23274 Federal Register / Vol. 84, No. 98 / Tuesday, May 21, 2019 / Proposed Rules

BUREAU OF CONSUMER FINANCIAL to http://www.regulations.gov. In these practices ‘‘contribute to the PROTECTION addition, comments will be available for number of personal bankruptcies, to public inspection and copying at 1700 marital instability, to the loss of jobs, 12 CFR Part 1006 G Street NW, Washington, DC 20552, on and to invasions of individual 5 [Docket No. CFPB–2019–0022] official business days between the hours privacy.’’ of 10:00 a.m. and 5:00 p.m. Eastern The FDCPA established certain RIN 3170–AA41 Time. You can make an appointment to consumer protections, but interpretative inspect the documents by telephoning questions have arisen since its passage. Debt Collection Practices (Regulation 202–435–7275. Some questions, including those related F) All comments, including attachments to communication technologies that did AGENCY: Bureau of Consumer Financial and other supporting materials, will not exist at the time the FDCPA was Protection. become part of the public record and passed (such as mobile telephones, subject to public disclosure. Proprietary email, and text messaging), have been ACTION: Proposed rule with request for or sensitive personal information, such the subject of inconsistent court public comment. as account numbers, Social Security decisions, resulting in legal uncertainty SUMMARY: The Bureau of Consumer numbers, or names of other individuals, and additional cost for industry and risk Financial Protection (Bureau) proposes should not be included. Comments will for consumers. As the first Federal to amend Regulation F, 12 CFR part not be edited to remove any identifying agency with authority under the FDCPA 1006, which implements the Fair Debt or contact information. to prescribe substantive rules with Collection Practices Act (FDCPA) and FOR FURTHER INFORMATION CONTACT: respect to the collection of debts by debt currently contains the procedures for Adam Mayle, Counsel; or Dania Ayoubi, collectors, the Bureau proposes to State application for exemption from the Owen Bonheimer, Seth Caffrey, David clarify how debt collectors may employ provisions of the FDCPA. The Bureau’s Hixson, David Jacobs, Courtney Jean, or such newer communication proposal would amend Regulation F to Kristin McPartland, Senior Counsels, technologies in compliance with the prescribe Federal rules governing the Office of Regulations, at 202–435–7700. FDCPA and to address other activities of debt collectors, as that term If you require this document in an communications-related practices that is defined in the FDCPA. The Bureau’s alternative electronic format, please may pose a risk of harm to consumers proposal would, among other things, contact [email protected]. and create legal uncertainty for address communications in connection SUPPLEMENTARY INFORMATION: industry. The Bureau also proposes to interpret the FDCPA’s consumer with debt collection; interpret and apply I. Summary of the Proposed Rule prohibitions on harassment or abuse, disclosure requirements to clarify how false or misleading representations, and The Bureau proposes to amend industry participants can comply with unfair practices in debt collection; and Regulation F, which implements the the law and to assist consumers in clarify requirements for certain Fair Debt Collection Practices Act making better-informed decisions about 6 consumer-facing debt collection (FDCPA),1 to prescribe Federal rules debts they owe or allegedly owe. disclosures. governing the activities of debt A. Coverage and Organization of the collectors, as that term is defined in the Proposed Rule DATES: Comments must be received on FDCPA (FDCPA-covered debt or before August 19, 2019. collectors). The proposal focuses on The Bureau’s proposed rule is based ADDRESSES: You may submit comments, debt collection communications and primarily on its authority to issue rules identified by Docket No. CFPB–2019– disclosures and also addresses related to implement the FDCPA. Consequently, 0022 or RIN 3170–AA41, by any of the practices by debt collectors. The Bureau the proposal generally would impose following methods: also proposes that FDCPA-covered debt requirements on debt collectors, as that • Federal eRulemaking Portal: http:// collectors comply with certain term is defined in the FDCPA. However, www.regulations.gov. Follow the additional disclosure-related and record the Bureau proposes certain provisions instructions for submitting comments. retention requirements pursuant to the of the regulation based on the Bureau’s • Email: 2019-NPRM-DebtCollection@ Bureau’s rulemaking authority under Dodd-Frank Act rulemaking authority. cfpb.gov. Include Docket No. CFPB– title X of the Dodd-Frank Wall Street With respect to debt collection, the 2019–0022 or RIN 3170–AA41 in the Reform and Consumer Protection Act Bureau’s authority under the Dodd- subject line of the email. 2 Frank Act generally may address the • (Dodd-Frank Act). Mail: Comment Intake—Debt In 1977, Congress passed the FDCPA conduct of those who collect debt Collection, Bureau of Consumer to eliminate abusive debt collection related to a consumer financial product Financial Protection, 1700 G Street NW, practices by debt collectors, to ensure or service, as that term is defined in the 7 Washington, DC 20552. that those debt collectors who refrain Dodd-Frank Act. Proposed rule • Hand Delivery/Courier: Comment from using abusive debt collection Intake—Debt Collection, Bureau of practices are not competitively 5 Id. 6 Consumer Financial Protection, 1700 G disadvantaged, and to promote Because this is a proposed rule, the Bureau’s Street NW, Washington, DC 20552. statements herein regarding proposed consistent State action to protect interpretations of the FDCPA or the Dodd-Frank Act Instructions: The Bureau encourages consumers against debt collection do not represent final Bureau interpretations. The the early submission of comments. All abuses.3 The statute was a response to Bureau is not, through its proposed interpretations, submissions should include the agency ‘‘abundant evidence of the use of finding that conduct either violates or is name and docket number or Regulatory permissible under the FDCPA or the Dodd-Frank abusive, deceptive, and unfair debt Act. Information Number (RIN) for this collection practices by many debt 7 Covered persons under the Dodd-Frank Act rulemaking. Because paper mail in the collectors.’’ 4 According to Congress, include persons who are ‘‘engage[d] in offering or Washington, DC area and at the Bureau providing a consumer financial product or service’’; this generally includes persons who are ‘‘collecting is subject to delay, commenters are 1 15 U.S.C. 1692–1692p. debt related to any consumer financial product or encouraged to submit comments 2 Public Law 111–203, 124 Stat. 1376 (2010). service’’ (e.g., debt related to the extension of electronically. In general, all comments 3 15 U.S.C. 1692(e). consumer credit). See 12 U.S.C. 5481(5), (6), received will be posted without change 4 15 U.S.C. 1692(a). (15)(A)(i), (x).

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provisions that rely on the Bureau’s resolve a debt the consumer owes, or within a seven-day period or within Dodd-Frank Act rulemaking authority identify and inform the debt collector if seven days after engaging in a telephone generally would not, therefore, require the debt is one that the consumer does conversation with the person. FDCPA-covered debt collectors to not owe. However, debt collection • Clarify that newer communication comply if they are not collecting debt communications also may constitute technologies, such as emails and text related to a consumer financial product unfair practices, may contain false or messages, may be used in debt or service.8 Such FDCPA-covered debt misleading representations, or may be collection, with certain limitations to collectors, however, would not violate harassing or abusive either because of protect consumer privacy and to prevent the FDCPA by complying with any such their content (for example, when debt harassment or abuse, false or misleading provisions adopted in a final rule. collectors employ profanity) or because representations, or unfair practices. For The proposed rule restates the of the manner in which they are made example, the Bureau proposes to require FDCPA’s substantive provisions largely (for example, when debt collectors place that a debt collector’s emails and text in the order that they appear in the excessive telephone calls with the intent messages include instructions for a statute, sometimes without further to harass or abuse). consumer to opt out of receiving further interpretation. Restating the statutory Communication technology has emails or text messages. The Bureau text of all of the substantive provisions evolved significantly since the FDCPA also proposes procedures that, when may facilitate understanding and was enacted in 1977. Today, consumers followed, would protect a debt collector compliance by ensuring that may prefer communicating with debt from liability for unintentional stakeholders need to consult only the collectors using newer technologies, violations of the prohibition against regulation to view all relevant such as emails, text messages, or web third-party disclosures when definitions and substantive provisions. portals, because these technologies may communicating with a consumer by Where the Bureau proposes to restate offer greater efficiency, convenience, email or text message. statutory text without further and privacy. These technologies also interpretation, the relevant section-by- may allow consumers to exert greater Consumer Disclosure Proposals section analysis explains that the control over the timing, frequency, and The FDCPA requires that a debt proposed rule restates the statutory duration of communications with debt collector send a written notice to a language with only minor wording or collectors—for example, by choosing consumer, within five days of the initial organizational changes for clarity. when, where, and how much time to communication, containing certain Except where specifically stated, the spend responding to a debt collector’s information about the debt and actions Bureau does not intend to codify email. Debt collectors also may find that the consumer may take in response, existing case law or judicial these technologies are a more effective unless such information was provided interpretations of the statute by restating and efficient means of communicating in the initial communication or the the statutory text. The Bureau requests with consumers. consumer has paid the debt. To clarify comment on the proposed approach of To address concerns about debt the information that a debt collector restating the substantive provisions of collection communications and to must provide to a consumer at the the FDCPA. clarify the application of the FDCPA to outset of debt collection, including (if The proposed rule has four subparts. newer communication technologies, the applicable) in a validation notice, the Subpart A contains generally applicable Bureau proposes to: Bureau proposes: provisions, such as definitions that • Define a new term related to debt • To specify that debt collectors must would apply throughout the regulation. collection communications: Limited- provide certain information about the Subpart B contains proposed rules for content message. This definition would debt and the consumer’s rights with FDCPA-covered debt collectors. Subpart identify what information a debt respect to the debt. The Bureau also C is reserved for any future debt collector must and may include in a proposes to require a debt collector to collection rulemakings. Subpart D message left for consumers (with the provide prompts that a consumer could contains certain miscellaneous inclusion of no other information use to dispute the debt, request provisions. permitted) for the message to be deemed information about the original creditor, not to be a communication under the B. Scope of the Proposed Rule or take certain other actions. The Bureau FDCPA. This definition would permit a also proposes to permit a debt collector Communications Proposals debt collector to leave a message for a to include certain optional information. • Debt collection efforts often begin consumer without communicating, as A model validation notice that a with attempts by a debt collector to defined by the FDCPA, with a person debt collector could use to comply with reach a consumer. Communicating with other than the consumer. the FDCPA and the proposed rule’s • a debt collector may benefit a consumer Clarify the times and places at disclosure requirements. • by helping the consumer to either which a debt collector may To clarify the steps a debt collector communicate with a consumer, must take to provide the validation 8 These provisions appear in proposed including by clarifying that a consumer notice and other required disclosures §§ 1006.14(b)(1)(ii) (repeated or continuous need not use specific words to assert electronically. telephone calls or telephone conversations), that a time or place is inconvenient for • A safe harbor if a debt collector 1006.30(b)(1)(ii) (prohibition on the sale, transfer, or debt collection communications. complies with certain steps when placement of certain debts), and 1006.34(c)(2)(iv) • (certain information about the debt) and (3)(iv) Clarify that a consumer may restrict delivering the validation notice within (certain information about consumer protections). the media through which a debt the body of an email that is the debt Note that proposed §§ 1006.14(b)(1)(i) and collector communicates by designating a collector’s initial communication with 1006.30(b)(1)(i) would prohibit the same conduct by all FDCPA-covered debt collectors that proposed particular medium, such as email, as the consumer. §§ 1006.14(b)(1)(ii) and 1006.30(b)(1)(ii) would one that cannot be used for debt The Bureau also proposes to prohibit prohibit only for FDCPA-covered debt collectors collection communications. a debt collector from suing or collecting consumer financial product or service • Clarify that, subject to certain threatening to sue a consumer to collect debt. Additionally, the record retention requirement exceptions, a debt collector is a time-barred debt. The Bureau plans to in § 1006.100 is proposed only pursuant to Dodd- Frank Act rulemaking authority but would apply to prohibited from placing a telephone call test consumer disclosures related to all FDCPA-covered debt collectors. to a person more than seven times time-barred debt and, after testing, will

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assess whether a debt collector who obligation to pay money to another party debt collector for several reasons, collects a time-barred debt must person or entity. Sometimes a debt including because the third-party debt disclose that the debt collector cannot arises out of a closed-end loan. At other collector possesses capabilities and sue to collect the debt because of its age. times, a debt arises from a consumer’s expertise that the creditor lacks. Third- At a later date, the Bureau may release use of an open-end line of credit, most party debt collectors usually are paid on a report on such testing and issue a commonly a credit card. And in other a contingency basis, typically a disclosure proposal related to the cases, a debt arises from a consumer’s percentage of recoveries; debt collectors collection of time-barred debt. purchase of goods or services with contracting with creditors on a Stakeholders will have an opportunity payment due thereafter. Often there is contingency basis generated a large to comment on such testing if the an agreed-upon payment schedule or majority of the industry’s 2018 Bureau intends to use it to support date by which the consumer must repay revenue.12 Contingency debt collectors disclosure requirements in a final rule. the debt. compete with one another to secure For a variety of reasons, consumers business from creditors based on, among Additional Proposals sometimes are unable (or in some other factors, the debt collectors’ The Bureau proposes to address instances unwilling) to make payments effectiveness in obtaining recoveries.13 certain other consumer protection when they are due. Collection efforts Debt Buyers concerns in the debt collection market. may directly recover some or all of the For example, the Bureau proposes: If contingency collections prove • overdue amounts owed to debt owners To clarify that the personal and thereby may indirectly help to keep unsuccessful—or if a particular creditor representative of a deceased consumer’s consumer credit available and more prefers not to use such third-party debt estate is a consumer for purposes of affordable to consumers.9 Collection collectors—a creditor may sell unpaid proposed § 1006.6, which addresses activities also can lead to repayment accounts to a debt buyer. In 2009, the communications in connection with plans or debt restructuring that may Federal Trade Commission (FTC) called debt collection. This clarification provide consumers with additional time the advent and growth of debt buying generally would allow a debt collector to make payments or resolve their debts ‘‘the most significant change in the debt 14 to discuss a debt with the personal on more manageable terms.10 collection business’’ in recent years. representative of a deceased consumer’s The debt collection industry includes Debt buyers purchase defaulted debt estate. The Bureau also proposes to creditors, third-party debt collectors from creditors or other debt owners and clarify how a debt collector may locate (including debt collection law firms), thereby take title to the debt. Credit card the personal representative of a debt buyers, and a wide variety of debt comprises a large majority of the 15 deceased consumer’s estate. In addition, related service providers. Debt debt that debt buyers purchase. Debt the proposed rule would interpret the collection is estimated to be an $11.5 buyers generated about one-third of debt requirement that a debt collector billion-dollar industry employing nearly collection revenue, or about $3.5 billion, 16 provide the validation notice to a 118,500 people across approximately in 2017. Creditors who sell their ‘‘consumer’’ to require the notice be 7,700 collection agencies in the United uncollected debt to debt buyers receive provided to the person acting on behalf States.11 a certain up-front return, but these debts of a deceased consumer’s estate, i.e., the typically are sold at prices that are a executor, administrator, or personal Creditors fraction of their face value. Debt buyers representative of a deceased consumer’s When an account becomes typically price their offers for portfolios estate, who would have the right to delinquent, initial collection efforts based upon their projections of the dispute the debt. amount they will be able to collect. The • often are undertaken by the original To prohibit a debt collector from creditor or its servicer. The FDCPA debt buyer incurs the risk of recovering furnishing information about a debt to a typically does not cover these first-party consumer reporting agency before recovery efforts. If these first-party 12 Id. at 10. communicating with the consumer 13 While third-party collection agencies have been recovery efforts result in resolution of increasing in size in recent years, third-party debt about the debt. the debt, whether through payment in • To prohibit, with certain collection continues to include a significant number full or another arrangement, the of smaller entities. See Robert M. Hunt, exceptions, the sale, transfer, or consumer typically will not interact Understanding the Model: The Life Cycle of a Debt, at 15, Fed. Reserve Bank of Phila. (June 6, 2013), placement for collection of a debt if a with a third-party debt collector. debt collector knows or should know https://www.ftc.gov/sites/default/files/documents/ public_events/life-debt-data-integrity-debt- that the debt has been paid or settled or Third-Party Debt Collectors collection/understandingthemodel.pdf. has been discharged in bankruptcy, or If a consumer’s payment obligations 14 Fed. Trade Comm’n, The Structure and that an identity theft report has been remain unmet, a creditor may send the Practices of the Debt Buying Industry, at i (2013), filed with respect to the debt. account to a third-party debt collector to https://www.ftc.gov/sites/default/files/documents/ The Bureau requests comment on all reports/structure-and-practices-debt-buying- recover on the debt in the third-party industry/debtbuyingreport.pdf (hereinafter FTC aspects of the proposed rule. debt collector’s name. A creditor may Debt Buying Report). C. Effective Date choose to send an account to a third- 15 Id. at 7 (citing Credit Card Debt Sales in 2008, 921 Nilson Rep. 10 (Mar. 2009)). The Bureau proposes that the effective 16 Bureau of Consumer Fin. Prot., Fair Debt 9 See Bureau of Consumer Fin. Prot., Fair Debt date of the final rule would be one year Collection Practices Act: CFPB Annual Report 2018, Collection Practices Act: CFPB Annual Report 2013, at 10 (Mar. 2018), https:// after the final rule is published in the at 9 (Mar. 2013), https://www.consumerfinance.gov/ files.consumerfinance.gov/f/documents/cfpb_ Federal Register. The Bureau requests data-research/research-reports/annual-report-on- fdcpa_annual-report-congress_03-2018.pdf comment on this proposed effective the-fair-debt-collection-practices-act/ (hereinafter (hereinafter 2018 FDCPA Annual Report) (citing 2013 FDCPA Annual Report). date. Edward Rivera, Debt Collection Agencies in the US, 10 See id. IBIS World (Dec. 2017)). Although debt buyers II. Background 11 See Bureau of Consumer Fin. Prot., Fair Debt represent about one-third of industry revenue, this Collection Practices Act: CFPB Annual Report 2019, overstates debt buyers’ share of dollars collected, A. Debt Collection Market Background at 8 (Mar. 2019), https://files.consumerfinance.gov/ since debt buyer revenue includes all amounts f/documents/cfpb_fdcpa_annual-report-congress_ recovered, whereas the revenue of contingency debt A consumer debt is commonly 03-2019.pdf (hereinafter 2019 FDCPA Annual collectors includes only the share of recoveries understood to be a consumer’s Report). retained by the debt collector. Id.

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less than the sum of the amount it paid to information that transferred with the contact from a series of different debt to acquire the debt and its expenses to account file, public records, data sellers, collectors over a number of years. collect the debt. or proprietary databases of contact During this time, the consumer may Typically a debt buyer engages in debt information. A debt collector may also make payments to multiple debt collection, attempting to collect debts attempt to obtain location information collectors or may receive itself. However, a debt buyer also may for a consumer from third parties, such communication attempts from multiple use a third-party debt collector or a as family members who share a debt collectors that may stop and restart series of such debt collectors. If the debt residence with the consumer or at irregular intervals, until the debt is buyer is unable to collect some of the colleagues at the consumer’s workplace. paid or settled in full or collection debts it purchased, the debt buyer may Once a debt collector has obtained activity ceases for other reasons. sell the debt again to another debt contact information for a consumer, the buyer. Any single debt thus may be debt collector typically will seek to C. Consumer Protection Concerns owned by multiple entities over its communicate with the consumer to lifetime. The price paid for a debt obtain payment on some or all of the Each year, consumers submit tens of generally will decline as the debt ages debt. The debt collector may tailor the thousands of complaints about debt 21 and passes from debt buyer to debt collection strategy depending on a collection to Federal regulators; many buyer, because the probability of variety of factors, including the size and of those complaints relate to practices payment decreases.17 age of the debt and the debt collector’s addressed in the proposed rule. assessment of the likelihood of Consumers also file thousands of private Debt Collection Law Firms obtaining money from the consumer. actions each year against debt collectors If debt collection attempts are For example, rather than affirmatively who allegedly have violated the FDCPA. unsuccessful, a debt owner may try to locating and contacting consumers, Since the Bureau began operations in recover on a debt through litigation. some debt collectors collecting 2011, it has brought numerous debt Most debt collection litigation is filed in relatively small debts—such as many collection cases against third-party debt State courts. Debt owners often retain medical, utility, and collectors, alleging both FDCPA law firms and attorneys that specialize telecommunications debts—will report violations and unfair, deceptive, or in debt collection and that are familiar the debts to consumer reporting abusive debt collection acts or practices with State and local rules. If a debt agencies (CRAs) and then wait for in violation of the Dodd-Frank Act.22 In owner obtains a judgment in its favor, consumers to contact them after these cases, the Bureau has ordered civil post-litigation efforts may include discovering the debts on their consumer penalties, monetary compensation for garnishment of wages or seizure of reports.20 Other types of debt are subject consumers, and other relief. In its assets. to statutory or regulatory requirements supervisory work, the Bureau similarly that may affect how a debt collector tries B. Debt Collection Methods has identified many FDCPA violations to recover on them. For example, during examinations of debt collectors. The debt collection experience is a privacy protections may affect how a Over the past decade, the FTC and State common one—approximately one in debt collector seeks to recover on a regulators also have brought numerous three consumers with a credit record medical debt, and the availability of additional actions against debt reported having been contacted about a administrative wage garnishment and collectors for violating Federal and State debt in collection in 2014.18 Of those, 27 tax refund intercepts may affect how a percent reported having been contacted debt collector seeks to recover on a 21 See, e.g., 2019 FDCPA Annual Report, supra about a single debt over the prior year, Federal student loan. note 11, at 15–16; Fed. Trade Comm’n, 2018 57 percent reported having been Changes in a consumer’s situation Consumer Sentinel Network Databook, at 4, 7 (Feb. contacted about two to four debts, and may warrant a change in a debt 2019), https://www.ftc.gov/system/files/documents/ collector’s recovery strategy, such as reports/consumer-sentinel-network-data-book-2018/ 16 percent reported having been ______19 when information purchased from CRAs consumer sentinel network data book 2018 contacted about more than four debts. 0.pdf; 2018 FDCPA Annual Report, supra note 16, A creditor typically stops or other third parties indicates that the at 14–15; Fed. Trade Comm’n, 2017 Consumer communicating with a consumer once consumer has started a new job. A debt Sentinel Network Databook, at 3, 6 (Mar. 2018), responsibility for an account has moved owner also may ‘‘warehouse’’ a debt and https://www.ftc.gov/system/files/documents/ to a third-party debt collector. Active cease collection efforts for a significant reports/consumer-sentinel-network-data-book-2017/ consumer_sentinel_data_book_2017.pdf; Bureau of debt collection efforts typically begin period. A new debt collector may later Consumer Fin. Prot., 2017 Fair Debt Collection with the debt collector attempting to be tasked with resuming collection Practices Act: CFPB Annual Report 2017, at 15–16 locate the consumer, usually by efforts because, for example, the debt (Mar. 2017), https://files.consumerfinance.gov/f/ _ _ identifying a valid telephone number or owner has sold the account, detected a documents/201703 cfpb Fair-Debt-Collection- Practices-Act-Annual-Report.pdf (hereinafter 2017 mailing address, so that the debt possible change in the consumer’s FDCPA Annual Report); Fed. Trade Comm’n, collector can establish contact with the financial situation, or wishes to make Consumer Sentinel Network Data Book for January– consumer. To obtain current contact periodic attempts at some recovery. December 2016, at 3, 6 (Mar. 2017), https:// information, a debt collector may look Each time a new debt collector obtains www.ftc.gov/system/files/documents/reports/ consumer-sentinel-network-data-book-january- responsibility for collecting the debt, the december-2016/csn_cy-2016_data_book.pdf. 17 FTC Debt Buying Report, supra note 14, at 23– consumer likely will be subject to 22 See, e.g., Consent Order, In re Encore Capital 24. communications or communication Grp., 2015–CFPB–0022 (Sept. 9, 2015), http:// 18 Bureau of Consumer Fin. Prot., Consumer attempts from the new debt collector. files.consumerfinance.gov/f/201509_cfpb_consent- Experience with Debt Collection: Findings from order-encore-capital-group.pdf; Consent Order, In CFPB’s Survey of Consumer Views on Debt, at 5 For the consumer, this may mean re Portfolio Recovery Assocs., LLC, 2015–CFPB– (2017), http://files.consumerfinance.gov/f/ 0023 (Sept. 9, 2015), http:// documents/201701_cfpb_Debt-Collection-Survey- 20 Bureau of Consumer Fin. Prot., Consumer files.consumerfinance.gov/f/201509_cfpb_consent- Report.pdf (hereinafter CFPB Debt Collection Credit Reports: A Study of Medical and Non- order-portfolio-recovery-associates-llc.pdf; Consumer Survey). This figure includes consumers Medical Collections, at 35–36 (2014), http:// Complaint, Consumer Fin. Prot. Bureau v. Nat’l contacted only by creditors as well as those files.consumerfinance.gov/f/201412_cfpb_reports_ Corrective Grp., Inc., 1:15–cv–00899–RDB (D. Md. contacted by one or more debt collection firms. Id. consumer-credit-medical-and-non-medical- Mar. 30, 2015), http://files.consumerfinance.gov/f/ at 13. collections.pdf (hereinafter CFPB Medical Debt 201503_cfpb_complaint-national-corrective- 19 Id. at 13. Report). group.pdf.

