CFPB final rule allows debt collectors to use email and text

Diving Brief:

  • The Consumer Financial Protection Bureau (CFPB) on Friday extended the methods debt collectors can use to contact borrowers to include voicemail, email, and text, but limited to seven times the number of times a debt collector can call a consumer about a particular debt over seven consecutive days.
  • The 653 pages final rule requires debt collectors to provide consumers with a “reasonable and straightforward method” to decline communications sent to a specific phone number or email address, the bureau said. If the debt collector is using electronic communications to reach out, a consumer can use that same mode of contact to send a “discontinue communication” request or notify the collector that they are refusing to pay, the CFPB said.
  • The CFPB rule, however, gives collectors a way out, establishing a type of communication – a limited content message – that they can use that will not count towards the limit. This description applies to a voice message that does not contain information subject to the restrictions of the Fair Debt Collection Practices Act, passed in 1977.

Overview of the dive:

Friday’s rule sets the parameters within which debt collectors can operate, incorporating for the first time modes of communication that did not exist in 1977. The rule takes into account 14,000 public comments the office received in response to a related proposal from May.

“With the vast changes in communications since the adoption of the FDCPA more than four decades ago, it is important to provide clear rules of conduct,” CFPB Director Kathy Kraninger said in a statement Friday. hurry.

Although the rule subjects debt collectors to a seven-call limit, exceeding that number may not automatically result in a penalty. Rather, other factors — such as whether the calls “intended to annoy, abuse or harass the person at the number called” — should be considered, the bureau said. However, consumers have the right to sue when a collector violates the cap.

The bureau has not clarified its rules regarding validation notices, which debt collectors are required to send consumers to notify them of an unpaid debt.

“A lot of debt collection litigation revolves around validation notices, so for the industry it’s a blow because it hurts all stakeholders,” said Joann Needleman, lead attorney. of Clark Hill’s Consumer Financial Services Regulatory and Compliance Group. American banker. The CFPB said it always performs qualitative tests on validation notices.

The FDCPA’s prohibition on harassing, oppressive, or abusive behavior applies to emails and text messages in addition to phone calls, said the CFPB, which also reaffirmed the law’s prohibitions on false, deceptive practices. , unfair and misleading.

Friday’s rule specifies that debt collectors must keep records showing compliance or non-compliance with the FDCPA and Regulation F, and prohibits the sale or transfer of certain debts.

The CFPB aims to address a second rule next month on statute-barred debt disclosures — specifically preventing collectors from suing for debts they know are past the statute of limitations.

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