Consumer Financial Protection Bureau Proposes Regulation Implementing Fair Debt Collection Practices Act

The Consumer Financial Protection Bureau (CFPB) this month issued a proposal to amend implementation of the Fair Debt Collection Practices Act (FDCPA) aimed at providing consumers with greater protection against harassment by debt collectors.

Since its passage in 1977, the FDCPA established consumer protections meant to eliminate abusive debt collection practices. However, certain interpretive questions about the FDCPA have emerged in recent years, particularly as to technology that did not exist when the FDCPA was first enacted. The CFPB issued this Notice of Proposed Rulemaking (NPRM) to clarify some of those issues.

Essentially, the goal of the currently proposed rule is to provide consumers with even stronger protection from harassment by debt collectors, as well as straightforward options to dispute debts. Among the changes proposed, the rule would set limits on the number of weekly calls debt collectors may place to consumers, clarify how collectors may communicate with debtors, and require them to provide certain additional information to consumers about their debt.

Specifically, the proposed rule would strengthen consumers’ protection against debt collectors in a number of ways. First, it would establish bright-line rules regarding telephone communication by limiting debt collectors to no more than seven weekly attempts to reach a consumer about a debt. Once they reach a consumer, debt collectors could have just one telephone conversation per week with that consumer about the debt. Second, the regulation would clarify consumer protection requirements by requiring debt collectors to send consumers certain disclosures about the debt and related consumer protections. Further, the proposed rule would clarify how debt collectors may communicate with consumers via voicemails, emails and text messages, and how consumers who don’t want to receive such communication can unsubscribe. The proposed regulation would also prohibit debt collectors from suing on debts that it knew or should have known had expired. Finally, debt collectors would be prohibited from reporting consumer debt to an agency before first informing the consumer.

“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. “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,” she added.

Addressing outdated financial regulations, the CFPB empowers consumers to take control of their economic lives, according to the Bureau’s website. The CFBP’s authority to issue substantive rules interpreting the FDCPA was granted to it by Congress with passage of the Dodd-Frank Act in 2010. The CFBP has proposed the rule in question based primarily on that authority to issue rules implementing the FDCPA.

The CFPB is currently reviewing public comments on the rule prior to issuing a final version. In the meantime, further details about the proposed regulation may be found by reading the text of the proposed rule.

Key Takeaways

The CFPB stated it has proposed the new rule in response to years of inconsistent court decisions and legal uncertainty regarding the interpretation of the FDCPA. Should the rule be adopted, debt collectors should expect to be subject to much more stringent standards under the FDCPA, as the rule would significantly strengthen the FDCPA.