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debt collection and consumer protection respect to the collection of debts by debt disclosure forms and has conducted laws. collectors.’’ 27 Section 1031 of the Dodd- formal and informal surveys over the Frank Act also authorizes the Bureau, past several years to obtain a more D. FDCPA and Dodd-Frank Act among other things, to prescribe rules comprehensive and systematic Protections for Consumers applicable to a covered person or understanding of debt collection Federal and State governments service provider identifying as unlawful practices. The Bureau also convened a historically have sought to protect unfair, deceptive, or abusive acts or Small Business Review Panel in August consumers from harmful debt collection practices in connection with any 2016 to obtain feedback from small debt practices. From 1938 to 1977, the transaction with a consumer for a collectors. Since the Bureau began Federal government primarily protected consumer financial product or service, studying this market, the Bureau has consumers through FTC enforcement or the offering of a consumer financial met on many occasions with various actions against debt collectors who product or service.28 Section 1031(b) stakeholders, including consumer engaged in unfair or deceptive acts or provides that rules under section 1031 advocacy groups, debt collection trade practices in violation of section 5 of the may include requirements for the associations, industry participants, FTC Act.23 When Congress enacted the purpose of preventing such unfair, academics with expertise in debt FDCPA in 1977, it found that ‘‘[e]xisting deceptive, or abusive acts or practices.29 collection, Federal prudential laws and procedures for redressing . . . Covered persons under the Dodd-Frank regulators, and other Federal and State injuries [were] inadequate to protect Act include persons who are ‘‘engage[d] consumer protection regulators. The consumers.’’ 24 Congress found that in offering or providing a consumer Bureau also received a number of ‘‘[t]here [was] abundant evidence of the financial product or service’’; 30 this comments specific to the debt collection use of abusive, deceptive, and unfair generally includes persons who are rulemaking in response to its Request debt collection practices by many debt ‘‘collecting debt related to any consumer for Information Regarding the Bureau’s collectors,’’ and that these practices financial product or service’’ (e.g., debt Adopted Regulations and New ‘‘contribute to the number of personal related to the extension of consumer Rulemaking Authorities 35 and its bankruptcies, to marital instability, to credit).31 Covered persons under the Request for Information Regarding the the loss of jobs, and to invasions of Dodd-Frank Act thus include many Bureau’s Inherited Regulations and individual privacy.’’ 25 FDCPA-covered debt collectors, as well Inherited Rulemaking Authorities,36 and The FDCPA was enacted, in part, ‘‘to as many creditors and their servicers, the Bureau has considered these eliminate abusive debt collection who are collecting debt related to a comments in developing the proposed practices by debt collectors, [and] to consumer financial product or service. rule. In addition, the Bureau has insure that those debt collectors who engaged in general outreach, speaking at III. The Rulemaking Process refrain from using abusive debt consumer advocacy group and industry collection practices are not The Bureau has conducted a wide events and visiting consumer competitively disadvantaged.’’ 26 range of outreach on the scope and organizations and industry stakeholders. Among other things, the FDCPA: (1) substance of this proposed rule, The Bureau has provided other Prohibits debt collectors from engaging including by holding field hearings,32 regulators with information about the in harassment or abuse, making false or hosting two joint roundtables with the proposed rule, has sought their input, misleading representations, and FTC,33 and issuing an Advance Notice and has received feedback that has engaging in unfair practices in debt of Proposed Rulemaking (ANPRM) in helped the Bureau to prepare this collection; (2) restricts debt collectors’ November 2013.34 The Bureau has proposed rule. communications with consumers and conducted several rounds of qualitative testing of prototype debt collection A. 2013 Advance Notice of Proposed others; and (3) requires debt collectors Rulemaking to provide consumers with disclosures concerning the debts they owe or 27 15 U.S.C. 1692l(d). The Bureau issued an ANPRM allegedly owe. 28 Dodd-Frank Act section 1031(b), 12 U.S.C. regarding debt collection in November Until the creation of the Bureau, no 5531(b). of 2013. The ANPRM sought 29 Id. information about both first- and third- Federal agency was authorized to issue 30 12 U.S.C. 5481(6). party debt collection practices, regulations to implement the 31 12 U.S.C. 5481(5), (15)(A)(i), (x). substantive provisions of the FDCPA. 32 See Bureau of Consumer Fin. Prot., Field including: Debt collectors’ Courts have issued opinions providing Hearing on Debt Collection in Seattle, WA (Oct. 24, communication and calling practices; differing interpretations of various 2012), https://www.consumerfinance.gov/about-us/ the use of disclosures, such as time- events/archive-past-events/field-hearing-on-deft- barred debt disclosures, in debt FDCPA provisions, and there is collection-from-seattle-washington/; Bureau of considerable uncertainty with respect to Consumer Fin. Prot., Field Hearing on Debt collection; the quantity and quality of how the FDCPA applies to Collection in Portland, ME (July 10, 2013), https:// information in the debt collection communication technologies that did www.consumerfinance.gov/about-us/events/ system; credit reporting by debt archive-past-events/field-hearing-debt-collection- collectors; the prevalence and use of not exist in 1977. Further, to reduce portland-me/; Bureau of Consumer Fin. Prot., Field legal risk, debt collectors typically use Hearing on Debt Collection in Sacramento, CA (July litigation by debt collectors, including the language of the statute in making 28, 2016), https://www.consumerfinance.gov/about- by debt collection attorneys; and record required disclosures, even though that us/events/archive-past-events/field-hearing-debt- retention, monitoring, and compliance language can be difficult for consumers collection-sacramento-calif/. issues. 33 Fed. Trade Comm’n & Bureau of Consumer Fin. The Bureau received more than to understand. Prot., Debt Collection and the Latino Community: The Dodd-Frank Act amended the An FTC–CFPB Roundtable (Oct. 23, 2014), https:// 23,000 comments in response to the FDCPA to provide the Bureau with www.ftc.gov/news-events/events-calendar/2014/10/ ANPRM, with approximately 379 non- authority to ‘‘prescribe rules with debt-collection-latino-community-roundtable; Fed. form comments submitted. These non- Trade Comm’n & Bureau of Consumer Fin. Prot., form comments were provided by Roundtable on Data Integrity in Debt Collection: 23 15 U.S.C. 45. Life of a Debt (July 6, 2013), https://www.ftc.gov/ consumers, consumer advocacy groups, 24 15 U.S.C. 1692(b). system/files/documents/public_events/71120/life- 25 15 U.S.C. 1692(a). debt-roundtable-transcript.pdf. 35 83 FR 12286 (Mar. 21, 2018). 26 15 U.S.C. 1692(e). 34 78 FR 67848 (Nov. 12, 2013). 36 83 FR 12881 (Mar. 26, 2018).

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industry participants and trade experience, were held in New Orleans, cognitive testing (FMG Cognitive associations, legal groups including law Louisiana, on July 29, 2014. In Report).40 school clinics, State Attorneys General, conjunction with the release of this Usability Testing. FMG also and other stakeholders. The Bureau also proposal, the Bureau is making available conducted 30 additional one-on-one worked with Cornell University’s a report prepared by FMG regarding the interviews of consumers to assess their Regulation Room, which interacted with focus group testing (FMG Focus Group perceptions, preferences, and consumers to obtain their input and Report).38 understanding of different model submitted a consolidated comment validation notices and to evaluate what Cognitive Testing. FMG also representing views from a multitude of influence, if any, these forms could have conducted 30 one-on-one interviews of consumers. Comments on the ANPRM on their behavior. FMG interviewed 23 related to both first- and third-party consumers to assess their perceptions, consumers who had been contacted by collection efforts. Commenters provided preferences, and understanding of a debt collector within the previous two significant feedback regarding debt different validation notices and to years and seven without such collector communication practices and evaluate how each of the notices might experience. The interviews took place at interactions with consumers, consumer affect consumer behavior. The three locations: Arlington, Virginia, on disclosures, and the use of newer interviews took place at three locations: March 31 and April 1, 2015; communication technologies. Specific Arlington, Virginia, on September 23 Minneapolis, Minnesota, on April 14 comments are discussed in more detail and 24, 2014; Minneapolis, Minnesota, and 15, 2015; and Las Vegas, Nevada, on in part V where relevant. on October 9 through 11, 2014; and Las April 28 and 29, 2015. During the Vegas, Nevada, on October 23 and 24, interviews, researchers asked B. Consumer Testing 2014. At each location, FMG participants comprehension questions The Bureau contracted with a third- interviewed 10 participants, seven of to determine their understanding of the party vendor, Fors Marsh Group (FMG), whom had debt collection experience forms and debriefing questions to to assist with developing, and to and three of whom did not. establish their reactions to and conduct qualitative consumer testing of, FMG tested three validation notices at perceptions of the forms. Researchers two potential consumer-facing debt each location. The first form was also engaged consumers in testing collection model disclosure forms: The modeled closely on validation notices activities to assess their interactions validation notice and the statement of commonly used by debt collectors. The with the forms. In conjunction with the consumer rights. The Bureau sought form included the disclosures release of this proposal, the Bureau is insight into consumers’ existing specifically required by FDCPA section making available a report prepared by understanding of debt collection 809(a), and the language on the form FMG regarding the usability testing protections and how consumers would 41 generally mirrored the statutory (FMG Usability Report). The Bureau interact with the forms if they were also is making available a report language. The second form provided the adopted in a final rule. Specific findings prepared by FMG summarizing the same information as the first form, but from the consumer testing are discussed focus group testing, cognitive testing, in plainer language. The third form used in more detail in part V where and usability testing (FMG Summary the same language as the second form, relevant.37 Report).42 along with additional information, Validation Notice Testing including consumer protection Quantitative Testing Focus groups. FMG facilitated five information, chain-of-title information The Bureau plans to conduct a web focus groups in July 2014 to assess describing the history of the debt, and, survey of 8,000 individuals possessing a consumers’ thoughts about debt for two of the testing locations, broad range of demographic collectors and debt collection, to information about time-barred debts. characteristics. The survey will explore evaluate their perceptions of disclosures FMG asked the participants to define, consumer comprehension and decision- provided by debt collectors, and to locate, and explain the meaning of making in response to sample debt measure their understanding of specific elements on each form. collection disclosures relating to time- consumers’ rights in debt collection. Participants responded to three surveys, Two focus groups, one consisting of each with three Likert-scale questions.39 40 See generally Fors Marsh Grp., Debt Collection participants who had been contacted by Cognitive Interviews (n.d.), https:// Participants were asked to compare the _ a debt collector within the previous two files.consumerfinance.gov/f/documents/cfpb debt- first and second forms side-by-side and collection_fmg-cognitive-report.pdf (hereinafter years and one consisting of participants were asked targeted questions about FMG Cognitive Report). The cognitive testing was without such experience, were held in what they would do after reading conducted in accordance with OMB control number 3170–0022, Generic Information Collection Plan for Arlington, Virginia, on July 16, 2014. individual elements of each notice. In Three focus groups, two consisting of the Development and/or Testing of Model Forms, conjunction with the release of this Disclosures, Tools, and Other Similar Related participants with debt collection proposal, the Bureau is making available Materials. experience and one consisting of 41 a report prepared by FMG regarding the See generally Fors Marsh Grp., Debt Collection participants without debt collection User Experience Study (Feb. 2016), https:// files.consumerfinance.gov/f/documents/cfpb_debt- 38 See generally Fors Marsh Grp., Debt Collection collection_fmg-usability-report.pdf (hereinafter 37 While the Bureau tested a statement of consumer rights disclosure, this proposal would not Focus Groups (Aug. 2014), https:// FMG Usability Report). Like the other testing, the files.consumerfinance.gov/f/documents/cfpb_debt- usability testing was conducted in accordance with require debt collectors to provide such a disclosure _ to consumers. Instead, the Bureau proposes to collection fmg-focus-group-report.pdf (hereinafter OMB control number 3170–0022, Generic require certain debt collectors to provide on the FMG Focus Group Report). The focus group testing Information Collection Plan for the Development validation notice a statement referring consumers to was conducted in accordance with OMB control and/or Testing of Model Forms, Disclosures, Tools, a Bureau-provided website that would describe number 3170–0022, Generic Information Collection and Other Similar Related Materials. certain consumer protections in debt collection. See Plan for the Development and/or Testing of Model 42 See generally Fors Marsh Grp., Debt Collection the section-by-section analysis of proposed Forms, Disclosures, Tools, and Other Similar Validation Notice Research: Summary of Focus § 1006.34(c)(3)(iv). Because the Bureau does not Related Materials. Groups, Cognitive Interviews, and User Experience propose to require debt collectors to provide 39 A Likert-scale is a commonly used research Testing (Feb. 2016), https:// consumers with a statement of consumer rights scale that asks respondents to specify their level of files.consumerfinance.gov/f/documents/cfpb_debt- disclosure, the Bureau does not summarize testing agreement or disagreement with a series of collection_fmg-summary-report.pdf (hereinafter related to that disclosure in this proposal. statements. FMG Summary Report).

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barred debts. The Bureau will use the questions about employees, types of set of credit records maintained by one information it gathers to help assess debt collected, clients, vendors, of the three nationwide CRAs, and how the Bureau may improve the clarity software, policies and procedures for responses were weighted to provide and effectiveness of debt collection consumer interaction, disputes, nationally representative results. The disclosures, among other things. On furnishing data to CRAs, litigation, and Consumer Survey, which included February 4, 2019, in accordance with compliance. Between August and survey participants’ self-reported the Paperwork Reduction Act of 1995,43 October 2015, the Bureau conducted responses, provided a more the Bureau proposed an information telephone interviews with a subset of comprehensive picture of consumers’ collection that described the web survey survey respondents. The interviews experiences and preferences related to and was open for public comment for 30 included several specific questions debt collection than was previously 44 days. The comment period closed on about the types of voicemails debt available.48 The Bureau considered March 6, 2019. This request is pending collectors leave and what share of survey responses when developing the under OMB review and can be viewed lawsuits filed against consumers end proposal. on OMB’s electronic docket at https:// with entry of default judgment, as well www.reginfo.gov/public/do/ as some open-ended questions about the The Consumer Survey describes in PRAViewICR?ref_nbr=201902-3170-001 costs associated with making changes to detail several key findings relating to (see ICR Reference Number 201902– collection management systems to the prevalence of debt collection, the 3170–001). Stakeholders will have an address changes in State regulations. extent to which consumers dispute opportunity to comment on a report From July to October 2015, the Bureau debts, and the extent to which creditors describing the web survey results if the conducted telephone interviews with or debt collectors pursue the collection Bureau proposes to use those results to debt collection vendors. A particular of debts through lawsuits. About one- support disclosure requirements in a focus of these interviews was collection third of consumers with a credit file at final rule. management systems, including one of the three nationwide CRAs programming and consulting services reported being contacted by a creditor or C. Study of Debt Collection Market provided to system users. The Bureau debt collector about a debt in the prior Operations also asked vendors about print mail year, and most of those consumers To better understand the operational services, predictive dialers, voice reported being contacted about two or costs of debt collection firms, including analytics, payment processing, and data more debts.49 More than one-half of the law firms, the Bureau surveyed debt services. consumers who had been contacted collection firms and vendors and Although the Bureau constructed the about a debt in collection indicated that published a report based on that study survey sample to ensure representation at least one of the debts about which in July 2016 (CFPB Debt Collection of debt collection firms of various sizes, they had been contacted was not theirs Operations Study or Operations the survey was not intended to be or was for the wrong amount. Roughly 45 Study). The answers to the survey nationally representative. Nonetheless, one-quarter of the consumers who had questions aided the Bureau’s the survey findings generally have been contacted about a debt in understanding of the compliance costs informed the Bureau’s understanding of collection reported having disputed a to debt collectors if the proposal were the operations and operating costs of debt with their creditor or debt collector finalized. As a qualitative study, the various types of debt collection firms. in the past year.50 About one-in-seven survey’s results are not necessarily Part VI discusses the Bureau’s findings consumers (about 15 percent) who had representative of the debt collection from the study in greater detail. been contacted about a debt in industry as a whole, but they provide a D. Survey of Consumer Experiences collection reported having been sued by broad understanding of how a range of a creditor or debt collector in the different types of debt collectors With Debt Collection preceding year.51 operate. The Bureau conducted a survey of The Operations Study focused on consumers’ experiences with debt The Consumer Survey also describes understanding how debt collection collection, approved under OMB control in detail several key findings related to firms obtain information about number 3170–0047, Debt Collection the frequency with which consumers delinquent consumer accounts and Survey from the Consumer Credit Panel, are contacted about debts in collection, attempt to collect on those accounts.46 and published a report of the findings how often consumers ask debt collectors Between July and September 2015, the in January 2017 (CFPB Debt Collection to stop contacting them, how consumers Bureau sent a written survey to debt Consumer Survey or Consumer prefer to be contacted by debt collectors, collection firms. The survey focused on Survey).47 Distributed to consumers in and the frequency with which current practices and included December 2014, the survey asked consumers report negative experiences consumers about their experiences with with debt collectors. More than one- 43 44 U.S.C. 3501 et seq. creditors and debt collectors over the third of consumers (37 percent) 44 See Agency Information Collection Activities: prior year, including disputes and contacted about a debt in collection Submission for OMB Review; Comment Request, 84 indicated that the creditor or debt FR 1430 (Feb. 4, 2019). lawsuits, and how they prefer to 45 See generally Bureau of Consumer Fin. Prot., communicate with a creditor or debt collector that most recently had Study of Third-Party Debt Collection Operations collector. The survey also asked for contacted them tried to reach them at (July 2016), https://www.consumerfinance.gov/ information on each consumer’s least four times per week. Seventeen _ _ _ _ _ documents/755/20160727 cfpb Third Party Debt demographic characteristics, general percent reported that the creditor or Collection_Operations_Study.pdf (hereinafter CFPB Debt Collection Operations Study). financial situation, and credit-market debt collector tried to reach them at 46 Most respondents collected debt on behalf of experiences. The survey sample was least eight times per week. Close to two- clients, rather than buying debt and collecting on selected from the Bureau’s Consumer thirds of consumers (63 percent) said their own behalf. Respondents that bought some Credit Panel, which consists of a debt reported that the majority of accounts they 48 collected were for clients. As a result, the nationally representative, de-identified Id. at 4. Operations Study did not provide distinct 49 Id. at 13. information on debt buyers and their operations as 47 See generally CFPB Debt Collection Consumer 50 Id. at 24–25. compared to third-party debt collectors. Survey, supra note 18. 51 Id. at 27.

