OBJECTIVE OF THE RULE
This rule amends Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA), to prescribe federal rules governing certain activities of debt collectors, as that term is defined in the FDCPA. The rule provides enhanced guidance on communications, including safe harbors and the use of modern technology methods for sending communications.
HISTORY OF THE CFPB RULE
- The rule was released in two parts in 2020 and is effective as of November 30, 2021.
- Part I was released in October 2020 and mainly focused on communications between the consumer and the debt collector and the use of new technology.
- Part II was released in December 2020 and mainly focused on the initial model validation notice and credit reporting.
- The rule provided model form language and voice-mail scripts, along with examples for applying the rule in practical situations in the Official Interpretations section.
MODEL VALIDATION NOTICE (MVN)
- Expands the FDCPA disclosure requirements to itemize the debt and provide a validation period end date on the MVN when used as the initial notice.
- Provides 4 categories of information:
- Information to help consumers identify the debt.
- Information about consumer protections.
- Information to help consumers exercise their rights.
- Other statutorily required information.
- The MVN must be clear and conspicuous and requires the inclusion of an itemization date, which is one of five reference dates for which a debt collector can ascertain the amount of the debt.
- Judgment Date.
- Charge Off Date.
- Last Payment Date.
- Last Statement Date.
- Transaction Date.
- The MVN must contain the itemization date, the amount of the debt on the itemization date, and an itemization of the current amount due reflecting interest, fees, payments, and credits since the itemization date. All fields must be completed without any blanks.
- Balance as of Itemization Date Selected.
- Amount of Interest Charged Since the Itemization Date.
- Amount of Fees Charged Since the Itemization Date.
- Amount Paid or Credited toward the Debt Since the Itemization Date.
- Yielding the Total Amount of the Debt Now.
E-MAIL AND TEXT MESSAGING
The rule allows a debt collector to use e-mail and text messaging subject to certain limitations:
- E-mail and/or text require prior consent and a reasonable and simple method to opt out of the communication.
- E-mail and text messaging are not subject to the call count frequency limitation.
- CFPB will review the cumulative effect of conduct of the volume and frequency use of all communication methods to ensure that the effect is not to harass or be abusive.
LIMITED CONTENT MESSAGE (LCM)
- An attempt to communicate; is not a communication about a debt.
- A safe way for debt collectors to leave a message requesting a return call from the consumer.
- LCM is a v-mail for the consumer.
- LCM has required content and may include option content.
- Required Content:
- Business name of the debt collector that does not indicate that the debt collector is in the debt collection business.
- A request that the consumer reply to the message.
- The name(s) of a natural person the consumer can contact at the debt collector.
- A telephone number the consumer can contact the debt collector to gain a reply.
- Optional Content:
- A salutation.
- Date and time of the message.
- Suggested dates and time to reply to the message.
- A statement that the consumer may speak to any of the debt collector’s representatives.
CALL FREQUENCY COMPLIANCE (7/7/7 RULE)
The rule states that a violation is presumed:
- If a debt collector places telephone calls to a particular person in connection with a particular debt more than 7 times within 7 consecutive days, or
- After having a telephone conversation with a particular person regarding a particular debt, the debt collector makes a call within 7 days of that conversation.
- Included in placed telephone call count:
- Limited Content Message/Voice-mail.
- Unanswered calls (telephone ringing).
- Ringless messages left at any number, if applicable.
- Busy or not connected to the number called/out of service.
- Misdirected calls.
- Calls placed with a person’s prior consent given directly to the debt collector and placed within 7 days of consent.
- Calls placed to authorized third parties.
- The rule focuses on particular debt and particular person; not particular telephone number.
ADDITIONAL CFPB RULE GUIDANCE
The rule also provides the following requirements:
- Update to consumer definition to include a deceased consumer.
- Probate initial communication must be directed to a named personal representative of the decedent’s estate; not the estate in general.
- Credit reporting may only occur after communication with consumer about the debt.
- Prohibition against inconvenient time and place expanded to include e-mail and texting limitations.
- Record retention requirement of 3 years.