 24, 2020), https://www.pewsocialtrends.org/2020/09/24/economic-fallout-from-covid-19-continues-to-hit-lower-income-americans-the-hardest/#:~:text=A%20new%20Pew%20Research%20Center,food%20from%20a%20food%20bank.