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they were contacted too often by the considered (Small Business Review Section 1022(a) of the Dodd-Frank Act most recent creditor or debt collector.52 Panel Outline or Outline),56 which the provides that ‘‘[t]he Bureau is Consumers contacted at the same Bureau posted on its website for review authorized to exercise its authorities frequency by creditors and debt by the small entity representatives under Federal consumer financial law to collectors were more likely to participating in the Panel process and administer, enforce, and otherwise characterize contact by a debt collector by the general public. implement the provisions of Federal as occurring ‘‘too often’’ than when a The Panel participated in initial consumer financial law.’’ 60 Section creditor engaged in the same frequency teleconferences with small groups of the 1022(b)(1) of the Dodd-Frank Act of contact. In addition, 42 percent of small entity representatives to introduce provides that the Director may prescribe consumers who reported they had been the Outline and supporting materials rules and issue orders and guidance, as contacted about a debt in collection said and to obtain feedback. The Panel then may be necessary or appropriate to they had asked at least one creditor or conducted a full-day outreach meeting enable the Bureau to administer and debt collector to stop contacting them in with the small entity representatives in carry out the purposes and objectives of the prior year, but only one in four August 2016 in Washington, DC. The the Federal consumer financial laws, consumers who made this request Panel gathered information from the and to prevent evasions thereof.61 reported that the contact stopped. small entity representatives and made ‘‘Federal consumer financial law’’ Consumers contacted by debt collectors findings and recommendations includes title X of the Dodd-Frank Act were more likely than those contacted regarding the potential compliance costs and the FDCPA.62 by creditors to report negative and other impacts of the proposals These and other authorities are experiences, such as being treated under consideration on those entities. discussed in greater detail in parts IV.A impolitely or being threatened.53 Those findings and recommendations through E below. Part IV.A discusses Almost one-half of the consumers are set forth in the Small Business how the Bureau proposes to interpret its (including those who did not report Review Panel Report, which is part of authority under sections 806 through having been contacted by a creditor or the administrative record in this 808 of the FDCPA. Parts IV.B through E debt collector about a debt in collection rulemaking and is available to the discuss the Bureau’s relevant authorities in the prior year) said they would most public.57 The Bureau has considered under the Dodd-Frank Act and the prefer debt collectors to contact them by these findings and recommendations in Electronic Signatures in Global and letter. When asked the way they would preparing this proposal and addresses National Commerce Act (E–SIGN Act). least like debt collectors to contact many of them in greater detail in part them, consumers most commonly V.58 A. FDCPA Sections 806 Through 808 indicated in-person contacts (20 percent IV. Legal Authority As discussed in part V, the Bureau of consumers). Nearly two-thirds of proposes several provisions, in whole or consumers said it was ‘‘very important’’ The Bureau issues this proposal in part, pursuant to its authority to that others not see or hear a message pursuant to its authority under the interpret FDCPA sections 806, 807, and from a creditor or debt collector. At the FDCPA and the Dodd-Frank Act. As 808, which set forth general same time, most consumers also amended by the Dodd-Frank Act, prohibitions on, and requirements preferred that a creditor or debt FDCPA section 814(d) provides that the relating to, debt collectors’ conduct and collector include their name and the Bureau ‘‘may prescribe rules with are accompanied by non-exhaustive lists purpose of the call (i.e., debt collection) respect to the collection of debts by debt of examples of unlawful conduct. This in a voicemail or answering-machine collectors,’’ as defined in the FDCPA.59 54 section provides an overview of how the message. Bureau proposes to interpret FDCPA 56 Bureau of Consumer Fin. Prot., Small Business E. Small Business Review Panel Review Panel for Debt Collector and Debt Buyer sections 806 through 808. In August 2016, the Bureau convened Rulemaking: Outline of Proposals Under FDCPA section 806 generally a Small Business Review Panel (Small Consideration and Alternatives Considered (July prohibits a debt collector from 2016), https://files.consumerfinance.gov/f/ ‘‘engag[ing] in any conduct the natural Business Review Panel or Panel) with documents/20160727_cfpb_Outline_of_ the Chief Counsel for Advocacy of the proposals.pdf (hereinafter Small Business Review consequence of which is to harass, Small Business Administration (SBA) Panel Outline). The Bureau also gathered feedback oppress, or abuse any person in and the Administrator of the Office of on the Small Business Review Panel Outline from connection with the collection of a other stakeholders, members of the public, and the debt.’’ 63 Then, ‘‘[w]ithout limiting the Information and Regulatory Affairs with Bureau’s Consumer Advisory Board and the Office of Management and Budget Community Bank Advisory Council. general application of the foregoing,’’ it (OMB).55 As part of this process, the 57 Bureau of Consumer Fin. Prot., U.S. Small Bus. lists six examples of conduct that Bureau prepared an outline of proposals Admin., & Office of Mgmt. & Budget, Final Report violate that section.64 Similarly, FDCPA under consideration and the alternatives of the Small Business Review Panel on the CFPB’s section 807 generally prohibits a debt Proposals Under Consideration for the Debt collector from ‘‘us[ing] any false, Collector and Debt Buying Rulemaking (Oct. 2016), 52 Id. at 30–31. As discussed further in the https://files.consumerfinance.gov/f/documents/ deceptive, or misleading representation Consumer Survey, consumers’ estimates of the cfpb_debt-collector-debt-buyer_SBREFA-report.pdf or means in connection with the frequency of contacts may be subject to uncertainty (hereinafter Small Business Review Panel Report). collection of any debt.’’ 65 Then, because the survey does not purport to distinguish 58 Certain proposals under consideration in the in its questions or analysis between various factual Small Business Review Panel Outline and scenarios. Prior to the Dodd-Frank Act’s grant of authority to discussed in the Small Business Review Panel the Bureau, the FTC published various materials 53 Id. at 34–35, 45–46. Report are not included in this proposed rule and providing guidance on the FDCPA. The FTC’s 54 Id. at 36–38. therefore are not discussed in part V. For example, materials have informed the Bureau’s rulemaking 55 The Small Business Regulatory Enforcement because this proposed rule would apply only to and, if relevant to particular proposed provisions, Fairness Act of 1996 (SBREFA), as amended by FDCPA-covered debt collectors, the Bureau does are discussed in part V. not include a discussion of proposals under section 1100G(a) of the Dodd-Frank Act, requires 60 12 U.S.C. 5512(a). the Bureau to convene a Small Business Review consideration that would have imposed information 61 12 U.S.C. 5512(b)(1). Panel before proposing a rule that may have a transfer requirements on first-party creditors who 62 substantial economic impact on a significant generally are not FDCPA-covered debt collectors. 12 U.S.C. 5481(12)(H), (14). number of small entities. See Public Law 104–121, 59 15 U.S.C. 1692l(d). As noted, the Bureau is the 63 15 U.S.C. 1692d. tit. II, 110 Stat. 847, 857 (1996) (as amended by Pub. first Federal agency with authority to prescribe 64 Id. at 1692d(1)–(6). L. 110–28, section 8302 (2007)). substantive debt collection rules under the FDCPA. 65 15 U.S.C. 1692e.

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‘‘[w]ithout limiting the general prohibitions. Accordingly, the proposal that a debt collector could violate application of the foregoing,’’ section would interpret the general provisions FDCPA section 808 by using coercive 807 lists 16 examples of conduct that of FDCPA sections 806 through 808 to tactics such as citing speculative legal violate that section.66 Finally, FDCPA prohibit or require certain conduct that consequences to pressure the consumer section 808 prohibits a debt collector is similar to the types of conduct to engage with the debt collector.78 from ‘‘us[ing] unfair or unconscionable prohibited or required by the specific Additionally, courts have held that a means to collect or attempt to collect examples. For example, the proposal debt collector could violate FDCPA any debt.’’ 67 Then, ‘‘[w]ithout limiting would interpret the general provisions sections 806 through 808 by taking the general application of the in FDCPA sections 806 through 808 as certain actions to collect a debt that a foregoing,’’ FDCPA section 808 lists protecting consumer privacy in debt consumer does not actually owe or that eight examples of conduct that violate collection in ways similar to the specific is not actually delinquent.79 Similarly, a that section.68 The Bureau interprets restrictions in: (1) FDCPA section debt collector could violate FDCPA FDCPA sections 806 through 808 in 806(3), which prohibits, with certain section 807 by, for example, giving ‘‘a light of: (1) The FDCPA’s language and exceptions, the publication of a list of false impression of the character of the purpose; (2) the general types of consumers who allegedly refuse to pay debt,’’ 80 such as by failing to disclose conduct prohibited by those sections debts; 72 (2) FDCPA section 808(7), that an amount collected includes and, where relevant, the specific which prohibits communicating with a fees,81 or by failing to disclose that the examples enumerated in those sections; consumer regarding a debt by postcard; applicable statute of limitations has and (3) judicial precedent.69 and FDCPA section 808(8), which expired.82 prohibits the use of certain language and Interpreting General Provisions in Light Several courts have applied an symbols on envelopes.73 The of Specific Prohibitions or Requirements objective standard of an interpretative approach of looking to ‘‘unsophisticated’’ or ‘‘least By their plain terms, FDCPA sections specific provisions to inform general sophisticated’’ consumer to FDCPA 806 through 808 make clear that their provisions is consistent with judicial sections 807 83 and 808 84 and an examples of prohibited conduct do not precedent indicating that the general ‘‘limit[ ] the general application’’ of prohibitions in the FDCPA should be propose to adopt specific judicial interpretations those sections’ general prohibitions. The interpreted ‘‘in light of [their] through its restatement of the general prohibitions FDCPA’s legislative history is consistent associates.’’ 74 For example, courts have except where noted in the proposal. with this understanding,70 as are 78 See, e.g., Hosseinzadeh v. M.R.S. Assocs., Inc., held that violating a consumer’s privacy 387 F. Supp. 2d 1104, 1117 (C.D. Cal. 2005) opinions by courts that have addressed interest through public exposure of a 71 (denying debt collector’s motion for summary this issue. Accordingly, the Bureau debt violates the FDCPA, noting that judgment on section 808 claim where debt collector may prohibit conduct that the specific violating a consumer’s privacy is a type used false name and implied that consumer ‘‘would examples in FDCPA sections 806 have legal problems’’ if consumer did not return of conduct prohibited by several debt collector’s telephone call). through 808 do not address if the 75 specific examples. In this way, the 79 See, e.g., Fox v. Citicorp Credit Servs., Inc., 15 conduct violates the general Bureau uses the specific examples in F.3d 1507, 1517 (9th Cir. 1994) (reversing grant of prohibitions. FDCPA sections 806 through 808 to summary judgment to debt collector in part because The Bureau proposes to use the inform its understanding of the general ‘‘a jury could rationally find’’ that filing writ of specific examples in FDCPA sections garnishment was unfair or unconscionable under provisions, consistent with the statute’s section 808 when debt was not delinquent); Ferrell 806 through 808 to inform its use of the phrase ‘‘without limiting the interpretation of those sections’ general v. Midland Funding, LLC, No. 2:15–cv–00126–JHE, general application of the foregoing’’ to 2015 WL 2450615, at *3–4 (N.D. Ala. May 22, 2015) introduce the specific examples.76 (denying debt collector’s motion to dismiss section 66 Id. at 1692e(1)–(16). 806 claim where debt collector allegedly initiated 67 15 U.S.C. 1692f. Judicial Precedent collection lawsuit even though it knew plaintiff did 68 Id. at 1692f(1)–(8). not owe debt); Pittman v. J.J. Mac Intyre Co. of Nev., 69 Where the Bureau proposes requirements The Bureau interprets the general Inc., 969 F. Supp. 609, 612–13 (D. Nev. 1997) pursuant only to its authority to implement and prohibitions in FDCPA sections 806 (denying debt collector’s motion to dismiss claims interpret sections 806 through 808 of the FDCPA, through 808 in light of the significant under sections 807 and 808 where debt collector allegedly attempted to collect fully satisfied debt). the Bureau does not take a position on whether body of existing court decisions such practices also would constitute an unfair, 80 Fields v. Wilber Law Firm, P.C., 383 F.3d 562, deceptive, or abusive act or practice under section interpreting those provisions, which 565–66 (7th Cir. 2004) (reversing dismissal of 1031 of the Dodd-Frank Act. Where the Bureau provides instructive examples of plaintiff’s claims brought under sections 807 and proposes an intervention both pursuant to its collection practices that are not 808 because dunning letter that failed to authority to implement and interpret FDCPA addressed by the specific prohibitions communicate that total amount due included sections 806 through 808 and pursuant to its attorneys’ fees ‘‘could conceivably mislead an authority to identify and prevent unfair acts or in those sections but that nonetheless unsophisticated consumer’’). practices under Dodd-Frank Act section 1031, the run afoul of the FDCPA’s general 81 Id. section-by-section analysis explains why the prohibitions in sections 806 through 82 See, e.g., Pantoja v. Portfolio Recovery Assocs., Bureau proposes to identify the act or practice as 808.77 For example, courts have held 852 F.3d 679, 686–87 (7th Cir. 2017). unfair under the Dodd-Frank Act. 83 See, e.g., Hartman v. Great Seneca Fin. Corp., 70 See, e.g., S. Rept. No. 95–382, 95th Cong., 1st 569 F.3d 606, 613 (6th Cir. 2009) (applying least 72 15 U.S.C. 1692d(3). Sess. 2, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. sophisticated consumer standard to section 807 73 1695, 1698 (hereinafter S. Rept. No. 382) (‘‘[T]his 15 U.S.C. 1692f(7)–(8). claim); Bentley v. Great Lakes Collection Bureau, 6 bill prohibits in general terms any harassing, unfair, 74 Currier v. First Resolution Inv. Corp., 762 F.3d F.3d 60, 62 (2d. Cir. 1993) (same); Swanson v. S. or deceptive collection practice. This will enable 529, 534 (6th Cir. 2014) (citing Limited, Inc. v. Or. Credit Serv., Inc., 869 F.2d 1222, 1227 (9th Cir. the courts, where appropriate, to proscribe other C.I.R., 286 F.3d 324, 332 (6th Cir. 2002)). 1988) (same). improper conduct which is not specifically 75 See id. at 535. 84 See, e.g., Crawford v. LVNV Funding, LLC, 758 addressed.’’). Courts have also cited legislative 76 15 U.S.C. 1692d–1692f. F.3d 1254, 1258 (11th Cir. 2014) (‘‘[W]e have history in noting that, ‘‘in passing the FDCPA, 77 This interpretive approach is consistent with adopted a ‘least-sophisticated consumer standard to Congress identified abusive collection attempts as courts’ reasoning that these general prohibitions evaluate whether a debt collector’s conduct is primary motivations for the Act’s passage.’’ Hart v. should be interpreted in light of conduct that courts ‘deceptive,’ ‘misleading,’ ‘unconscionable,’ or FCI Lender Servs, Inc., 797 F.3d 219, 226 (2d Cir. have already found violate them. See, e.g., Todd v. ‘unfair’ under the statute.’’); LeBlanc v. Unifund 2015). Collecto, Inc., 731 F.3d 734, 739 (7th Cir. 2013). CCR Partners, 601 F.3d 1185, 1200–01 (11th Cir. 71 See, e.g., Stratton v. Portfolio Recovery Assocs., While judicial precedent informs the Bureau’s 2010) (applying least sophisticated consumer LLC, 770 F.3d 443, 450 (6th Cir. 2014) (‘‘[T]he listed interpretation of the general prohibitions in FDCPA standard to section 808 claim); Turner v. J.V.D.B. & examples of illegal acts are just that—examples.’’). sections 806 through 808, the Bureau does not Assocs., Inc., 330 F.3d 991, 997 (7th Cir. 2003)

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objective, vulnerable consumer standard the term ‘‘unsophisticated’’ consumer to relating to unfair and deceptive acts or to FDCPA section 806.85 In determining describe the standard it will apply in practices.95 Given these similarities, whether particular acts violate FDCPA this proposal when assessing the effect where the Bureau relies on Dodd-Frank sections 806 through 808, the Bureau of conduct on consumers. Act section 1031(b) authority to support interprets those sections to incorporate particular provisions, the Bureau is FDCPA’s Purposes ‘‘an objective standard’’ that is designed guided, in part, by case law and Federal to protect consumers who are ‘‘of below- FDCPA section 802 establishes that agency rulemakings addressing unfair average sophistication or intelligence’’ the purpose of the statute is to eliminate and deceptive acts or practices under or who are ‘‘especially vulnerable to abusive debt collection practices by debt the FTC Act. For example, case law fraudulent schemes.’’ 86 collectors, to ensure that debt collectors establishes that, under the FTC Act, the Courts have reasoned, and the Bureau who refrain from using abusive debt FTC may impose requirements to agrees, that ‘‘[w]hether a consumer is collection practices are not prevent acts or practices that the FTC more or less likely to be harassed, competitively disadvantaged, and to identifies as unfair or deceptive so long oppressed, or abused by certain debt promote consistent State action to as the preventive requirements have a collection practices does not relate protect consumers against debt reasonable relation to the identified acts solely to the consumer’s relative collection abuses.91 In particular, or practices.96 Where the Bureau relies sophistication’’ and may be affected by FDCPA section 802 delineates certain on Dodd Frank Act section 1031(b) other circumstances, such as the specific harms that the general and prevention authority to support consumer’s financial and legal specific prohibitions in sections 806 particular proposals, the Bureau resources.87 Courts have further through 808 were designed to alleviate. explains how the preventive reasoned that section 807’s prohibition Section 802 states: ‘‘[T]he use of requirements have a reasonable relation on false, deceptive, or misleading abusive, deceptive, and unfair debt to the identified unfair, deceptive, or representations incorporates an collection practices by many debt abusive acts or practices. objective, ‘‘unsophisticated’’ consumer collectors . . . contribute[s] to the standard.88 This standard ‘‘protects the number of personal bankruptcies, to Section 1031(c) consumer who is uninformed, naive, or marital instability, to the loss of jobs, Section 1031(c)(1) of the Dodd-Frank trusting, yet it admits an objective and to invasions of individual Act provides that the Bureau shall have element of reasonableness.’’ 89 The privacy.’’ 92 no authority under section 1031 to declare an act or practice in connection Bureau agrees with the reasoning of B. Dodd-Frank Act Section 1031 courts that have applied this standard or with a transaction with a consumer for a ‘‘least sophisticated consumer’’ Section 1031(b) a consumer financial product or service, standard.90 The Bureau proposes to use Section 1031(b) of the Dodd-Frank or the offering of a consumer financial Act provides the Bureau with authority product or service, to be unlawful on (applying unsophisticated consumer standard to to prescribe rules to identify and the grounds that such act or practice is section 808 claim). Circuit courts have also held, for prevent unfair, deceptive, or abusive unfair, unless the Bureau ‘‘has a example, that the least sophisticated consumer reasonable basis’’ to conclude that: (A) standard applies to a consumer’s understanding of acts or practices. Specifically, Dodd- a validation notice required under FDCPA section Frank Act section 1031(b) authorizes the The act or practice causes or is likely to 809 and threats to take legal action under FDCPA Bureau to prescribe rules applicable to cause substantial injury to consumers section 807(5). See Swanson, 869 F.2d at 1225–27; a covered person or service provider which is not reasonably avoidable by Wilson, 225 F.3d 350, 353 (3d Cir. 2000). consumers; and (B) such substantial 85 For example, in Jeter v. Credit Bureau, Inc., 760 identifying as unlawful unfair, F.2d 1168, 1179 (11th Cir. 1985), the court applied deceptive, or abusive acts or practices in injury is not outweighed by a standard analogous to the ‘‘least sophisticated connection with any transaction with a countervailing benefits to consumers or 97 consumer’’ to an FDCPA section 806 claim, holding consumer for a consumer financial to competition. Section 1031(c)(2) of that claims under section 806 ‘‘should be viewed the Dodd-Frank Act provides that, in from the perspective of a consumer whose product or service, or the offering of a circumstances makes him relatively more consumer financial product or service.93 determining whether an act or practice susceptible to harassment, oppression, or abuse.’’ Section 1031(b) of the Dodd-Frank Act is unfair, the Bureau may consider 86 See Brief for the United States as Amicus further provides that ‘‘[r]ules under this established public policies as evidence Curiae Supporting Respondents, Sheriff v. Gillie, section may include requirements for to be considered with all other 136 S. Ct. 1594 (2016) (No. 15–338), 2016 WL evidence. Public policy considerations 836755, at * 29 (quoting Gammon v. GC Servs. Ltd. the purpose of preventing such acts or P’ship, 27 F.3d 1254, 1257 (7th Cir. 1994) and practices’’ 94 (sometimes referred to as may not serve as a primary basis for 98 Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. prevention authority). The Bureau such a determination. The Bureau 1993)). proposes certain provisions based on its proposes certain interventions based in 87 Jeter, 760 F.2d at 1179 (‘‘[R]ather, such part on its authority under Dodd-Frank susceptibility might be affected by other authority under Dodd-Frank Act section circumstances of the consumer or by the 1031(b). Act section 1031(c). relationship between the consumer and the debt Section 1031(b) of the Dodd-Frank The unfairness standard under Dodd- collection agency. For example, a very intelligent Act is similar to the FTC Act provisions Frank Act section 1031(c)—requiring and sophisticated consumer might well be primary consideration of the three susceptible to harassment, oppression, or abuse because he is poor (i.e., has limited access to the of the consumer-protection laws, courts have elements (substantial injury, not legal system), is on probation, or is otherwise at the attempted to articulate a standard for evaluating reasonably avoidable by consumers, and mercy of a power relationship.’’). deceptiveness that does not rely on assumptions 88 See Brief for the United States as Amicus about the ‘average’ or ‘normal’ consumer. This effort 95 15 U.S.C. 45. Curiae Supporting Respondents, supra note 86, at is grounded, quite sensibly, in the assumption that 96 See Jacob Siegel Co. v. Fed. Trade Comm’n, 327 *10, 27–30. consumers of below-average sophistication or U.S. 608, 612–13 (1946) (‘‘The Commission is the 89 Gammon, 27 F.3d at 1257. intelligence are especially vulnerable to fraudulent expert body to determine what remedy is necessary schemes. The least-sophisticated-consumer 90 See, e.g., Rosenau v. Unifund Corp., 539 F.3d to eliminate the unfair or deceptive trade practices standard protects these consumers in a variety of 218, 221 (3d Cir. 2008) (‘‘We use the ‘least which have been disclosed. It has wide latitude for ways.’’). sophisticated debtor’ standard in order to effectuate judgment and the courts will not interfere except 91 the basic purpose of the FDCPA: To protect all 15 U.S.C. 1692(e). where the remedy selected has no reasonable consumers, the gullible as well as the shrewd’’) 92 15 U.S.C. 1692(a). relation to the unlawful practices found to exist.’’). (internal quotation marks and citation omitted); 93 12 U.S.C. 5531(b). 97 12 U.S.C. 5531(c)(1). Clomon, 988 F.2d at 1319 (‘‘To serve the purposes 94 Id. 98 12 U.S.C. 5531(c)(2).

