On Friday, October 30, 2020, the Consumer Financial Protection Bureau (“CFPB”) issued a new, long-awaited final rule to bring the Fair Debt Collection Practices Act (“FDCPA”) regulations into the 21st century. In announcing the change, the CFPB had the same idea I had: distinguishing the differences between pop culture and collection practices in 1977 and 2020.1
I think the CFPB missed one.
The FDCPA—aimed at protecting consumers from abusive debt collection practices—was introduced into Congress on March 22, 1977, and enacted later that year. Rocky—the beloved movie about a Philadelphia palooka who made good after working as a debt collector for not-so-savory creditors—won the Oscar for Best Picture six days later on March 28, 1977. (I was born in December 1976, so this client alert discusses the changes seen just in my lifetime—who knows what the future holds?)
The 1977 statute codifying the FDCPA, and its implementing regulations, addressed the collections practices available at that time: communications through in person, mail and telephone contacts. Obviously, we hope that fewer creditors nowadays rely on muscle from a “bum from the neighborhood” to collect their debts. However, the modern panoply of communications available to debt collectors—including worldwide phone service, email, text messaging, social media, and other networked- or electronic-based communications—would have been as foreign to the 1970s regulators as the idea of Apollo Creed’s son fighting Ivan Drago’s son in 2018. (See Creed II.) Accordingly, for years, the CFPB has been promising an update to the FDCPA’s implementing regulations to address the miracles (so far) of modern technology.
Staying on top of these changes may seem as unpleasant as punching sides of beef, chasing chickens or training in Siberia under the watchful eyes of Soviet intelligence officers, but compliance demands nothing less than a tedious adherence to new rules. The new regulation, which amends Regulation F, 12 CFR 1006, includes the following:
- A violation of law is presumed when a debt collector calls a person (note the use of “person” instead of “consumer”) in connection with a particular debt more than seven times within seven consecutive days or within seven days of having had a telephone conversation with the person (the Rule includes a non-exhaustive list of factors that may be used to rebut the presumption);
- Debt collectors who communicate electronically with a consumer must offer the consumer a reasonable and simple way to opt out of such communications;
- A consumer may require that a medium, such as email, be one that cannot be used for debt collection practices;
- The FDCPA’s general prohibitions on harassing, oppressive or abusive conduct are extended from telephone calls to include emails and text messages;
- An altered definition of what information a debt collector must and may include in a voicemail for a consumer; and
- Clarification of (a) debt collectors’ record retention obligations, (b) debt collectors’ transfer of certain debts, (c) debt collectors’ duplicative dispute response obligations, and (d) the role and rights of a personal representative of the estate of a deceased consumer.
Significantly, a final rule on consumer disclosures under the FDCPA has been tabled until December 2020, perhaps longer. Likewise, the CFPB postponed a final rule on the regulatory treatment of a safe harbor provision for the interaction of an attorney’s participation in a debt collection process involving litigation.
Modern creditors of consumer debtors might not be thought of as the same kind of underdog as Rocky Balboa. But consumer financial protection laws and regulations have been enacted and implemented for all sorts of (mostly good, sometimes misunderstood or ill-advised) reasons, and it is important for creditors of these consumer debts to put in the work and scrupulously comply with applicable law to ensure the viability of their collection practices and business endeavors, generally.
If you have any questions about the FDCPA, Reg. F, or any other consumer finance regulation or compliance issue, please do not hesitate to reach out to me, Brian Bennett, or any member of our Creditors’ Rights & Bankruptcy group to help resolve your concern.