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Bureau Issues Long Anticipated Proposal to Amend Regulation F

michaelchristians • May 9, 2019

On May 7th the Consumer Financial Protection Bureau (“the Bureau”) issued a proposed rule to amend Regulation F, which implements the Fair Debt Collection Practices Act (“FDCPA”). The FDCPA is a consumer protection statute enacted in 1977 that makes it illegal for a debt collector to use unfair, deceptive or abusive acts or practices while collecting a debt. The proposal seeks to modernize the four decades old law to bring it in line with advancements in communications technology, such as e-mail and mobile phones.

First, the important news for most financial institutions… you would continue to be exempt from the FDCPA’s requirements under the proposed rule. The FDCPA applies to debt collectors, defined as those who regularly collect or attempt to collect a debt owed to another. Furthermore, the FDCPA expressly exempts creditors collecting debts in their own name. The proposed rule makes no substantive changes to the definition of debt collector.

However, a financial institution that uses a name other than its own during the debt collection process would fall within the scope of the FDCPA. If your institution falls into this category, below is a high-level overview of some of the proposed changes:
• Makes safe harbor provisions available to a debt collector who unintentionally communicates with a third-party about a consumer’s debt when attempting to communicate with the consumer via e-mail or text message.
• Requires a debt collector to include in e-mails and text messages an option for the consumer to unsubscribe from future communications.
• Allows the consumer to request that a debt collector not communicate through a particular channel, such as a specific e-mail address or mobile phone number.
• Brings electronic communications (calls to mobile phones, text messages and e-mail) within the FDCPA’s prohibition on communicating with a consumer before 8am and after 9pm.
• Prohibits a debt collector from communicating with a consumer via an e-mail address that the debt collector knows or should have known is the consumer’s work e-mail address.
• Prohibits a debt collector from contacting a consumer through a social media platform except through the use of a private messaging function.
• Clarifies the number of attempted calls permitted to a consumer to avoid classifying the debt collector’s actions as an “intent to harass”, a practice specifically prohibited by the FDCPA.
• Clarifies to whom the debt collector may communicate when attempting to collect on a deceased consumer’s debt.
• Makes changes to the debt validation form required to be provided under the FDCPA.

While it’s good news that the proposed rule did not specifically bring first-party debt collectors within the scope of the FDCPA, a word of caution. We’ve seen the Bureau use the FDCPA before, within the scope of its UDAAP authority, to define what constitutes an unfair, deceptive or abusive debt collection practice (see CFPB Bulletin 2013-07). As a result, it’s probably a good idea for all financial institutions to familiarize themselves with the proposed rule and prepare to make changes to their debt collection practices accordingly.

The comment period closes 90 days after the proposed rule’s publication in the Federal Register.

The post Bureau Issues Long Anticipated Proposal to Amend Regulation F appeared first on Michael Christians Consulting, LLC.

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