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countervailing benefits to consumers or consumers. As discussed above, the FTC Statement on Unfairness, rulemakings to competition) and permitting Act unfairness standard, the FTC Policy by the FTC and other Federal agencies, secondary consideration of public Statement on Unfairness, rulemakings and related case law inform the meaning policy—is similar to the unfairness by the FTC and other Federal agencies, of the elements of the unfairness standard under the FTC Act.99 Section and related cases inform the meaning of standard under Dodd-Frank Act section 5(n) of the FTC Act was amended in the elements of the unfairness standard 1031(c)(1). The FTC stated that knowing 1994 to incorporate the principles set under Dodd-Frank Act section the steps for avoiding injury is not forth in the FTC’s ‘‘Commission 1031(c)(1). The FTC noted in its Policy enough for the injury to be reasonably Statement of Policy on the Scope of Statement on Unfairness that substantial avoidable; rather, the consumer must Unfairness Jurisdiction,’’ 100 issued on injury ordinarily involves monetary also understand and appreciate the December 17, 1980. The FTC Act harm.103 The Policy Statement stated necessity of taking those steps.110 As the unfairness standard, the FTC Policy that trivial or speculative harms are not FTC explained in its Policy Statement Statement on Unfairness, rulemakings cognizable under the test for substantial on Unfairness, most unfairness matters by the FTC and other Federal injury.104 The FTC also noted that an are brought to ‘‘halt some form of seller agencies,101 and related cases 102 inform injury is ‘‘sufficiently substantial’’ if it behavior that unreasonably creates or the scope and meaning of the Bureau’s consists of a small amount of harm to takes advantage of an obstacle to the free authority under Dodd-Frank Act section a large number of individuals or raises exercise of consumer 1031(b) to issue rules that identify and a significant risk of harm.105 The FTC decisionmaking.’’ 111 The D.C. Circuit prevent acts or practices that the Bureau has found that substantial injury also has noted that, if such behavior exists, determines are unfair pursuant to Dodd- may involve a large amount of harm there is a ‘‘market failure’’ and the Frank Act section 1031(c). experienced by a small number of agency ‘‘may be required to take Substantial injury. The first element individuals.106 As described in the FTC corrective action.’’ 112 Assessing for a determination of unfairness under Policy Statement, emotional effects from whether an injury is reasonably Dodd-Frank Act section 1031(c)(1) is an act or practice might be a basis for avoidable also requires taking into that the act or practice causes or is a finding of unfairness in an extreme account the costs of making a choice likely to cause substantial injury to case in which tangible injury from the other than the one made and the act or practice could be clearly availability of alternatives in the 107 99 Section 5(n) of the FTC Act, as amended in demonstrated, and the D.C. Circuit marketplace.113 1994, provides that, ‘‘The [FTC] shall have no has upheld an FTC conclusion that the Countervailing benefits to consumers authority . . . to declare unlawful an act or practice demonstrated effects on consumers from or competition. The third element for a on the grounds that such act or practice is unfair unless the act or practice causes or is likely to cause threats to seize household possessions determination of unfairness under substantial injury to consumers which is not were sufficient to form part of the Dodd-Frank Act section 1031(c)(1) is reasonably avoidable by consumers themselves and substantial injury along with financial that the act or practice’s countervailing not outweighed by countervailing benefits to harm.108 The Bureau has stated that benefits to consumers or to competition consumers or to competition. In determining emotional impact and other more whether an act or practice is unfair, the [FTC] may do not outweigh the substantial consider established public policies as evidence to subjective types of harm ‘‘will not consumer injury. As discussed above, be considered with all other evidence. Such public ordinarily amount to substantial injury’’ the FTC Act unfairness standard, the policy considerations may not serve as a primary but that, in certain circumstances, FTC Policy Statement on Unfairness, basis for such determination.’’ 15 U.S.C. 45(n). ‘‘emotional impacts may amount to or 100 rulemakings by the FTC and other Letter from the FTC to Hon. Wendell Ford and 109 Hon. John Danforth, Committee on Commerce, contribute to substantial injury.’’ Federal agencies, and related cases Science & Transportation, United States Senate, Not reasonably avoidable. The second inform the meaning of the elements of Commission Statement of Policy on the Scope of element for a determination of the unfairness standard under Dodd- Consumer Unfairness Jurisdiction (Dec. 17, 1980), unfairness under Dodd-Frank Act Frank Act section 1031(c)(1). In reprinted in Int’l Harvester Co., 104 F.T.C. 949, section 1031(c)(1) is that the substantial 1070–76 (1984), https://www.ftc.gov/sites/default/ applying the FTC Act’s unfairness files/documents/commission_decision_volumes/ injury is not reasonably avoidable by standard, the FTC has stated that it volume-104/ftc_volume_decision_104__july_-_ consumers. As discussed above, the FTC generally is important to consider both _ _ _ december 1984pages949 - 1088.pdf (hereinafter Act unfairness standard, the FTC Policy the costs of imposing a remedy and any FTC Policy Statement on Unfairness); see also S. Rept. 103–130, at 12–13 (1993), reprinted in 1994 benefits that consumers receive as a 103 See FTC Policy Statement on Unfairness, U.S.C.C.A.N. 1776 (legislative history to FTC Act result of the act or practice. Authorities supra note 100, at 1073. amendments indicating congressional intent to 104 addressing the FTC Act’s unfairness codify the principles of the FTC Policy Statement Id. 105 standard indicate that the on Unfairness). Id. at 1073 n.12. 101 In addition to the FTC’s rulemakings under 106 Int’l Harvester Co., 104 F.T.C. 949, 1064 countervailing benefits test does not unfairness authority, certain Federal prudential (1984). require a precise quantitative analysis of regulators have prescribed rules prohibiting unfair 107 FTC Policy Statement on Unfairness, supra benefits and costs, as such an analysis practices under section 18(f)(1) of the FTC Act and, note 100, at 1073 n.16 (‘‘In an extreme case, may be unnecessary or, in some cases, in doing so, they applied the statutory elements however, where tangible injury could be clearly consistent with the standards articulated by the demonstrated, emotional effects might possibly be FTC. See 74 FR 5498, 5502 (Jan. 29, 2009) considered as the basis for a finding of unfairness’’). 110 See Int’l Harvester, 104 F.T.C. at 1066. (background discussion of legal authority for 108 See Am. Fin. Servs. Assoc. v. FTC, 767 F.2d 111 FTC Policy Statement on Unfairness, supra interagency Subprime Credit Card Practices rule). 957, 973–74 n.20 (D.C. Cir. 1985) (‘‘the Commission note 100, at 1074. The Board, FDIC, and the OCC also previously found that ‘the threat to seize household 112 Am. Fin. Servs. Assoc., 767 F.2d at 976. issued guidance generally adopting these standards possessions causes ‘great emotional suffering, 113 See FTC Policy Statement on Unfairness, for purposes of enforcing the FTC Act’s prohibition humiliation, anxiety, and deep feelings of guilt, and supra note 100, at 1074 n.19 (‘‘In some senses any on unfair and deceptive acts or practices. See id. this distress can lead to physical breakdowns or injury can be avoided—for example, by hiring 102 See, e.g., Consumer Fin. Prot. Bureau v. NDG illness, disruption of the family, and undue strain independent experts to test all products in advance, Fin. Corp., No. 15–cv–52110 CM, 2016 WL 7188792 on family relationships’ ’’) (internal citations or by private legal actions for damages—but these (S.D.N.Y. Dec. 2, 2016); Consumer Fin. Prot. Bureau omitted). courses may be too expensive to be practicable for v. Universal Debt & Payment Sols., LLC, No. 1:15– 109 Bureau of Consumer Fin. Prot., CFPB individual consumers to pursue.’’); Am. Fin. Servs. CV–00–859 RWS, 2015 WL 11439178 (N.D. Ga. Supervision and Examination Process, at UDAAP 2 Assoc., 767 F.2d at 976–77 (reasoning that, because Sept. 1, 2015); Consumer Fin. Prot. Bureau v. ITT (Apr. 2019), https://files.consumerfinance.gov/f/ of factors such as substantial similarity of contracts Educ. Servs., Inc., 219 F. Supp. 3d 878 (S.D. Ind. documents/cfpb_supervision-and-examination- offered by creditors, ‘‘consumers have little ability 2015). manual.pdf. or incentive to shop for a better contract’’).

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impossible; rather, the agency is provision of the required Dodd-Frank Act section 1024(b)(7)(A) expected to gather and consider disclosures.’’ 117 Dodd-Frank Act section and (B) 125 as applied to debt collectors reasonably available evidence.114 1032(b)(2) provides that such a model who are nondepository covered persons Public policy. As noted above, Dodd- form ‘‘shall contain a clear and that the Bureau supervises under Dodd- Frank Act section 1031(c)(2) provides conspicuous disclosure that at a Frank Act section 1024(a).126 The that, in determining whether an act or minimum—(A) uses plain language section-by-section analysis of proposed practice is unfair, the Bureau may comprehensible to consumers; (B) § 1006.100 contains an additional consider established public policies as contains a clear format and design, such description of the authorities on which evidence to be considered with all other as an easily readable type font; and (C) the Bureau relies for proposed evidence. Public policy considerations, succinctly explains the information that § 1006.100. however, may not serve as a primary must be communicated to the basis for such a determination.115 consumer.’’ 118 Dodd-Frank Act section E. The E-SIGN Act C. Dodd-Frank Act Section 1032 1032(b)(3) provides that any such model form ‘‘shall be validated through The E-SIGN Act provides standards The Bureau proposes certain consumer testing.’’; 119 for determining if delivery of a provisions based in part on its authority Dodd-Frank Act section 1032(c) disclosure by electronic record satisfies under Dodd-Frank Act section 1032. provides that, in prescribing rules a requirement in a statute, regulation, or Dodd-Frank Act section 1032(a) pursuant to Dodd-Frank Act section other rule of law that the disclosure be provides that the Bureau may prescribe 1032, the Bureau ‘‘shall consider provided or made available to a rules to ensure that the features of any available evidence about consumer consumer in writing. The E-SIGN Act consumer financial product or service, awareness, understanding of, and sets forth criteria under which Federal ‘‘both initially and over the term of the responses to disclosures or regulatory agencies may exempt a product or service,’’ are ‘‘fully, communications about the risks, costs, specified category or type of record from accurately, and effectively disclosed to and benefits of consumer financial the consent requirements for electronic consumers in a manner that permits 120 products or services.’’ Dodd-Frank disclosures in the E-SIGN Act.127 For consumers to understand the costs, Act section 1032(d) provides that ‘‘[a]ny the reasons set forth in part V, proposed benefits, and risks associated with the covered person that uses a model form § 1006.42(c) and (d) would exempt product or service, in light of the facts included with a rule issued under this and circumstances.’’ 116 Under Dodd- section shall be deemed to be in electronic delivery of certain required Frank Act section 1032(a), the Bureau is compliance with the disclosure notices from the consent requirements empowered to prescribe rules regarding requirements of this section with of the E-SIGN Act. Pursuant to E-SIGN the disclosure of the ‘‘features’’ of respect to such model form.’’ 121 Act section 104(b)(1), which permits the consumer financial products and Bureau to interpret the E-SIGN Act services generally. Accordingly, the D. Other Authorities Under the Dodd- through the issuance of regulations, Bureau may prescribe rules containing Frank Act proposed comments 6(c)(1)–1 and –2 disclosure requirements even if other The Bureau proposes certain provide an interpretation of the E-SIGN Federal consumer financial laws do not interventions based in part on its Act as applied to a debt collector specifically require disclosure of such authority under Dodd-Frank Act responding to a consumer’s notification features. sections 1022 and 1024. Section that the consumer refuses to pay the Dodd-Frank Act section 1032(b)(1) 1022(b)(1) of the Dodd-Frank Act debt or wants the debt collector to cease provides that ‘‘any final rule prescribed provides that the Bureau’s Director communication; proposed comments by the Bureau under this section ‘‘may prescribe rules and issue orders 38–2 and –3 provide an interpretation of requiring disclosures may include a and guidance, as may be necessary or the E-SIGN Act as applied to a debt appropriate to enable the Bureau to model form that may be used at the collector responding to a consumer option of the covered person for administer and carry out the purposes and objectives of the Federal consumer dispute or request for original-creditor information; and proposed 114 Pa. Funeral Dirs. Ass’n v. FTC, 41 F.3d 81, 91 financial laws, and to prevent evasions (3d Cir. 1994) (upholding FTC’s amendments to the thereof.’’ 122 ‘‘Federal consumer § 1006.42(b)(1) and proposed comment Funeral Industry Practices Rule and noting that financial laws’’ include the FDCPA and 42(b)(1)–1 provide an interpretation of ‘‘much of a cost-benefit analysis requires 123 the E-SIGN Act as applied to certain predictions and speculation’’); Int’l Harvester, 104 title X of the Dodd-Frank Act. F.T.C. at 1065 n.59 (‘‘In making these calculations Section 1022(b)(2) of the Dodd-Frank disclosures that the regulation would we do not strive for an unrealistic degree of Act prescribes certain standards for require debt collectors to provide. precision.... We assess the matter in a more rulemaking that the Bureau must follow general way, giving consumers the benefit of the in exercising its authority under Dodd- doubt in close issues.... What is important . . . 124 is that we retain an overall sense of the relationship Frank Act section 1022(b)(1). See part between costs and benefits. We would not want to VI for a discussion of the Bureau’s impose compliance costs of millions of dollars in standards for rulemaking under Dodd- 125 Dodd-Frank Act section 1024(b)(7)(A) order to prevent a bruised elbow.’’); see also S. Frank Act section 1022(b)(2). Rept. 103–130, at 13 (1994) (noting that, ‘‘[i]n authorizes the Bureau to prescribe rules to facilitate determining whether a substantial consumer injury Proposed § 1006.100 concerning the supervision of persons identified as larger is outweighed by the countervailing benefits of a retention of records would be based in participants of a market for a consumer financial practice, the Committee does not intend that the part on the Bureau’s authority under product or service as defined by rule in accordance FTC quantify the detrimental and beneficial effects with section 1024(a)(1)(B) of the Dodd-Frank Act, of the practice in every case. In many instances, 117 12 U.S.C. 5532(b)(1). and Dodd-Frank Act section 1024(b)(7)(B) such a numerical benefit-cost analysis would be 118 authorizes the Bureau to require a person described unnecessary; in other cases, it may be impossible. 12 U.S.C. 5532(b)(2). 119 in Dodd-Frank Act section 1024(a)(1) to retain This section would require, however, that the FTC 12 U.S.C. 5532(b)(3). carefully evaluate the benefits and costs of each 120 12 U.S.C. 5532(c). records for the purpose of facilitating supervision exercise of its unfairness authority, gathering and 121 12 U.S.C. 5532(d). of such persons and assessing and detecting risks considering reasonably available evidence.’’). 122 12 U.S.C. 5512(b)(1). to consumers. 115 12 U.S.C. 5531(c)(2). 123 12 U.S.C. 5481(14). 126 12 U.S.C. 5514(b)(7)(A)–(B). 116 12 U.S.C. 5532(a). 124 12 U.S.C. 5512(b)(2). 127 15 U.S.C. 7004(d)(1).

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V. Section-by-Section Analysis in existing § 1006.1(b) to paragraph 1(b) § 1006.1(c)(1) would clarify that of appendix A of the regulation.135 Regulation F would not apply to a Subpart A—General Consistent with FDCPA section 802, person excluded from coverage by Section 1006.1 Authority, Purpose, proposed § 1006.1(b) explains that part section 1029(a) of the Dodd-Frank and Coverage 1006 carries out the purposes of the Act.139 FDCPA, which include eliminating The Bureau proposes certain 1(a) Authority abusive debt collection practices by debt provisions of the proposed rule only FDCPA section 817 provides that the collectors, ensuring that debt collectors under sections 1031 or 1032 of the Bureau shall by regulation exempt from who refrain from using abusive debt Dodd-Frank Act. Dodd-Frank Act the requirements of the FDCPA any collection practices are not section 1031 grants the Bureau authority class of debt collection practices within competitively disadvantaged, and to write regulations applicable to any State if the Bureau determines that promoting consistent State action to covered persons and service providers certain conditions have been met.128 protect consumers against debt to identify and prevent unfair, Before the Bureau’s creation, FDCPA collection abuses. Consistent with deceptive, or abusive acts or practices in section 817 provided the same authority Dodd-Frank Act section 1032, proposed connection with a transaction with a to the FTC, and the FTC issued a rule § 1006.1(b) further explains that part consumer for, or the offering of, a to describe procedures for a State to 1006 also prescribes requirements to consumer financial product or apply for such an exemption.129 After ensure that certain features of debt service.140 Dodd-Frank Act section 1032 the Dodd-Frank Act granted the Bureau collection are fully, accurately, and grants the Bureau authority to ensure FDCPA rulewriting authority, the effectively disclosed to consumers in a that the features of any consumer Bureau restated the FTC’s existing rule manner that permits consumers to financial product or service are fully, regarding State exemptions without understand the costs, benefits, and risks accurately, and effectively disclosed to substantive change as the Bureau’s associated with debt collection, in light consumers.141 Under the Dodd-Frank Regulation F, 12 CFR part 1006.130 of the facts and circumstances. Finally, Act, collecting a debt related to any Existing § 1006.1(a) thus states that the consistent with Dodd-Frank Act consumer financial product or service purpose of Regulation F is to establish sections 1022(b)(1) and 1024(b)(7), generally is, itself, a consumer financial procedures and criteria for States to proposed § 1006.1(b) explains that part product or service.142 Of primary apply to the Bureau for an exemption as 1006 sets forth record retention relevance here, a consumer financial provided in FDCPA section 817. requirements to enable the Bureau to product or service includes the 143 Consistent with the Bureau’s proposal administer and carry out the purposes of extension of consumer credit. to revise part 1006 to regulate the debt the FDCPA and the Dodd-Frank Act and Provisions proposed only under Dodd- collection activities of FDCPA-covered to prevent evasions thereof, and to Frank Act sections 1031 or 1032, if debt collectors, the Bureau proposes to facilitate supervision of debt collectors adopted, therefore would apply to revise existing § 1006.1(a) to set forth and the assessment and detection of FDCPA-covered debt collectors only to the Bureau’s authority to issue such risks to consumers. the extent that such debt collectors were collecting a debt related to an extension rules. Proposed § 1006.1(a) provides that 1(c) Coverage part 1006 is known as Regulation F and of consumer credit or another consumer The Bureau proposes to add 144 is issued by the Bureau pursuant to financial product or service. This § 1006.1(c) to address coverage under would include, for example, FDCPA- sections 814(d) and 817 of the the proposed rule, which, with the FDCPA,131 title X of the Dodd-Frank covered debt collectors collecting debts 132 exception of proposed § 1006.108 and related to consumer mortgage loans or Act, and section 104(b)(1) and (d)(1) appendix A, would apply to FDCPA- of the E–SIGN Act.133 The Bureau credit cards. covered debt collectors.136 Proposed Proposed § 1006.1(c)(2) would clarify proposes to move the remainder of § 1006.1(c)(1) thus provides that, except that certain provisions in proposed existing § 1006.1(a), regarding State-law as provided in § 1006.108 and appendix Regulation F apply to FDCPA-covered exemptions from the FDCPA, to A regarding applications for State debt collectors only when they are paragraph I(a) of appendix A of the exemptions from the FDCPA, proposed collecting consumer financial product regulation.134 part 1006 applies to debt collectors as or service debt, as defined in 1(b) Purpose defined in proposed § 1006.2(i), i.e., § 1006.2(f).145 Proposed § 1006.1(c)(2) debt collectors covered by the specifies that these provisions are Existing § 1006.1(b) defines terms FDCPA.137 §§ 1006.14(b)(1)(ii), 1006.30(b)(1)(ii), relevant to the procedures and criteria Proposed § 1006.1(c)(1) also would for States to apply to the Bureau for an implement FDCPA section 814(d), 139 This proposed exclusion would apply only to exemption as provided in FDCPA which provides, in part, that the Bureau Regulation F. Any motor vehicle dealers who are section 817. Consistent with the may not prescribe rules under the FDCPA-covered debt collectors would still need to Bureau’s proposal to revise part 1006 to FDCPA with respect to motor vehicle comply with the FDCPA. 140 regulate the debt collection activities of dealers as described in section 1029(a) 12 U.S.C. 5531(b). 141 12 U.S.C. 5532. FDCPA-covered debt collectors, the 138 of the Dodd-Frank Act. Proposed 142 It is a financial product or service and is a Bureau proposes to revise § 1006.1(b) to consumer financial product or service if, for identify the purposes of part 1006. The 135 See id. example, it is delivered offered, or provided in Bureau proposes to move the definitions 136 Proposed § 1006.108 and appendix A would connection with a consumer financial product or apply to States. service. See 12 U.S.C. 5481(5)(B), 5481(15)(A)(x). 137 143 12 U.S.C. 5481(15)(A)(i). The Dodd-Frank Act 128 15 U.S.C. 1692o. Section 812 of the FDCPA addresses the furnishing of deceptive forms and applies to any defines credit to mean the right granted by a person 129 See 16 CFR part 901. person, not just to debt collectors. Proposed to a consumer to defer payment of a debt, incur debt 130 76 FR 78121 (Dec. 16, 2011). 1006.30(e) would prohibit FDCPA-covered debt and defer its payment, or purchase property or 131 15 U.S.C. 1692l(d), 1692o. collectors from furnishing deceptive forms. Other services and defer payment for such purchase. 12 132 12 U.S.C. 5481 et seq. persons would continue to be prohibited from U.S.C. 5481(7). 133 15 U.S.C. 7004(b)(1), 7004(d)(1). furnishing deceptive forms under FDCPA section 144 12 U.S.C. 5481(5). 134 See the section-by-section analysis of 812. 145 See the section-by-section analysis of proposed § 1006.108 and appendix A. 138 12 U.S.C. 5519(a). proposed § 1006.2(f).

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and 1006.34(c)(2)(iv) and (3)(iv). The § 1006.2(d) but also to communication require the conveying of information Bureau requests comment on all aspects attempts. For example, proposed regarding a debt. As the examples in of proposed § 1006.1(c), including on § 1006.6(b) and (c) would, among other proposed comment 2(b)–1 illustrate, an whether additional clarification would things, prohibit a debt collector from attempt to communicate includes be helpful. communicating or attempting to leaving a limited-content message for a communicate with a consumer at times consumer or placing a telephone call to Section 1006.2 Definitions or places that the debt collector knows a person, regardless of whether the debt FDCPA section 803 defines terms or should know are inconvenient to the collector speaks to any person or leaves used throughout the statute.146 consumer or after a consumer notifies any message at the dialed number. Proposed § 1006.2 would repurpose the debt collector in writing that the Proposed comment 2(b)–1 also would existing § 1006.2 to implement and consumer wishes the debt collector to clarify that an act to initiate a interpret FDCPA section 803 and define cease further communication with the communication or other contact with a additional terms that would be used in consumer. In addition, proposed person is an attempt to communicate the regulation.147 The Bureau proposes § 1006.22(f)(3) and (4) would generally regardless of whether the attempt, if to move existing § 1006.2, which prohibit a debt collector from successful, would be a communication describes how a State may apply for an communicating or attempting to that conveys information regarding a exemption from the FDCPA, to communicate with a consumer using an debt directly or indirectly to any person. paragraph II of appendix A of the email address that the debt collector Although the proposed definition of regulation.148 knows or should know is maintained by attempt to communicate covers a Paragraphs (c), (g), and (l) of proposed the consumer’s employer or by a social broader range of conduct than the § 1006.2 would implement the FDCPA media platform that is viewable by a proposed definition of communication, section 803 definitions of Bureau, person other than the consumer. in many circumstances the same creditor, and State, respectively. These To facilitate compliance with the conduct may give rise to both an paragraphs generally restate the statute, proposed provisions that apply to attempt to communicate and a with only minor wording and attempts to communicate, proposed communication. For example, a debt organizational changes for clarity, and § 1006.2(b) would define an attempt to collector who places a telephone call to thus are not addressed further in the communicate as any act to initiate a a consumer and speaks to the consumer section-by-section analysis below. communication or other contact with about the debt has both attempted to Proposed § 1006.2(a) and (b), (d) any person through any medium, communicate with the consumer (by through (f), and (h) through (k) would including by soliciting a response from initiating the call and speaking to the define other terms that would be used such person. Proposed § 1006.2(b) consumer) and communicated with the in the regulation, as described below. further states that an attempt to consumer (by conveying information The Bureau proposes § 1006.2 to communicate includes providing a about the debt). Sometimes, however, an implement and interpret FDCPA section limited-content message, as defined in attempt to communicate may not give 803, pursuant to its authority under § 1006.2(j). The Bureau proposes this rise to a communication. For example, FDCPA section 814(d) to prescribe rules definition of attempt to communicate on a debt collector who places an with respect to the collection of debts by the basis that any outreach by a debt unanswered telephone call to a debt collectors. In addition to the collector to a consumer—whether by a consumer and chooses not to leave a specific comment requests noted below, telephone call, text message, email, or message has attempted to communicate the Bureau generally requests comment otherwise—is designed to bring about a with the consumer but has not on whether additional clarification is communication either immediately (e.g., communicated with the consumer. The needed for any of the proposed a consumer answers a debt collector’s Bureau requests comment on proposed definitions and on whether additional telephone call and they engage in a § 1006.2(b) and on proposed comment definitions would be helpful. For conversation about the debt) or at a later 2(b)–1. point in time (e.g., in response to a example, the proposal uses the term 2(d) Communicate or Communication ‘‘day’’ to refer to any day, including missed telephone call or a limited- weekends and public holidays. The content message from a debt collector, a FDCPA section 803(2) defines the Bureau requests comment on whether consumer calls or texts the debt term communication to mean the adding a defined term such as ‘‘calendar collector and they engage in a conveying of information regarding a conversation about the debt). debt directly or indirectly to any person day’’ and using it in the final rule would 149 be helpful. As proposed, an attempt to through any medium. Proposed communicate covers a broader range of § 1006.2(d) would implement and 2(a) Act or FDCPA activity than a communication. As interpret this definition. Proposed § 1006.2(a) provides that the discussed in the section-by-section Proposed § 1006.2(d) first restates the terms Act and FDCPA mean the Fair analysis of proposed § 1006.2(d), the statutory definition of communication, Debt Collection Practices Act. proposed rule would define a with only minor changes for clarity. communication, consistent with FDCPA Proposed § 1006.2(d) also would 2(b) Attempt To Communicate section 803(2), as the conveying of interpret FDCPA section 803(2) to Several of the proposed rule’s information regarding a debt directly or provide that a debt collector does not requirements would apply not only to indirectly to any person through any convey information regarding a debt communications as defined in medium. The proposed definition of directly or indirectly to any person— communication further states that a debt and therefore does not communicate 146 15 U.S.C. 1692a. collector does not convey information with any person—if the debt collector 147 FDCPA section 803(7) defines the term regarding a debt directly or indirectly to provides only a limited-content ‘‘location information.’’ 15 U.S.C. 1692a(7). The any person if the debt collector provides message, as defined in proposed Bureau proposes to define that term in § 1006.10, only a limited-content message, as § 1006.2(j). The section-by-section rather than in § 1006.2. See the section-by-section analysis of proposed § 1006.10(a). defined in proposed § 1006.2(j). The analysis of proposed § 1006.2(j) 148 See the section-by-section analysis of proposed definition of attempt to proposed § 1006.108 and appendix A. communicate, in contrast, does not 149 15 U.S.C. 1692a(2).

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regarding limited-content messages a validation notice and to respond to Bureau notes that debt collectors often explains and requests comment both on disputes and requests for original- collect or attempt to collect debts from the proposed content of limited-content creditor information, refer only to a debt deceased consumers (i.e., from their messages and on the Bureau’s proposal collector’s obligations to consumers.151 estates), which presents many of the to interpret the term communication in In the absence of guidance, debt same consumer-protection concerns as § 1006.2(d) as excluding such messages. collectors may be uncertain who, if collecting or attempting to collect debts Proposed comment 2(d)–1 notes that anyone, should receive the validation from living consumers. a communication can occur through notice and have the right to dispute the In addition to proposing to clarify the ‘‘any medium’’ and explains that ‘‘any debt if the consumer obligated or meaning of the term consumer in the medium’’ includes any oral, written, allegedly obligated to pay the debt is decedent debt context, the Bureau electronic, or other medium. The deceased. Without a validation notice proposes in § 1006.2(e) to cross- proposed comment states that a and an opportunity to dispute the debt, reference the special definition of communication may occur, for example, individuals trying to resolve debts in a consumer for certain communications in in person or by telephone, audio deceased consumer’s estate may connection with the collection of a debt recording, paper document, mail, email, experience difficulty because they lack in proposed § 1006.6(a). As described in text message, social media, or other information needed to determine the section-by-section analysis of electronic media. The Bureau proposes whether they are being asked to pay the proposed § 1006.6, FDCPA section comment 2(d)–1 in part to clarify that right debt, in the right amount, to the 805(d) identifies certain persons in debt collectors may communicate with right debt collector, and to assert addition to the section 803(3) consumer consumers through newer dispute rights. To address that concern, as persons with whom a debt collector communication media, such as the Bureau proposes to clarify in the may communicate in connection with electronic media. The Bureau elsewhere commentary to §§ 1006.34(a)(1) and the collection of any debt without proposes provisions to clarify how debt 1006.38 that a person who is authorized violating FDCPA section 805(b)’s collectors may use those media to to act on behalf of the deceased prohibition on third-party communicate with consumers. The consumer’s estate, such as the executor, disclosures.154 The Bureau proposes to Bureau requests comment on proposed administrator, or personal implement FDCPA section 805(d) in § 1006.2(d) and on proposed comment representative, operates as the consumer § 1006.6(a) and to cross-reference the 2(d)–1 and on whether additional for purposes of proposed § 1006.6(a) definition in proposed clarification about the definition of §§ 1006.34(a)(1) and 1006.38.152 § 1006.14(h). As discussed below, communication would be useful. Consistent with those proposed proposed § 1006.14(h) would prohibit a debt collector from communicating or 2(e) Consumer clarifications, the Bureau proposes in § 1006.2(e) to interpret the definition of attempting to communicate with a FDCPA section 803(3) defines a consumer in FDCPA section 803(3) to consumer through a medium of consumer as any natural person mean any natural person, whether living communication if the consumer has obligated or allegedly obligated to pay or deceased, who is obligated or requested that the debt collector not use any debt.150 Proposed § 1006.2(e) would allegedly obligated to pay any debt. The that medium to communicate with the implement this definition, interpret it to proposed interpretation should clarify consumer. Accordingly, proposed include a deceased natural person who the meaning of the term consumer in the § 1006.2(e) provides that, for purposes is obligated or allegedly obligated to pay decedent debt context and appears to be of proposed §§ 1006.6 and 1006.14(h), a debt, and cross-reference the special consistent with a modern trend in the the term consumer has the meaning definition of consumer for certain law that favors recognizing, as a default, given to it in proposed § 1006.6(a). For communications in connection with the the continued existence of a natural further discussion, see the section-by- collection of a debt set forth in proposed person after death.153 Further, the section analysis of proposed § 1006.6(a). § 1006.6(a). The Bureau requests comment on the As summarized in part I.B, the Bureau 151 See 15 U.S.C. 1692g(a)–(b). definition of consumer in proposed proposes to address several consumer 152 See proposed comments 34(a)(1)–1, § 1006.2(e), including on whether the protection concerns and ambiguities in 34(d)(1)(ii)–2, and 38–1. definition should include deceased statutory language related to the 153 See, e.g., Cal. Civ. Proc. Code sec. 377.20(a) consumers. collection of debts owed by deceased (2018) (‘‘Except as otherwise provided by statute, a consumers, also known as decedent cause of action for or against a person is not lost 2(f) Consumer Financial Product or by reason of the person’s death, but survives subject Service Debt debt. One such issue is that the FDCPA to the applicable limitations period.’’). Federal law does not specify whether a consumer, as often provides an unclear answer about whether As discussed in the section-by-section defined in section 803(3), includes a claims survive the death of a natural person. Rule analysis of proposed § 1006.1(c), certain deceased consumer (or whether a 25(a) of the Federal Rules of Civil Procedure allows proposed provisions would apply to substitution ‘‘[i]f a party dies and the claim is not natural person, as that term is used in extinguished,’’ but Federal statutes often do not debt collectors only if they are section 803(3), includes a deceased address whether claims extinguish upon the death collecting a debt related to a consumer natural person). Because the definition of a plaintiff or defendant and, in these cases, of consumer in FDCPA section 803(3) is Federal common law generally permits survival of other hand, some courts, for example, follow the claims where they are merely remedial in nature tradition of the common law and treat a ‘‘natural silent with respect to deceased and not penal. See Ex parte Schreiber, 110 U.S. 76, person’’ as ceasing to exist at the point of death. consumers, debt collectors may be 80 (1884). Most authority suggests that claims See, e.g., Williamson v. Treasurer, 814 A.2d 1153, uncertain, when collecting a deceased brought under other portions of the Consumer 1164 (N.J. Super. Ct. App. Div. 2003) (‘‘We would consumer’s debts, how to comply with Credit Protection Act (CCPA), of which the FDCPA not describe the body or remains of a deceased is subchapter V, likely are remedial rather than person as still a human being or a natural person.’’ FDCPA provisions that refer to a debt penal in nature. See, e.g., Murphy v. Household Fin. (interpreting the New Jersey Right to Know law and collector’s obligations to a consumer. Corp., 560 F.2d 206, 210 (6th Cir. 1977) (holding, citing Natural person, Black’s Law Dictionary (7th For example, certain important in a widely adopted test, that double damages ed. 1999))). In light of the conflicting traditions and FDCPA disclosure requirements, such as under Truth in Lending Act (TILA), subchapter I of the FDCPA’s silence, it appears appropriate to the CCPA, are remedial rather than penal); In re regard the statutory term ‘‘consumer’’ as ambiguous a debt collector’s obligation to provide Wood, 643 F.2d 188, 192 (5th Cir. 1980) (following as to whether it includes or excludes a deceased Murphy to conclude that trustee of debtor’s estate consumer. 150 15 U.S.C. 1692a(3). had standing to bring claims under TILA). On the 154 15 U.S.C. 1692c(d).

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financial product or service, as that term The Supreme Court recently has and interpret that definition, including is defined in section 1002(5) of the interpreted FDCPA section 803(6). In by specifying that a debt collector does Dodd-Frank Act.155 Debt related to a Henson v. Santander Consumer USA not engage in an FDCPA communication consumer financial product or service Inc., the Court held that a company may if the debt collector provides only a would include, for example, debts collect defaulted debts that it has limited-content message.165 Proposed related to consumer mortgage loans or purchased from another without being § 1006.2(j) would further interpret credit cards. For ease of reference, an FDCPA-covered debt collector.160 In FDCPA section 803(2) by defining the proposed § 1006.2(f) would define the so holding, the Court decided only content that a limited-content message term consumer financial product or whether, by using its own name to would be required and permitted to service debt to mean a debt related to a collect debts that it had purchased, include. For the reasons discussed consumer financial product or service, Santander met the ‘‘regularly collects’’ below, under the Bureau’s interpretation as consumer financial product or service prong of the introductory language in of the term communication, a limited- is defined in section 1002(5) of the FDCPA section 803(6). The Court content message would not convey Dodd-Frank Act. expressly declined to address two other information about a debt directly or indirectly to any person, and, as a 2(h) Debt ways that a debt buyer like Santander might qualify as a debt collector under result, a debt collector could provide FDCPA section 803(5) defines the FDCPA section 803(6): (1) By meeting such a message for a consumer without term debt for purposes of the FDCPA. the ‘‘regularly collects’’ prong by communicating with any person for the Proposed § 1006.2(h) would implement regularly collecting or attempting to purposes of the FDCPA or Regulation F. FDCPA section 803(5) and generally collect debts owned by others, in The definition of communication is restates the statute. Proposed § 1006.2(h) addition to collecting debts that it central to the FDCPA’s protections, also would clarify that, for purposes of purchased and owned; or (2) by meeting many of which regulate a debt § 1006.2(f), the term debt means debt as the ‘‘principal purpose’’ prong of the collector’s communications with a that term is used in the Dodd-Frank Act. definition.161 The Court held that consumer or other person. For example, The Bureau proposes this clarification Santander was not a debt collector FDCPA section 805 166 restricts when to ensure that, when determining within the meaning of the ‘‘regularly and where a debt collector may whether a debt is a debt related to a collects’’ prong because Santander was communicate with a consumer, FDCPA consumer financial product or service collecting debts that it purchased and sections 806 through 808 167 contain for purposes of § 1006.2(f), debt owned, not collecting debts owed to requirements concerning the form and collectors and other stakeholders refer another.162 content of a debt collector’s to the Dodd-Frank Act rather than the Proposed § 1006.2(i) generally would communications with a consumer or FDCPA’s definition of debt. restate FDCPA section 803(6)’s other person, and FDCPA section 804 168 2(i) Debt Collector definition of debt collector. Consistent imposes requirements on a debt with the Court’s holding in Henson, the collector communicating with any FDCPA section 803(6) defines the proposed definition thus could include person other than the consumer for the term debt collector for purposes of the a debt buyer collecting debts that it purpose of acquiring location FDCPA. The introductory language of purchased and owned, if the debt buyer information about the consumer. FDCPA section 803(6) generally Uncertainty about what constitutes a provides that a debt collector is any either met the ‘‘principal purpose’’ prong of the definition or regularly communication, however, has led to person: (1) Who uses any questions about how debt collectors can instrumentality of interstate commerce collected or attempted to collect debts owned by others, in addition to leave voicemails or other messages for or the mails in any business the consumers while complying with principal purpose of which is the collecting debts that it purchased and owned.163 certain FDCPA provisions. Most collection of any debts (i.e., the significantly, if a voicemail or other ‘‘principal purpose’’ prong), or (2) who 2(j) Limited-Content Message message is a communication with a regularly collects, or attempts to collect, FDCPA section 803(2) defines the consumer, FDCPA section 807(11) directly or indirectly, debts owed or due term communication to mean the requires that the debt collector identify or asserted to be owed or due to another itself as a debt collector or inform the 156 conveying of information regarding a (i.e., the ‘‘regularly collects’’ prong). debt directly or indirectly to any person consumer that the debt collector is FDCPA section 803(6) also sets forth through any medium.164 As discussed, attempting to collect a debt and that any several exclusions from the general proposed § 1006.2(d) would implement information obtained will be used for definition.157 Proposed § 1006.2(i) that purpose.169 A debt collector who would implement FDCPA section 160 Henson v. Santander Consumer USA, Inc., 137 leaves a message with such disclosures, 803(6)’s definition of debt collector and S. Ct. 1718 (2017). In addition to Henson, the however, risks violating FDCPA section generally restates the statute, with only Supreme Court also recently interpreted FDCPA 805(b)’s prohibition against revealing minor wording and organizational section 803(6) to hold that a business engaged in no debts to third parties if the disclosures more than nonjudicial foreclosure proceedings is 158 170 changes for clarity and to specify that not an FDCPA-covered debt collector, except for the are seen or heard by a third party. the term excludes private entities that limited purpose of FDCPA section 808(6). See Uncertainty about what constitutes a operate certain bad check enforcement Obduskey v. McCarthy & Holthus LLP, 139 S. Ct. communication may result in debt programs that comply with FDCPA 1029 (2019). collectors repeatedly calling consumers section 818.159 161 Henson, 137 S. Ct. at 1721. The Court had not identified these questions as being presented when it granted certiorari. Id. 165 See the section-by-section analysis of 155 12 U.S.C. 5481(5). See the section-by-section 162 Id. at 1721–22. proposed § 1006.2(d). 166 analysis of proposed § 1006.1(c). 163 See, e.g., Barbato v. Greystone Alliance, LLC, 15 U.S.C. 1692c. 156 15 U.S.C. 1692a(6). 916 F.3d 260 (3d Cir. 2019) (holding that a debt 167 15 U.S.C. 1692d–1692f. 157 Id. buyer whose principal purpose was debt collection 168 15 U.S.C. 1692b. 158 For example, to avoid obsolete language, was an FDCPA-covered debt collector even though 169 15 U.S.C. 1692e(11). See also the section-by- proposed § 1006.2(i) uses the term ‘‘mail’’ instead the debt buyer outsourced its collection activities to section analysis of proposed § 1006.18(e). of ‘‘the mails.’’ third parties). 170 15 U.S.C. 1692c(b). See also the section-by- 159 15 U.S.C. 1692p. 164 15 U.S.C. 1692a(2). section analysis of proposed § 1006.6(d).

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and hanging up rather than risking courts hold that a message limited to Government Accountability Office also liability by leaving messages. certain content—such as the debt have previously noted the need to Courts interpreting the FDCPA’s collector’s name, a statement that the clarify the law regarding debt collectors’ definition of communication and the caller is a debt collector, and a call-back ability to leave voicemails for intersection of FDCPA sections 805(b) number—is not a communication and consumers.177 and 807(11) have reached conflicting thus does not, itself, constitute a To address uncertainty about what results. Some courts hold that a message prohibited third-party disclosure under constitutes an FDCPA communication asking for a return call from a consumer FDCPA section 805(b) or require an and to reduce the need for debt is a communication and that a debt FDCPA section 807(11) disclosure.173 collectors to rely on repeated telephone collector who leaves such a message Many debt collectors state that they calls without leaving messages to violates FDCPA section 805(b)’s err on the side of caution and make establish contact with consumers, the prohibition on communicating with repeated telephone calls instead of Bureau proposes § 1006.2(j) to interpret third parties if the message is heard by leaving messages on a consumer’s FDCPA section 803(2) and define a a person other than the consumer.171 voicemail or with a third party who message whose content would not These courts also hold that, because the answers a consumer’s telephone, or ‘‘convey[ ] information regarding a debt message is a communication with the sending text messages.174 Such repeated directly or indirectly to any person.’’ consumer, it must include a statement telephone calls may frustrate many Specifically, proposed § 1006.2(j) would pursuant to FDCPA section 807(11) that consumers. Indeed, consumers often provide that a limited-content message the caller is attempting to collect a debt, complain to the Bureau about the means a message for a consumer that which further increases the likelihood number of collection calls they receive includes all of the content described in that a third party hearing the message and, to a lesser degree, about debt § 1006.2(j)(1), and that may include any would know that the message relates to collectors’ reluctance to leave of the content described in debt collection.172 Conversely, other voicemails.175 In comments to the § 1006.2(j)(2), but does not include other Bureau’s ANPRM and in feedback content. As discussed in the section-by- 171 See, e.g., Cordes v. Frederick J. Hanna & during the SBREFA process, many debt section analysis of proposed § 1006.2(b) Assocs., P.C., 789 F. Supp. 2d 1173, 1177 (D. Minn. collectors stated that they would place and (d), a limited-content message 2011) (holding that debt collector violated FDCPA fewer telephone calls if they were would not be a communication, as section 805(b) by leaving voicemail messages that defined in § 1006.2(d), but would be an disclosed that the caller was a debt collector); confident that leaving voicemails or Marisco v. NCO Fin. Sys., Inc., 946 F. Supp. 2d 287, other messages for consumers would not attempt to communicate, as defined in 289, 291–96 (E.D.N.Y. 2013) (holding that consumer expose them to risk of liability under § 1006.2(b). stated a claim for a violation of FDCPA 805(b) the FDCPA.176 The FTC and the U.S. Under the proposal, a debt collector where debt collector’s voicemail message was who leaves a limited-content message overheard by a third party and stated, in part, ‘‘This is an important message from NCO Financial messages are ‘communications’ subjecting for a consumer would not have Systems, Inc. The law requires that we notify that defendant to the provisions of § 1692e(11), it also communicated with the consumer or this is a debt collection company. This is an attempt appears that defendant has violated § 1692e(11) any other person through that message. because the messages do not convey the to collect a debt and any information obtained will In turn, because FDCPA sections 805(b) be used for that purpose. This is an attempt to information required by § 1692e(11), in particular, collect a debt.’’); Fed. Trade Comm’n v. Check that the messages were from a debt collector.’’). and 807(11) both apply only to Enforcement, No. CIV.A. 03–2115 (JWB), 2005 WL 173 See, e.g., Zortman v. J.C. Christensen & communications as defined by the 1677480, at *8 (D.N.J. July 18, 2005) (‘‘[T]he record Assocs., Inc., 870 F. Supp. 2d 694, 701, 707–08 (D. FDCPA, the requirements described in indicates that defendants left messages on home Minn. 2012) (holding that debt collector did not those sections would not apply to the violate FDCPA section 805(b) by leaving a answering machines, which were overheard by limited-content message. Accordingly, a family members and other third parties, to obtain voicemail message that stated, ‘‘We have an payments from alleged indebted consumers. Thus, important message from J.C. Christensen & limited-content message would not be defendants have . . . engaged in prohibited Associates. This is a call from a debt collector. required to include a disclosure communications with third parties in violation of Please call 866–319–8619.’’); Zweigenhaft v. pursuant to FDCPA section 807(11) (as Receivables Performance Mgmt., LLC, No. 14 CV Section 805 of the FDCPA.’’), aff’d sub nom. Fed. implemented by proposed § 1006.18(e)), Trade Comm’n v. Check Investors, Inc., 502 F.3d 01074 RJD JMA, 2014 WL 6085912, at *1 (E.D.N.Y. 159 (3d Cir. 2007); see also Foti v. NCO Fin. Sys., Nov. 13, 2014) (similar); Biggs v. Credit Collections, and a debt collector would not risk Inc., 424 F. Supp. 2d 643, 655–56 (S.D.N.Y. 2006) Inc., No. CIV–07–0053–F, 2007 WL 4034997, at *4 violating FDCPA section 805(b) (as (‘‘Defendant’s voicemail message, while devoid of (W.D. Okla. Nov. 15, 2007) (‘‘Words matter—in this instance, the words of the voice mails and the any specific information about any particular debt, (noting that debt collectors believe that recent case words of the statutory definition of a clearly provided some information, even if law presents a dilemma in which a debt collector’s ‘communication.’ The transcript of the voice mail indirectly, to the intended recipient of the message. voicemail for a consumer may not be able to comply messages demonstrates that the voice mails Specifically, the message advised the debtor that with both FDCPA sections 805(b) and 807(11)); Fed. ‘convey[ed]’ no ‘information regarding a debt.’ No the matter required immediate attention, and Trade Comm’n, Collecting Consumer Debts: The amount of liberal construction can broaden the provided a specific number to call to discuss the Challenges of Change, at 36 n.228 (Feb. 2009), statutory language to encompass the words matter. Given that the obvious purpose of the https://www.ftc.gov/sites/default/files/documents/ recorded in these voice mails.’’); see also Consent message was to provide the debtor with enough reports/collecting-consumer-debts-challenges- Order at ¶ IV.A., Fed. Trade Comm’n v. Expert information to entice a return call, it is difficult to change-federal-trade-commission-workshop-report/ Global Solutions, Inc., No. 3:13–cv–02611–M (N.D. imagine how the voicemail message is not a dcwr.pdf (hereinafter FTC Modernization Report) Tex. July 16, 2013), https://www.ftc.gov/sites/ communication under the FDCPA.’’). (summarizing industry members’ comments that 172 Foti, 424 F. Supp. 2d at 657–58 (‘‘[A] narrow default/files/documents/cases/2013/07/ conflicting case law on debt collectors’ ability to reading of the term ‘communication’ to exclude 130709ncoorder.pdf (enjoining defendant debt communicate by newer forms of technology deters instances such as the present case where no specific collector from leaving recorded messages in which debt collectors from using such technologies, information about a debt is explicitly conveyed defendant states both the debtor’s name and that the including leaving voicemails); id. at 47–49 (noting could create a significant loophole in the FDCPA, caller is a debt collector, unless the recipient’s industry commenters’ concerns about their ability allowing debtors to circumvent the § 1692e(11) voicemail greeting identifies only the debtor’s first to leave voicemails that comply with the FDCPA disclosure requirement, and other provisions of the and last name or defendant has already spoken with and recommending that the law regarding FDCPA that have a threshold ‘communication’ the debtor at the called number). voicemails be clarified). 174 requirement, merely by not conveying specific See, e.g., Small Business Review Panel Report, 177 See FTC Modernization Report, supra note information about the debt .... Such a reading is supra note 57, at 25–26. 176, at 49–50; U.S. Gov’t Accountability. Off., inconsistent with Congress’s intent to protect 175 See the section-by-section analysis of GAO–09–748, Credit Cards: Fair Debt Collection consumers from ‘serious and widespread’ debt proposed § 1006.14(b)(2). Practices Act Could Better Reflect the Evolving Debt collection abuses.’’); Hosseinzadeh v. M.R.S. 176 See Bureau of Consumer Fin. Prot., Advanced Collection Marketplace and Use of Technology, at Assocs., Inc., 387 F. Supp. 2d 1104, 1116 (C.D. Cal. Notice of Proposed Rulemaking, Debt Collection 47–48, 52 (Sept. 2009), http://www.gao.gov/assets/ 2005) (‘‘Because it appears that defendant’s (Regulation F), 78 FR 67848, 67867 (Nov. 12, 2013) 300/295588.pdf.

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implemented by proposed § 1006.6(d)) if that includes the content specified in well as a telephone number that the someone other than the consumer heard § 1006.2(j) is not a limited-content consumer could use to reply to the debt or received the message. message. The comment further explains collector; a limited-content message The proposal would define a limited- that, if a message includes any other could not contain any content that is not content message as, in part, a message content and such other content directly described in proposed § 1006.2(j)(1) or ‘‘for a consumer.’’ As a result, any or indirectly conveys any information (2), and debt collectors would be message left for a person other than a about a debt, including but not limited prohibited from including false or consumer would not be a limited- to any information that indicates that misleading statements about the caller’s content message. FDCPA section the message relates to the collection of identity or the purpose of the call. As a 807(11)’s requirement that a debt a debt, the message would be a result, the message should not mislead collector disclose that the purpose of a communication, as defined in proposed a consumer about the identity of the communication is to collect a debt and § 1006.2(d). Proposed comment 2(j)–2 caller and the consumer could use the that any information obtained will be provides examples of limited-content contact information to call a particular used for that purpose applies only when messages. employee of a debt collector. Upon a debt collector is communicating ‘‘with Proposed comment 2(j)–3 provides receiving such a call and engaging in a the consumer.’’ Concerns about the examples of ways in which a debt communication, the debt collector intersection of FDCPA sections 805(b) collector could transmit a limited- would be required by FDCPA section and 807(11) are thus not as relevant content message to a consumer, such as 807(11) to disclose to the consumer that when a debt collector contacts a person by leaving a voicemail at the consumer’s the communication is from a debt other than a consumer. In addition, telephone number, sending a text collector. This sequence of events—a because debt collectors generally are message to the consumer’s mobile limited-content message followed by a prohibited from communicating with a telephone number, or leaving a message communication in which the debt person other than the consumer, they orally with a third party who answers collector provides the FDCPA section generally have no need to contact third the consumer’s home or mobile 807(11) disclosures—may benefit parties, and, when such telephone number. Proposed comment consumers more than the status quo, communications are permitted for 2(j)–3 notes, however, that leaving a under which many debt collectors place obtaining location information about a limited-content message would be repeated telephone calls without leaving consumer, FDCPA section 804 already subject to other FDCPA provisions, any message or any contact information provides a comprehensive disclosure including the prohibitions on harassing that the consumer can use to reply to regime. Therefore, it may not be or abusive conduct and unfair or the debt collector. necessary to specify the content of a unconscionable practices in FDCPA The interpretation in proposed message that does not constitute a sections 806 and 808, respectively.178 comment 2(j)–4 would apply only when communication if left by a debt collector As the section-by-section analyses of a debt collector places a telephone call for a person other than the consumer. proposed §§ 1006.2(b) and (d), 1006.6(b) and leaves only a limited-content The proposal would enable a debt and (c), 1006.14(h), and 1006.22(f)(3) message for a consumer. It would not collector to transmit a limited-content and (4) explain in more detail, extend to any other message a debt message by voicemail, by text message, consumers may be harassed or collector leaves for a consumer or other or orally. Debt collectors may be most otherwise injured not only by person, as such messages might not likely to use these methods to send communications, but also by attempts to include all of the content that must be limited-content messages, and these communicate, including when a debt included in a limited-content message, methods may be most likely to generate collector conveys limited-content might include content that is not a response from a consumer. The messages. Accordingly, those sections described in proposed § 1006.2(j)(1) or proposal would not enable a debt propose certain restrictions on when (2) and that conveys a misleading collector to transmit a limited-content and how a debt collector may attempt to impression about the caller’s identity or message by email because, as discussed communicate with a person, including purpose of the call, or might constitute below, email messages typically require by leaving a limited-content message. a communication that is subject to additional information (e.g., a sender’s Proposed comment 2(j)–4 would FDCPA section 807(11) or that email address) that may in some clarify that a debt collector who places otherwise would need to include circumstances convey information about a telephone call and leaves only a different disclosures about the caller’s a debt, and consumers may be unlikely limited-content message for a consumer identity and purpose in order to satisfy to read or respond to an email does not, with respect to that telephone FDCPA section 806(6). Similarly, the containing solely the information call, violate FDCPA section 806(6)’s rationale in proposed comment 2(j)–4 included in a limited-content message prohibition on the placement of would not extend to a telephone call (e.g., consumers may disregard such an telephone calls without meaningful that is a live conversation with the email as spam or a security risk). In disclosure of the caller’s identity. Under consumer because, again, the content of addition, other aspects of the proposed the proposed interpretation, the content such a conversation would be different rule (e.g., the procedures described in described in proposed § 1006.2(j)(1) than the content of a limited-content proposed § 1006.6(d)(3) for emails and would meaningfully disclose the caller’s message. text messages) may encourage debt identity. The proposed interpretation The Bureau requests comment on collectors to send debt collection would be limited to the narrow whether the proposal to define a communications to consumers by email. circumstance of a debt collector limited-content message that a debt Accordingly, a rule that would enable providing only a limited-content collector could leave for a consumer debt collectors to send limited-content message to a consumer. As described without risking a violation of FDCPA messages by email might not sufficiently below, proposed § 1006.2(j)(1) would sections 805(b) or 807(11) will enable protect consumers’ privacy interests or require a limited-content message to debt collectors to establish contact with be of significant benefit to debt include the name of a natural person consumers while reducing the number collectors. whom the consumer could contact as of telephone calls that consumers Proposed comment 2(j)–1 explains receive. The Bureau further requests that any message other than a message 178 15 U.S.C. 1692d, 1692f. comment on the costs and benefits of

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permitting debt collectors to leave providing limited-content messages by consumer can speak to, should enable limited-content messages for consumers, media other than telephone, and of any the consumer to reply to the message including on whether those costs and proposal that would require debt and interact with a debt collector’s benefits differ depending on whether a collectors to include a toll-free callback employee who has access to information debt collector leaves a limited-content telephone number in a limited-content about the debt in collection. In the case message: (1) In a voicemail message on message (as the proposal then under of a limited-content message sent by text a home, mobile, or work telephone; (2) consideration would have).180 Proposed message, a disclosure explaining how in a live conversation with a third party § 1006.2(j) and the requests for comment the consumer can stop receiving such who answers the consumer’s home, in this section are consistent with the messages may help prevent harassment, mobile, or work telephone number; or feedback received during the SBREFA as further explained in the section-by- (3) by text message. The Bureau requests process, which supported a definition of section analysis of proposed § 1006.6(e). comment on whether there are other limited-content message, and the Panel In addition, the Bureau understands that communication media, such as email, Report’s recommendations. the content required by § 1006.2(j)(1) by which debt collectors should be 2(j)(1) Required Content often is included in a voicemail or other permitted to leave limited-content message for a person in a wide variety messages, including in particular on the Proposed § 1006.2(j)(1) would require of non-debt collection circumstances, so advantages and disadvantages of the that limited-content messages include a third party hearing or observing the proposed approach, which would not certain content to ensure that they message may not infer from its content permit debt collectors to send limited- facilitate contact between debt that the consumer owes a debt. Under content messages by email. In addition, collectors and consumers. In particular, this proposed interpretation, none of the the Bureau requests comment on proposed § 1006.2(j)(1) provides that a items in the limited-content message whether a debt collector should be limited-content message must include themselves individually or collectively permitted to leave limited-content all of the following: The consumer’s convey that the consumer owes a debt messages with third parties only in name, a request that the consumer reply or other information regarding a debt. certain circumstances (e.g., if a third to the message, the name or names of one or more natural persons whom the Proposed comment 2(j)(1)(iv)–1 notes party answers the consumer’s telephone that a limited-content message must number) and whether a debt collector consumer can contact to reply to the include a telephone number that the should be able to include additional debt collector,181 a telephone number consumer can use to reply to the debt content in a limited-content message if that the consumer can use to reply to collector. The proposed comment leaving it with a third party (e.g., a the debt collector,182 and, if delivered explains that a voicemail or a text request that the third party take a electronically, a disclosure explaining message that spells out, rather than message). how the consumer can stop receiving The Bureau also requests comment on messages through that medium.183 The enumerates numerically, a vanity the proposed commentary. In particular, consumer’s name and a request that the telephone number is not a limited- the Bureau requests comment on consumer reply to the message may help content message. Spelling out a vanity whether proposed comment 2(j)–4 to ensure that the correct person telephone number could, in some properly interprets the requirement to receives the message and is prompted to circumstances, convey information ‘‘meaningful[ly] disclose the caller’s respond. Including in the message a about a debt or otherwise disclose that identity’’ as satisfied when a debt telephone number that the consumer the message is from a debt collector. The collector places a telephone call and can use to reply to the message, as well Bureau considered permitting such leaves only a limited-content message, as the name of at least one person the telephone numbers to be included in and on whether there are other limited-content messages on the disclosures that would satisfy the 180 Id. condition that they do not convey meaningful disclosure requirement of 181 Proposed § 1006.18(f) would clarify that a debt information about a debt, but such a FDCPA section 806(6) without causing collector’s employee does not violate § 1006.18 by condition would require a case-by-case using an assumed name when communicating or analysis to determine if a particular the message to become a attempting to communicate with a person, provided communication (i.e., without conveying that the employee uses the assumed name vanity number conveyed information information about a debt directly or consistently and that the employer can readily about a debt. As a result, permitting the identify any employee who is using an assumed inclusion of a vanity number in any or indirectly to any person). name. See the section-by-section analysis of During the SBREFA process, small proposed § 1006.18(f). all circumstances could undermine the entity representatives overwhelmingly 182 The proposal under consideration during the certainty that the limited-content supported a rule clarifying how and SBREFA process would have required the message definition is designed to when a debt collector may leave a telephone number to be toll-free to the consumer provide and could increase the risk that (e.g., a 1–800 number). See Small Business Review a third party hearing or observing the voicemail or other message for a Panel Outline, supra note 56, at 24. In light of consumer.179 They predicted that a rule feedback from some small entity representatives message could infer that it relates to defining a limited-content message that regarding the potential costs of maintaining a 1–800 debt collection. Similarly, the sender’s is not a communication under the number for the sole purpose of being able to email address could, in some transmit limited-content messages, the proposed circumstances, convey information FDCPA would reduce the number and rule would not require a toll-free telephone number. frequency of collection calls as well as 183 Proposed § 1006.6(e) would require a debt about a debt. In part for that reason, facilitate communications between debt collector who communicates or attempts to proposed § 1002.2(j) would not permit a collectors and consumers. The Small communicate with a consumer electronically in limited-content message to include a connection with the collection of a debt using, sender’s email address and, Business Review Panel Report among other things, a telephone number for text recommended that the Bureau request messages or other electronic-medium address, to consequently, would effectively prohibit comment on the costs and benefits of include in such communication or attempt to sending a limited-content message by any limited-content message proposal, communicate a clear and conspicuous statement email. As discussed, debt collectors also describing one or more ways the consumer can opt may have less of a need to send a including on the costs and benefits of out of further electronic communications or attempts to communicate by the debt collector to limited-content message by email 179 Small Business Review Panel Report, supra that address or telephone number. See the section- because proposed § 1006.6(d)(3) would note 57, at 36. by-section analysis of proposed § 1006.6(e). clarify the procedures that a debt

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collector could maintain to avoid message and reduce the utility of a disclosures.187 For example, under incurring liability for a prohibited third- bright-line definition. Finally, the FDCPA section 805(d), a debt collector party communication by email, thereby Bureau requests comment on the media may communicate not only with the reducing the risk to debt collectors of by which debt collectors anticipate that consumer who owes or allegedly owes sending debt collection communications they would send limited-content the debt, but also with the consumer’s to consumers by email. messages and on whether additional spouse, parent (if the consumer is a minor), guardian, executor, or 2(j)(2) Optional Content clarification is necessary regarding sending limited-content messages by administrator,188 even though debt Proposed § 1006.2(j)(2) would permit media other than telephone. collectors generally are prohibited from a debt collector to include in a limited- communicating in connection with the content message certain content that 2(k) Person collection of a debt with third parties.189 may help prompt a consumer to reply Proposed § 1006.2(k) would define the A debt collector may communicate with but that, unlike the content described in term person to have the meaning set third parties to seek location proposed § 1006.2(j)(1), may not be forth in 1 U.S.C. 1, which provides that, information about consumers, but the necessary to enable the consumer to ‘‘in determining the meaning of any Act debt collector may not state that the reply to the message or to prevent of Congress, unless the context indicates consumer owes any debt.190 harassment. In particular, proposed otherwise,’’ the term person includes Proposed § 1006.6(a) would § 1006.2(j)(2) provides that a limited- ‘‘corporations, companies, associations, implement and interpret FDCPA section content message also may include one firms, partnerships, societies, and joint 805(d) and would define consumer for or more of the following: A salutation, stock companies, as well as purposes of proposed §§ 1006.6 and the date and time of the message, a individuals.’’ 184 The FDCPA does not 1006.14(h). Consistent with proposed generic statement that the message define the term person, and the context § 1006.2(e), which, as described above, relates to an account, and suggested does not appear to indicate that a would interpret consumer to include dates and times for the consumer to meaning other than the meaning in 1 deceased persons, proposed comments reply to the message. The proposed U.S.C. 1 should apply. The term person 6(a)(1)–1 and 6(a)(2)–1 would clarify interpretation would hold that none of is used throughout the FDCPA and the that surviving spouses and parents of these items, individually or collectively, proposed regulation. The Bureau deceased minor consumers, conveys that the consumer owes a debt proposes to define this term to facilitate respectively, are consumers for or other information regarding a debt. compliance, with only minor wording purposes of proposed § 1006.6. Except The Bureau requests comment on all changes from the statute. for these clarifications, and except for aspects of proposed § 1006.2(j), the interpretations discussed in the including on the proposed Subpart B—Rules for FDCPA Debt section-by-section analysis of proposed 185 interpretation that none of the content Collectors § 1006.6(a)(4) and (5), proposed described in proposed § 1006.2(j)(1) and Section 1006.6 Communications in § 1006.6(a) generally mirrors the statute. (2) conveys information regarding a Connection With Debt Collection The section-by-section analysis below debt. The Bureau also requests comment therefore addresses only proposed FDCPA section 805 generally limits on whether the proposal to allow a § 1006.6(a)(4) and (5). limited-content message to include a how debt collectors may communicate generic statement that the message with consumers and third parties when 6(a)(4) 186 relates to an ‘‘account’’ raises a risk that collecting debts. Proposed § 1006.6 Proposed § 1006.6(a)(4) would the message would convey information would implement and interpret FDCPA implement FDCPA section 805(d)’s about a debt to a third party hearing or section 805; it also would interpret definition of the term consumer as observing the message, and whether FDCPA sections 806 and 808 to provide related to executors and administrators. there is an alternative statement that certain additional protections regarding Proposed § 1006.6(a)(4) generally would better minimize such risk. For debt collection communications. restates the statute and its commentary example, the Bureau considered 6(a) Definition also interprets FDCPA section 805(d) to proposing permitting a limited-content include the personal representative of message to state that the message relates FDCPA section 805(d) provides that, the deceased consumer’s estate. to a ‘‘personal,’’ ‘‘business,’’ for purposes of section 805, the term As discussed above, FDCPA section ‘‘confidential,’’ ‘‘private,’’ ‘‘important,’’ consumer includes certain individuals 805 generally limits the individuals or ‘‘time-sensitive’’ matter, but each of other than the person obligated or with whom a debt collector may discuss these might, in at least certain contexts, allegedly obligated to pay the debt. the debt to those individuals identified be misleading or confusing to a Accordingly, the protections in FDCPA as consumers in FDCPA section 805(d). consumer. The Bureau further requests section 805 apply to these individuals If the consumer who owes or allegedly comment on whether there is sufficient and the person obligated or allegedly owes the debt is deceased, the information required or permitted in the obligated to pay the debt. Also, debt consumer’s family members may find limited-content message to prompt collectors may communicate with these that debt collectors are reluctant to consumers to make a return call or text individuals in connection with the communicate with the individuals to the included telephone number and, collection of any debt without violating attempting to resolve any outstanding if not, what additional information the FDCPA’s prohibition on third-party debts of the decedent unless they are could be included in the message that among the individuals identified in 184 See 1 U.S.C. 1. FDCPA section 805(d) with whom a would not cause the message to 185 Consistent with its proposal to amend debt collector may generally discuss the constitute a communication. The Regulation F to prescribe Federal rules governing Bureau also requests comment on the activities of debt collectors, the Bureau proposes whether including a sender or recipient to move existing §§ 1006.3 through 1006.8 regarding 187 15 U.S.C. 1692c(d). email address or a vanity telephone applications for State exemptions from the FDCPA 188 Id. to appendix A of the regulation. See the section-by- 189 number in a limited-content message See 15 U.S.C. 1692c(b). section analysis of proposed § 1006.108 and 190 See 15 U.S.C. 1692b. For additional discussion could convey information about a debt appendix A. of these provisions, see the section-by-section to a third party hearing or observing the 186 15 U.S.C. 1692c. analyses of proposed §§ 1006.6(d) and 1006.10(c).

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debt, i.e., individuals with the title of take no enforcement action against debt proposed comment 10(b)(2)–1.195 The executor or administrator under State collectors who communicated about a Bureau requests comment on the scope law. This reluctance may delay the decedent’s debts with an individual of the definition of personal prompt resolution of estates. who has the authority to pay the debts representative in proposed comment The Bureau understands that most out of the assets of the deceased 6(a)(4)–1 and on any ambiguity in the States currently provide procedures for consumer’s estate.192 illustrative descriptions of personal resolving estates that are faster and less For these reasons, and pursuant to its representatives. The Bureau specifically expensive than the formal probate authority under FDCPA section 814(d) requests comment on experiences under process that may have been more to prescribe rules with respect to the the FTC’s Policy Statement on Decedent common when Congress enacted the collection of debts by debt collectors, Debt. FDCPA more than 40 years ago. Under the Bureau proposes § 1006.6(a)(4). The In its Small Business Review Panel these expedited State procedures, an Bureau requests comment on proposed Outline, the Bureau stated that it was individual with the authority to pay the § 1006.6(a)(4). considering limiting the definition of decedent’s debts out of the assets of the Proposed comment 6(a)(4)–1 would personal representative to individuals estate may lack the particular title of clarify that the terms executor or recognized under State probate or estate executor or administrator under State administrator include the personal laws.196 However, the Bureau received law. The Bureau proposes to interpret representative of the consumer’s estate, feedback from industry indicating that the terms executor and administrator as and that a personal representative of the many State laws define personal used in the FDCPA to include personal consumer’s estate is any person who is representative to mean an executor or representatives, which is defined in authorized to act on behalf of the administrator. In these States, the proposed comment 6(a)(4)–1 as any deceased consumer’s estate. The definition of personal representative person who is authorized to act on proposed comment explains that under consideration in the Small behalf of the deceased consumer’s persons with such authority may Business Review Panel Outline would estate. These terms are not defined in include personal representatives under have restricted communication to the FDCPA, and the FDCPA does not the informal probate and summary formally appointed executors or indicate that they are limited to persons administration procedures of many administrators, which would not have who formally have the title of executor States, persons appointed as universal alleviated the harms the Bureau or administrator under State law. successors, persons who sign intended to address. Proposed comment Rather, it is ambiguous whether the declarations or affidavits to effectuate 6(a)(4)–1, which provides that a terms executor and administrator the transfer of estate assets, and persons personal representative is any person include personal representatives of a who dispose of the deceased consumer’s who is authorized to act on behalf of the consumer’s estate, as these persons assets extrajudicially. deceased consumer’s estate, is designed serve the functions of executors or The term personal representative in to address this post-SBREFA feedback. administrators but do not formally have comment 6(a)(4)–1 includes the same 6(a)(5) that title. Accordingly, the Bureau individuals as those recognized by the proposes to interpret executor and FTC’s Policy Statement on Decedent Proposed § 1006.6(a)(5) would administrator in a manner that is Debt.193 As the FTC has noted, some of interpret FDCPA section 805(d)’s flexible enough to recognize the the terms used to describe these definition of the term consumer to evolution in estate resolution processes individuals come from the Uniform include confirmed successors in over time, including the use of a Probate Code.194 However, proposed interest. Under Regulations X and Z, a personal representative to be the comment 6(a)(4)–1 adapts the general successor in interest is a person to executor or administrator of the description of the term personal whom a borrower transfers an decedent’s estate.191 ownership interest either in a property The ability to resolve the debts of representative from Regulation Z, 12 CFR 1026.11(c), comment 11(c)–1 securing a mortgage loan subject to estates outside of the formal probate subpart C of Regulation X, or in a process through informal processes may (persons ‘‘authorized to act on behalf of the estate’’) rather than the general dwelling securing a closed-end benefit consumers. If a debt collector consumer credit transaction under does not communicate with an estate description found in the FTC’s Policy Statement (persons with the ‘‘authority Regulation Z, provided that the transfer because no executor or administrator is: (1) A transfer by devise, descent, or exists, the debt collector might force the to pay the decedent’s debts from the assets of the decedent’s estate.’’). The operation of law on the death of a joint estate into probate, which could tenant or tenant by the entirety; (2) a substantially burden the resources of the Bureau believes that this change is non- substantive. The description of the term transfer to a relative resulting from the estate and the deceased consumer’s death of a borrower; (3) a transfer where heirs or beneficiaries. These burdens personal representative also reflects the language that a debt collector may use the spouse or children of the borrower may be particularly acute for small become an owner of the property; (4) a estates and for individuals of limited to acquire location information about the executor, administrator, or personal transfer resulting from a decree of a means. Probate also adds costs and dissolution of marriage, legal separation delays for debt collectors. In its Policy representative of the deceased agreement, or from an incidental Statement on Decedent Debt, the FTC consumer’s estate, as explained in property settlement agreement, by voiced similar concerns about 192 which the spouse of the borrower unnecessarily pushing estates into Statement of Policy Regarding Communications in Connection with the Collection becomes an owner of the property; or (5) probate. In light of such concerns, the of Decedents’ Debts, 76 FR 44915, 44919 (July 27, a transfer into an inter vivos trust in FTC indicated that the agency would 2011) (hereinafter FTC Policy Statement on which the borrower is and remains a Decedent Debt). beneficiary and which does not relate to 191 Additionally, the word ‘‘includes’’ in FDCPA 193 Id. section 805(d) indicates that section 805(d) is an 194 Statement of Policy Regarding exemplary, rather than an exhaustive, list of the Communications in Connection with Collection of 195 See the section-by-section analysis of categories of individuals who are consumers for a Decedent Debt, 75 FR 62389, 62391–92 (Oct. 8, proposed § 1006.10(b). purposes of FDCPA section 805. See 15 U.S.C. 2010) (describing the processes of informal probate 196 Small Business Review Panel Outline, supra 1692c(d). and administration and universal succession). note 56, at 32–33.

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a transfer of rights of occupancy in the 6(b) Communications With a to ring repeatedly or continuously with property.197 A confirmed successor in Consumer—In General intent to annoy, abuse, or harass any interest, in turn, means a successor in FDCPA section 805(a) restricts how a person at the called number is an interest once a servicer has confirmed debt collector may communicate with a example of conduct the natural the successor in interest’s identity and consumer in connection with the consequence of which is to harass, ownership interest in the relevant collection of any debt and provides oppress, or abuse. FDCPA section 806(5) property type.198 certain exceptions to these thus recognizes that telephone calls may As the Bureau explained in its prohibitions.202 The Bureau generally have the natural consequence of Amendments to the 2013 Mortgage proposes § 1006.6(b) to implement and harassment, oppression, or abuse even if Rules under the Real Estate Settlement interpret FDCPA section 805(a) to no conversation ensues. A consumer Procedures Act (Regulation X) and the specify circumstances in which a debt who hears a telephone ringing at an Truth in Lending Act (Regulation Z) collector is prohibited from inconvenient time or place but who (2016 Servicing Final Rule) 199 and its communicating with a consumer in does not answer it may experience the concurrently issued FDCPA interpretive connection with the collection of any natural consequence of harassment from rule (2016 FDCPA Interpretive Rule),200 debt. In addition, the Bureau proposes the telephone ringing in much the same the word ‘‘includes’’ in FDCPA section § 1006.6(b) to interpret FDCPA sections way as a consumer who answers and 805(d) indicates that section 805(d) is an 806 and 808 to prohibit a debt collector speaks to the debt collector on the exemplary, rather than an exhaustive, from attempting to communicate with a telephone. For this reason, the Bureau list of the categories of individuals who consumer if FDCPA section 805(a) proposes to interpret FDCPA section are consumers for purposes of FDCPA would prohibit the debt collector from 806 as prohibiting a debt collector from section 805. The Bureau explained that communicating with the consumer. The attempting to communicate at times FDCPA section 805 recognizes the Bureau proposes § 1006.6(b) pursuant to when and places where a importance of permitting debt collectors its authority under FDCPA section communication would be prohibited as to communicate with a narrow category 814(d) to prescribe rules with respect to inconvenient. of persons other than the individual the collection of debts by debt FDCPA section 808 prohibits a debt who owes or allegedly owes the debt collectors. collector from using unfair or who, by virtue of their relationship to unconscionable means to collect or Attempts To Communicate that individual, may need to attempt to collect any debt.204 A debt communicate with the debt collector in The Bureau proposes to clarify in collector who places a telephone call connection with the collection of the proposed § 1006.6(b) that a debt without the intent to speak to any debt. The Bureau further explained that, collector is prohibited from attempting person who answers the telephone (thus given their relationship to the to communicate with a consumer in the avoiding a communication for purposes individual who owes or allegedly owes same circumstances in which FDCPA of FDCPA section 805) may be causing the debt, confirmed successors in section 805(a) prohibits the debt injury to persons at the called number interest are—like the narrow categories collector from communicating with the without any legitimate purpose, and of persons enumerated in FDCPA consumer. As discussed, proposed thus may be engaging in a prohibited section 805(d)—the type of individuals § 1006.2(b) would define an attempt to unfair or unconscionable act under with whom a debt collector needs to communicate to mean any attempt by a FDCPA section 808. Additionally, communicate about the debt. The debt collector to initiate contact with section 808 targets practices that Bureau therefore interpreted the term any person, including by soliciting a pressure a consumer to pay debts the consumer for purposes of FDCPA response from such person, regardless of consumer might not otherwise have section 805 to include a confirmed whether the attempt, if successful, paid. A debt collector’s attempts to successor in interest as that term is would be a communication as defined communicate at a time when or a place defined in Regulation X, 12 CFR in proposed § 1006.2(d). For example, a where a communication would be 1024.31, and Regulation Z, 12 CFR debt collector who places a telephone prohibited could pressure the consumer 1026.2(a)(27)(ii).201 call to the consumer that goes to pay the debt to avoid further Consistent with that interpretation, unanswered has attempted to intrusions on the consumer’s privacy, and pursuant to its authority under communicate with the consumer. The and the Bureau interprets such conduct FDCPA section 814(d) to write rules phrase attempt to communicate thus as unfair or unconscionable under with respect to the collection of debts by appears throughout proposed FDCPA section 808. The Bureau debt collectors, the Bureau proposes to § 1006.6(b)(1) through (4). requests comment on its proposed The Bureau proposes to limit attempts interpret FDCPA section 805(d) in interpretations regarding attempts to to communicate in § 1006.6(b) based on § 1006.6(a)(5) to provide that a communicate. confirmed successor in interest, as interpretations of FDCPA sections 806 defined in Regulations X and Z, is a and 808. FDCPA section 806 prohibits a 6(b)(1) Prohibitions Regarding Unusual consumer for purposes of proposed debt collector from engaging in any or Inconvenient Times or Places conduct the natural consequence of § 1006.6. The Bureau requests comment FDCPA section 805(a)(1) prohibits a which is to harass, oppress, or abuse on proposed § 1006.6(a)(5), including on debt collector from, among other things, any person in connection with the the benefits and risks of communicating with a consumer in collection of a debt.203 FDCPA section communications about debts between connection with the collection of any 806(5) provides that causing a telephone debt collectors and confirmed debt at times or places that the debt successors in interest. 202 15 U.S.C. 1692c(a). Specifically, FDCPA collector knows or should know are section 805(a)(1) prohibits certain communications inconvenient to the consumer, subject to 197 12 CFR 1024.31; 1026.2(a)(27)(i). at unusual or inconvenient times and places, certain exceptions. As discussed in the 198 12 CFR 1024.31; 1026.2(a)(27)(ii). section 805(a)(2) prohibits certain communications section-by-section analysis below, 199 81 FR 72160 (Oct. 19, 2016). with a consumer represented by an attorney, and 200 81 FR 71977 (Oct. 19, 2016). section 805(a)(3) prohibits certain communications proposed § 1006.6(b)(1)(i) and (ii) 201 Id. at 71979; 81 FR 72160, 72181 (Oct. 19, at a consumer’s place of employment. 2016). 203 15 U.S.C. 1692d. 204 15 U.S.C. 1692f.

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generally would implement and examples and illustrations would be Proposed comment 6(b)(1)(i)–1 would interpret FDCPA section 805(a)(1). instructive. The Bureau specifically clarify that, for purposes of determining Proposed comment 6(b)(1)–1 provides requests comment on whether the time of an electronic communication general interpretations and illustrations additional clarification is needed under § 1006.6(b)(1)(i), an electronic of the time and place restrictions in regarding the delivery of legally communication occurs when the debt proposed § 1006.6(b)(1). Proposed required communications at a time or collector sends it, not, for example, comment 6(b)(1)–1 illustrates how a place that a debt collector knows or when the consumer receives or views it. debt collector knows or should know should know is inconvenient to a Ambiguity exists about whether, for that a time or place is inconvenient to particular consumer. The Bureau purposes of FDCPA section 805(a)(1), an a consumer. The proposed comment requests comment on whether to require electronic communication occurs at the explains that a debt collector may know, a debt collector to ask a consumer at the time of sending or at the time of receipt or should know, that a time or place is outset of all debt collection or viewing. A rule that clarifies that an inconvenient to a consumer if the communications whether the time or electronic communication occurs when consumer uses the word ‘‘inconvenient’’ place is convenient to the consumer. the debt collector sends it makes it to notify the debt collector. The The Bureau also requests comment on possible for a debt collector to comply. proposed comment also explains that, what effect a consumer-initiated A debt collector can control the time at even if the consumer does not use the communication should have on the which it chooses to send word ‘‘inconvenient’’ to notify the debt times and places that a debt collector communications, whereas it often collector, the debt collector nevertheless knows or should know are inconvenient would be impossible for a debt collector may know, or should know, based on to the consumer. to determine when a consumer receives the facts and circumstances, that a time 6(b)(1)(i) or views an electronic communication. or place is inconvenient. The Bureau Accordingly, under proposed proposes this interpretation because FDCPA section 805(a)(1) provides, in § 1006.6(b)(1)(i), a debt collector would FDCPA section 805(a)(1) refers to what relevant part, that a debt collector may be prohibited from sending an is ‘‘inconvenient to the consumer,’’ not communicate with a consumer in electronic communication at a time that without specifying that a consumer connection with the collection of any the debt collector knows or should must designate communications as debt at any unusual time, or at a time know is inconvenient to the consumer. inconvenient using the word that the debt collector knows or should The Bureau requests comment on ‘‘inconvenient.’’ The Bureau’s proposed know is inconvenient to the 206 proposed comment 6(b)(1)(i)–1. interpretation also is consistent with consumer. FDCPA section 805(a)(1) Proposed comment 6(b)(1)(i)–2 would some case law holding that a consumer specifies that, in the absence of provide a safe harbor and illustrate how need not use the precise language of the knowledge of circumstances to the a debt collector could comply with statute to invoke the protections of contrary, a debt collector shall assume proposed § 1006.6(b)(1)(i) and FDCPA 205 FDCPA section 805. that the convenient time for section 805(a)(1) if the debt collector has Proposed comment 6(b)(1)–1 would communicating with a consumer is after conflicting or ambiguous information further clarify that, if the consumer 8:00 a.m. and before 9:00 p.m., local regarding a consumer’s location, such as initiates a communication with the debt time at the consumer’s location. telephone numbers with area codes collector at a time or from a place that Proposed § 1006.6(b)(1)(i) would located in different time zones or a the consumer previously designated as implement and interpret FDCPA section telephone number with an area code inconvenient, the debt collector may 805(a)(1)’s prohibitions regarding and a physical address that are respond once to that consumer-initiated unusual or inconvenient times.207 The inconsistent. Proposed comment communication at that time or place. Bureau interprets the language in 6(b)(1)(i)–2 would clarify that, if a debt Because the consumer initiated the FDCPA section 805(a)(1) that a debt collector is unable to determine a communication, the debt collector collector shall assume that the consumer’s location, then, in the neither knows nor should know that convenient time for communicating absence of knowledge of circumstances responding to that specific with a consumer is after 8:00 a.m. and to the contrary, the debt collector would communication is inconvenient to the before 9:00 p.m. to mean that a time comply with the prohibition in consumer. The debt collector is before 8:00 a.m. and after 9:00 p.m. local § 1006.6(b)(1)(i) on communicating at permitted to respond once. After that time at the consumer’s location is inconvenient times if the debt collector response, the debt collector must not inconvenient, unless the debt collector communicated or attempted to communicate or attempt to has knowledge of circumstances to the communicate with the consumer at a communicate further with the consumer contrary. The Bureau requests comment time that would be convenient in all of at that time or place until the consumer on proposed § 1006.6(b)(1)(i).208 the locations at which the debt conveys that the time or place is no collector’s information indicated the longer inconvenient. Proposed comment 206 15 U.S.C. 1692c(a)(1). consumer might be located. A debt 6(b)(1)–1 also provides four specific 207 As discussed in the section-by-section analysis collector with such conflicting examples of when a debt collector of proposed § 1006.6(b), proposed § 1006.6(b)(1)(i) also would interpret FDCPA sections 806 and 808 information may know or should know knows or should know that the time or to prohibit a debt collector from attempting to that it is inconvenient to contact a place of a communication is communicate with a consumer at a time when consumer at a time outside of the inconvenient to a consumer. FDCPA section 805(a)(1) would prohibit the debt presumptively convenient times (8:00 The Bureau requests comment on collector from communicating with the consumer. 208 In the Small Business Review Panel Outline, a.m. to 9:00 p.m.) in any of the time proposed § 1006.6(b)(1) and on the Bureau described a proposal under zones in which the consumer might be comment 6(b)(1)–1, including on consideration to define the 30-day period after the located. As indicated by some industry whether other general clarifications death of a consumer as an inconvenient time for regarding inconvenient times or places communicating about the deceased consumer’s debt with surviving spouses or parents (in the case of 56, at 33. The proposed rule does not include such would be useful or whether other deceased minor consumers) or persons acting as a waiting period. The Bureau requests evidence of executors, administrators, or personal specific consumer harm and benefits from debt 205 See, e.g., Horkey v. J.V.D.B. & Assocs., Inc., representatives of a deceased consumer’s estate. See collection communications occurring within 30 333 F.3d 769, 773 (7th Cir. 2003). Small Business Review Panel Outline, supra note days after a consumer’s death.

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commenters in response to the Bureau’s FDCPA section 805(a)(3) prohibits a 6(b)(4)(i) ANPRM, some debt collectors already debt collector from communicating with Proposed § 1006.6(b)(4)(i) would have adopted this proposed approach a consumer in connection with the implement the text in FDCPA section for determining the convenient times to collection of any debt at the consumer’s 805(a) that, in relevant part, sets forth contact a consumer if the debt collector place of employment if the debt the exception for the prior consent of has conflicting location information for collector knows or has reason to know the consumer given directly to the debt the consumer. Proposed comment that the consumer’s employer prohibits collector.217 Proposed § 1006.6(b)(4)(i) 6(b)(1)(i)–2 also provides two examples the consumer from receiving such generally mirrors the statute, except that 214 of how a debt collector could comply communication. Proposed proposed § 1006.6(b)(4)(i) would with proposed § 1006.6(b)(1)(i). The § 1006.6(b)(3) would implement this interpret FDCPA section 805(a) to Bureau requests comment on proposed prohibition and generally restates the require that the consumer’s prior 215 comment 6(b)(1)(i)–2. statute. consent must be given during a Even under circumstances where 6(b)(1)(ii) communication that would not violate proposed § 1006.6(b)(3) may not apply proposed § 1006.6(b)(1) through (3), i.e., FDCPA section 805(a)(1) provides, in because the debt collector does not the prohibitions on communications relevant part, that a debt collector may know or have reason to know that a with a consumer at unusual or not communicate with a consumer in consumer’s employer prohibits the inconvenient times or places, connection with the collection of any consumer from receiving communications with a consumer debt at any unusual place, or at a place communications in connection with the represented by an attorney, and that the debt collector knows or should collection of a debt at the consumer’s communications at the consumer’s know is inconvenient to the place of employment, proposed 209 place of employment. For example, consumer. Proposed § 1006.6(b)(1)(ii) § 1006.22(f)(3), discussed below, would ordinarily a debt collector could not would implement this prohibition and prohibit the debt collector from place a telephone call to a consumer at generally restates the statute, with only communicating or attempting to midnight and obtain the consumer’s 210 211 minor changes for clarity. communicate with the consumer using prior consent for future debt collection an email address that the debt collector 6(b)(2) Prohibitions Regarding communications. The Bureau interprets knows or should know is provided to Consumer Represented by an Attorney a consumer’s prior consent to be the consumer by the consumer’s consent obtained in the absence of FDCPA section 805(a)(2) prohibits a employer, unless an exception under conduct that would compromise or debt collector from communicating with proposed § 1006.22(f)(3) applies (i.e., eliminate a consumer’s ability to freely a consumer in connection with the the debt collector has received directly choose whether to consent. A collection of any debt if the debt from the consumer either prior consent communication that would violate collector knows the consumer is to use that email address or an email proposed § 1006.6(b)(1) through (3) (e.g., represented by an attorney with respect 216 from that email address). Proposed consent obtained from a represented to the debt and has knowledge of, or can comment 6(b)(3)–1 cross-references the consumer where the consumer’s readily ascertain, the attorney’s name employer-provided email rule described attorney is not present) is likely to and address, unless the attorney fails to in proposed § 1006.22(f)(3). compromise or eliminate a consumer’s respond within a reasonable period of The Bureau requests comment on ability to freely choose whether to time to a communication from the debt proposed § 1006.6(b)(3). The Bureau consent. By addressing only prior collector or unless the attorney consents also requests comment on whether consent purported to be obtained during to direct communication with the additional clarification would be useful a communication that would violate consumer.212 Proposed § 1006.6(b)(2) with respect to a debt collector’s communications or attempts to proposed § 1006.6(b)(1) through (3), the would implement this prohibition and Bureau does not intend to suggest that generally restates the statute.213 The communicate with a consumer while at work, for example, on a consumer’s prior consent obtained in other Bureau requests comment on proposed unlawful ways would comply with § 1006.6(b)(2), including whether non-work mobile telephone or portable electronic device. FDCPA section 805(a). additional clarification regarding this Proposed comments 6(b)(4)(i)–1 and prohibition would be useful. 6(b)(4) Exceptions –2 would clarify the meaning of prior 6(b)(3) Prohibitions Regarding FDCPA section 805(a) provides consent.218 Proposed comment Consumer’s Place of Employment certain exceptions to its limitations on 6(b)(4)(i)–1 explains that, if a debt a debt collector’s communications with collector learns during a communication 209 15 U.S.C. 1692c(a)(1). a consumer. Proposed § 1006.6(b)(4) that the debt collector is communicating 210 As discussed in the section-by-section analysis with a consumer at an inconvenient of proposed § 1006.6(b), proposed § 1006.6(b)(1)(ii) would implement and interpret the also would interpret FDCPA sections 806 and 808 exceptions in FDCPA section 805(a). time or place, the debt collector cannot to prohibit a debt collector from attempting to during that communication ask the communicate with a consumer at a place at which communicate with a consumer who is represented consumer to consent to the continuation FDCPA section 805(a)(1) would prohibit the debt by an attorney if FDCPA section 805(a)(2) would of that debt collection communication. collector from communicating with the consumer. prohibit the debt collector from communicating The Bureau proposes this comment 211 In the Small Business Review Panel Outline, with that consumer. the Bureau described a proposal under 214 15 U.S.C. 1692c(a)(3). because consent that satisfies proposed consideration to designate four categories of places 215 As discussed in the section-by-section analysis § 1006.6(b)(4)(i) must be ‘‘prior’’ and as presumptively inconvenient. See Small Business of proposed § 1006.6(b), proposed § 1006.6(b)(3) therefore given in advance of a Review Panel Outline, supra note 56, at 29–30. In also would interpret FDCPA sections 806 and 808 communication that otherwise would response to feedback received during the SBREFA to prohibit a debt collector from attempting to violate proposed § 1006.6(b)(1) through process, the Bureau does not propose that communicate with a consumer at the consumer’s intervention at this time. place of employment if FDCPA section 805(a)(3) 212 15 U.S.C. 1692c(a)(2). would prohibit the debt collector from 217 15 U.S.C. 1692c(a). 213 As discussed in the section-by-section analysis communicating with the consumer there. 218 The interpretations and illustrations of prior of proposed § 1006.6(b), proposed § 1006.6(b)(2) 216 For additional discussion of proposed work consent discussed here also apply to proposed also would interpret FDCPA sections 806 and 808 email restrictions, see the section-by-section §§ 1006.14(b) and 1006.22(f), as discussed in the to prohibit a debt collector from attempting to analysis of proposed § 1006.22(f)(3). corresponding section-by-section analyses below.

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(3). Additionally, permitting a debt 6(c) Communications With a required to give legal effect to a collector to ask a consumer to consent Consumer—After Refusal To Pay or consumer’s notification submitted to a communication once the debt Cease Communication Notice electronically only if the debt collector collector knows the communication is FDCPA section 805(c) provides that, generally chose to accept electronic occurring at an inconvenient time or subject to certain exceptions, if a communications from consumers. The Bureau proposes to codify this place would undermine the very consumer notifies a debt collector in interpretation of the E-SIGN Act in protection guaranteed to the consumer writing that the consumer refuses to pay proposed comment 6(c)(1)–2. under FDCPA section 805(a)(1). a debt or that the consumer wishes the Although proposed comment 6(b)(4)(i)– Proposed comment 6(c)(1)–1 would debt collector to cease further implement FDCPA section 805(c)’s 1 would clarify that the debt collector communication with the consumer, the would be prohibited from asking the provision that, if such notice is made by debt collector shall not communicate mail, a consumer’s notification is consumer to consent to the continuation further with the consumer with respect of the communication at the complete upon receipt by the debt to such debt (the ‘‘cease communication collector.224 Proposed comment 6(c)(1)– inconvenient time or place, the 221 provision’’). The Bureau proposes 1 would apply this standard to all comment also would clarify that a debt § 1006.6(c) to implement and interpret collector may ask the consumer what written or electronic forms of a FDCPA section 805(c) and pursuant to consumer’s notification. The Bureau time or place would be convenient. the Bureau’s authority under FDCPA notes that FDCPA section 805(c) does Proposed comment 6(b)(4)(i)–2 section 814(d) to prescribe rules with not state that only mail notifications are restates the rule that the prior consent respect to the collection of debts by debt complete upon receipt, but rather leaves of the consumer must be given directly collectors. vague when other forms of notification to the debt collector and explains that 6(c)(1) Prohibitions are complete. The Bureau proposes to a debt collector cannot rely on the prior clarify this ambiguity by providing that consent of the consumer given to the Proposed § 1006.6(c)(1) would written or electronic forms of original creditor or to a previous debt implement FDCPA section 805(c)’s notification are complete upon receipt. collector. The Bureau proposes this cease communication provision and The Bureau proposes this clarification interpretation because prior consent generally restates the statute, with only on the basis that, regardless of the given to the original creditor or to a minor changes for clarity. Specifically, medium, before a debt collector has previous debt collector is not given proposed § 1006.6(c)(1) would provide received a notification, it may not be ‘‘directly’’ to the debt collector, as the that, except as provided in proposed reasonable to consider the debt collector FDCPA expressly requires.219 The § 1006.6(c)(2), a debt collector must not to have been notified. On the other Bureau requests comment on proposed communicate or attempt to hand, once the debt collector has § 1006.6(b)(4)(i) and its related communicate further with a consumer received a notification, the debt commentary, including on whether with respect to a debt if the consumer collector can reasonably be considered additional clarification regarding a notifies the debt collector in writing to have been notified. consumer’s prior consent for the that: (i) The consumer refuses to pay the The Bureau requests comment on purposes of these rule provisions would debt; or (ii) the consumer wants the debt proposed § 1006.6(c)(1) and on collector to cease further proposed comment 6(c)(1)–1, including be instructive. Additionally, because the 222 definition of consumer for purposes of communication with the consumer. on: Whether additional clarification is The Bureau proposes to interpret the proposed § 1006.6 includes the needed with respect to a consumer’s applicability of the E-SIGN Act to a individuals listed in proposed notification pursuant to proposed consumer electronically notifying a debt § 1006.6(a)(1) through (5) (e.g., the § 1006.6(c)(1) being complete upon collector that the consumer wants the consumer’s spouse), the Bureau requests receipt by the debt collector; whether a debt collector to cease further comment on whether additional debt collector should be afforded a communication.223 Specifically, the clarification is needed regarding which certain period of time to update its Bureau proposes to interpret FDCPA ‘‘consumer’’ may give prior consent systems to reflect the consumer’s section 805(c)’s writing requirement as pursuant to proposed § 1006.6(b)(4)(i). request even after the notification is being satisfied if a consumer notifies a received, and, if so, how long; and 6(b)(4)(ii) debt collector using a medium of whether receipt works differently for electronic communication through different written and electronic Proposed § 1006.6(b)(4)(ii) would which a debt collector accepts communication media. Additionally, implement the text in FDCPA section electronic communications from because the definition of consumer for 805(a) that, in relevant part, sets forth consumers, such as email or a website purposes of proposed § 1006.6 includes the exception for the express permission portal. Thus, a debt collector would be the individuals listed in proposed of a court of competent jurisdiction.220 § 1006.6(a)(1) through (5) (e.g., the Proposed § 1006.6(b)(4)(ii) generally 221 15 U.S.C. 1692c(c). consumer’s spouse), the Bureau requests restates the statute, with only minor 222 For the same reasons that proposed § 1006.6(b) comment on whether additional changes for clarity. would prohibit debt collectors from attempting to communicate with consumers if FDCPA section clarification is needed regarding which 805(a) would prohibit communications with ‘‘consumer’’ may notify the debt 219 This proposal is also consistent with the consumers, proposed § 1006.6(c) would interpret collector pursuant to proposed FDCPA’s legislative history. See H. Rept. No. 95– FDCPA sections 806 and 808 to prohibit a debt § 1006.6(c)(1). 131, at 5 (1977) (‘‘The committee intends that in collector from attempting to communicate with a section [805] the ‘prior consent’ be meaningful, i.e., consumer if FDCPA section 805(c) would prohibit 6(c)(2) Exceptions that any prior consent by a consumer is to be a the debt collector from communicating with the voluntary consent and shall be expressed by the consumer. FDCPA section 805(c) provides consumer directly to the debt collector. 223 Section 104(b)(1)(A) of the E-SIGN Act exceptions to the cease communication Consequently, the committee intends that any term provides authority for a Federal regulatory agency provision. The exceptions allow a debt in a contract which requires a consumer to consent with rulemaking authority under a statute to in advance to debt collection communication would interpret section 101 of the E-SIGN Act with respect collector to communicate with a not constitute ‘prior consent’ by such consumer.’’). to that statute by regulation. 15 U.S.C. 220 15 U.S.C. 1692c(a). 7004(b)(1)(A). 224 15 U.S.C. 1692c(c).

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consumer even after a consumer has certain exceptions to this prohibition. prohibited communication with the notified a debt collector pursuant to Proposed § 1006.6(d)(1) would prior consent of the consumer given FDCPA section 805(c)’s cease implement FDCPA section 805(b)’s directly to the debt collector. Proposed communication provision: (1) To advise general prohibition against § 1006.6(d)(2) would implement the the consumer that the debt collector’s communicating with third parties, and exceptions in FDCPA section 805(b) and further efforts are being terminated; (2) proposed § 1006.6(d)(2) would generally restates the statute, with to notify the consumer that the debt implement the exceptions. Proposed minor wording and organizational collector or creditor may invoke § 1006.6(d)(3) would specify, for changes for clarity. Proposed comment specified remedies which are ordinarily purposes of FDCPA section 813(c), 6(d)(2)–1 refers to the commentary to invoked by such debt collector or procedures that are reasonably adapted proposed § 1006.6(b)(4)(i) for guidance creditor; or (3) where applicable, to to avoid an error in sending an email or concerning a consumer giving prior notify the consumer that the debt text message that would result in a consent directly to a debt collector. collector or creditor intends to invoke a violation of FDCPA section 805(b). The Additionally, because the definition of specified remedy.225 Proposed Bureau proposes § 1006.6(d) pursuant to consumer for purposes of proposed § 1006.6(c)(2) would implement these its authority under FDCPA section § 1006.6 includes those individuals exceptions and generally restates the 814(d) to write rules with respect to the listed in proposed § 1006.6(a)(1) through statute, with only minor changes for collection of debts by debt collectors. (5) (e.g., the consumer’s spouse), the clarity. 6(d)(1) Prohibitions Bureau requests comment on whether In the 2016 Servicing Final Rule 226 additional clarification is needed and the concurrently issued 2016 With limited exceptions, FDCPA regarding which consumer under FDCPA Interpretive Rule,227 the Bureau section 805(b) prohibits a debt collector proposed § 1006.6(a) may give prior interpreted the written early from communicating, in connection consent pursuant to proposed intervention notice required in with the collection of any debt, with any § 1006.6(d). Regulation X, 12 CFR 1024.39(d)(3), to person other than the consumer (as fall within the exceptions to the cease defined in FDCPA section 805(d)) or 6(d)(3) Reasonable Procedures for Email communication provision in FDCPA certain other persons. Proposed and Text Message Communications section 805(c)(2) and (3). As the Bureau § 1006.6(d)(1) would implement FDCPA FDCPA section 813(c) provides that a explained in the 2016 Servicing Final section 805(b) and generally restates the debt collector may not be held liable in Rule, the Bureau concluded that, statute, with minor wording and any action brought under the FDCPA if because failure to provide the written organizational changes for clarity. the debt collector shows by a early intervention notice required by Proposed comment 6(d)(1)–1 explains preponderance of evidence that the Regulation X, 12 CFR 1024.39(d)(3), is that, because a limited-content message violation was not intentional, that it closely linked to the ability of a is not a communication, a debt collector resulted from a bona fide error, and that mortgage servicer (who also is a debt does not violate § 1006.6(d)(1) if the it occurred even though the debt collector subject to the FDCPA with debt collector leaves a limited-content collector maintained procedures respect to a mortgage loan) to invoke its message for a consumer orally with a reasonably adapted to avoid the error.232 specified remedy of foreclosure, the third party who answers the consumer’s Proposed § 1006.6(d)(3) identifies home or mobile telephone.231 The notice falls within the exceptions in procedures that a debt collector may use comment explains that the message FDCPA sections 805(c)(2) and (3).228 For to obtain a safe harbor from civil would be an attempt to communicate a further discussion of the requirement liability for unintentionally violating the with the consumer (as defined in in Regulation X, see the 2016 Servicing third-party disclosure prohibition in proposed § 1006.2(b)). It further Final Rule’s section-by-section analysis proposed § 1006.6(d)(1) and, by explains, however, that if, during the discussion of 12 CFR 1024.39(d)(3).229 extension, FDCPA section 805(b), as a course of the interaction with the third The Bureau proposes comment 6(c)(2)– result of a bona fide error resulting from party, the debt collector conveys content 1 to incorporate by reference this a communication by email or text other than the specific limited-content- interpretation, which applies to a message. message items described in proposed FDCPA section 805(b) generally mortgage servicer who also is a debt § 1006.2(j)(1) and (2), and such other prohibits a debt collector from collector subject to the FDCPA with content directly or indirectly conveys respect to a mortgage loan. any information regarding a debt, the communicating with any person other than the consumer unless the consumer 6(d) Communications With Third message is a communication, subject to provides consent directly to the debt Parties the prohibition on third-party communications in proposed collector. FDCPA section 803(2), in turn, FDCPA section 805(b) prohibits a debt defines the term communication to collector from communicating, in § 1006.6(d)(1). The Bureau requests comment on proposed § 1006.6(d)(1) include the conveying of information connection with the collection of any and on whether additional clarification regarding a debt directly or indirectly to debt, with any person other than the 233 would be useful. any person. In the context of oral consumer or certain other persons.230 communications, courts have found FDCPA section 805(b) also identifies 6(d)(2) Exceptions that, if a debt collector leaves a voice FDCPA section 805(b) specifies message that is overheard by a third 225 15 U.S.C. 1692c(c)(1)–(3). exceptions to the general prohibition party, the debt collector may violate 226 81 FR 72160 (Oct. 19, 2016). against a debt collector communicating FDCPA section 805(b) by indirectly 227 81 FR 71977 (Oct. 19, 2016). 228 with third parties, including that a debt conveying information regarding a debt 81 FR 72160, 72232 (Oct. 19, 2016). 234 229 Id. at 72233–38. collector may engage in an otherwise to a person other than the consumer. 230 15 U.S.C. 1692c(b). Specifically, FDCPA section 805(b) prohibits communicating with any 231 The Bureau separately requests comment in 232 15 U.S.C. 1692k(c). person other than the consumer, the consumer’s the section-by-section analysis of proposed 233 See the section-by-section analysis of attorney, a consumer reporting agency if otherwise § 1006.2(j) defining limited-content messages on proposed § 1006.2(d). permitted by law, the creditor, the creditor’s whether to permit a debt collector to leave limited- 234 See the section-by-section analysis of attorney, or the debt collector’s attorney. content messages with third parties. proposed § 1006.2(j).

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While nothing in the FDCPA prohibits by newer media, the Bureau proposes to unintentional and that the debt debt collectors from communicating identify procedures that debt collectors collector, in fact, maintained the using newer communication media such may use to reduce the risk of liability specified procedures. As proposed, this as email and text messages, the case law from communicating with consumers by would require a debt collector to show regarding communications has given email or text message. Pursuant to its that the procedures included steps to rise to uncertainty about how FDCPA authority to implement and interpret reasonably confirm and document that section 805(b) applies to such media, FDCPA sections 805(b) and 813(c), the the debt collector acted in accordance because of the potential for inadvertent Bureau proposes § 1006.6(d)(3) to with proposed § 1006.6(d)(3)(i) and (ii). disclosure of communications to third specify when a debt collector maintains For example, procedures that permitted parties. In pre-proposal feedback, procedures that are reasonably adapted, a debt collector to use obviously several industry stakeholders asserted for purposes of FDCPA section 813(c), to incorrect email addresses merely that this uncertainty, particularly about avoid a bona fide error in sending an because the addresses were obtained liability for third-party disclosures, email or text message communication consistent with one of the three discourages the use of electronic that would result in a violation of methods would not satisfy proposed communications in debt collection.235 § 1006.6(d)(1). A debt collector would § 1006.6(d)(3)’s reasonableness Consistent with this feedback, the maintain such procedures if, when requirement.239 Bureau’s Consumer Survey found that communicating with a consumer using The procedures in proposed only 8 percent of consumers contacted an email address or, in the case of a text § 1006.6(d)(3) address email and text by a debt collector were contacted by message, a telephone number, the debt message communications only. At this email—even though email is widely collector’s procedures include steps to time, the Bureau does not propose available and less expensive than other reasonably confirm and document that procedures related to the use of less- forms of communication, and 15 percent the debt collector: (1) Has obtained and developed and less-widespread forms of of surveyed consumers said that email used the email address or telephone electronic communication because was their most preferred method of number in accordance with one of the consumers do not appear accustomed to being contacted about a debt in three methods specified in using such technologies in their collection.236 In pre-proposal feedback, § 1006.6(d)(3)(i); and (2) has taken the financial lives. The Bureau may revisit industry participants expressed interest additional steps specified in this conclusion if consumer use of these in communicating with consumers § 1006.6(d)(3)(ii). technologies changes. The Bureau also using electronic technologies. They The procedures in proposed does not propose procedures related to therefore requested that the Bureau § 1006.6(d)(3) are designed to ensure the use of voicemails. The limited- clarify how FDCPA section 805(b) that a debt collector who uses a specific content message described in proposed applies to the inadvertent disclosure of email address or telephone number to § 1006.2(j) is designed to enable debt an electronic communication to a third communicate with a consumer by email collectors to leave voicemails for party not authorized to receive it.237 or text message does not have a reason consumers without risking third-party In light of this feedback and evidence to anticipate that an unauthorized third- disclosures. suggesting that some consumers may party disclosure may occur. The FTC Proposed § 1006.6(d)(3) does not prefer debt collectors to communicate staff and some courts have found that identify the only circumstances in debt collectors do not violate the which a debt collector may 235 An industry trade association commenting on prohibition on third-party disclosures communicate with a consumer by email the Bureau’s ANPRM surveyed its members and unless they have reason to anticipate or text message, nor does it identify the found that only 15 percent of respondents only procedures that may be reasonably communicated electronically with consumers, that the disclosure may be heard or read primarily because of concerns about liability. A by third parties.238 Designing the adapted to avoid a violation of proposed later study by a consulting firm, released in 2017, procedures around the reason-to- § 1006.6(d)(1) and FDCPA section reported that about one-third of debt collectors anticipate standard is consistent with 805(b). Thus, a debt collector would not communicate with consumers by email. Ernst & necessarily violate proposed Young, The Impact of Third-Party Debt Collection these principles. A debt collector who on the US National and State Economies in 2016: follows the procedures in proposed § 1006.6(d)(1) or FDCPA section 805(b) Prepared for ACA Int’l, at 5 (Nov. 2017), https:// § 1006.6(d)(3) may not have reason to if the debt collector communicated with www.acainternational.org/assets/ernst-young/ey- anticipate that a disclosure may be a consumer by email or text message 2017-aca-state-of-the-industry-report-final-5.pdf; without following the procedures in see also Gov’t Accountability Off., No. GAO–09– heard or read by a third party. 748, Fair Debt Collection Practices Act Could Better Proposed § 1006.6(d)(3) would not proposed § 1006.6(d)(3). Depending on Reflect the Evolving Debt Collection Marketplace fully eliminate a debt collector’s risk of the facts, a debt collector could show by and Use of Technology, at 48 (Sept. 2009), https:// liability for third-party disclosures. To a preponderance of the evidence that www.gao.gov/assets/300/295588.pdf (‘‘Debt any third-party disclosures were collection agencies have been reluctant to use email be protected from civil liability under and faxes to communicate with debtors because of FDCPA 813(c), a debt collector would unintentional and that the debt collector the risk that someone other than the debtor may need to show, by a preponderance of the employed procedures reasonably read the transmission, which could violate FDCPA’s evidence, that the debt collector’s adapted to avoid them. prohibition on disclosure to third parties.’’). The Bureau requests comment on 236 disclosure to the third party was See CFPB Debt Collection Consumer Survey, proposed § 1006.6(d)(3). In particular, supra note 18, at 37, 42. 237 For example, one industry trade association 238 See, e.g., Statements of General Policy or the Bureau requests comment on the suggested that the Bureau establish a presumption Interpretation: Staff Commentary on the FDCPA, 53 risk of third-party disclosure and against liability when debt collectors use consumer- FR 50097, 50104 (Dec. 13, 1988) (‘‘A debt collector resulting consumer harm posed by debt provided email addresses and telephone numbers. does not violate [FDCPA section 805(b)] when an collection communications that take In addition, a Federal regulator recently eavesdropper overhears a conversation with the recommended that the Bureau ‘‘codify that consumer, unless the debt collector has reason to place by email or text message. The reasonable digital communications, especially anticipate the conversation will be overheard.’’); when they reflect a consumer’s preferred method, Peak v. Prof’l Credit Serv., No. 6:14–cv–01856–AA, 239 In addition, a debt collector who are appropriate for use in debt collection.’’ U.S. 2015 WL 7862774, at *5–6 (D. Or. Dec. 2, 2015); communicates with a consumer consistent with Dept. of Treasury, A Financial System that Creates Berg v. Merchants Ass’n Collection Div., Inc., 586 proposed § 1006.6(d)(3) would not be protected Economic Opportunities: Nonbank Financials, F. Supp. 2d 1336, 1342, 1345 (S.D. Fla 2008); from liability for violations unrelated to third-party FinTech, and Innovation, at 21 (July 2018), https:// Chlanda v. Wymard, No. C–3–93–321, 1995 WL disclosures (e.g., for failure to include the opt-out home.treasury.gov/news/press-releases/sm447. 17917574, at *2 (S.D. Ohio Sept. 5, 1995). notice that proposed § 1006.6(e) would require).

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Bureau is especially interested in any that a debt collector could obtain 240 a the debt collector. Telephone numbers data or other information bearing on the safe harbor from liability for an frequently are disconnected and harm associated with such disclosure. unintentional third-party disclosure if reassigned from one person to another. The Bureau also requests comment on the debt collector maintained In fact, according to a recent Federal whether the procedures identified in procedures to reasonably confirm and Communications Commission (FCC) proposed § 1006.6(d)(3) are likely to document that the debt collector notice of proposed rulemaking, nearly increase debt collectors’ use of emails communicated with the consumer using 35 million telephone numbers are and text messages to communicate with an email address or, in the case of a text disconnected and made available for consumers. The Bureau also requests message, a telephone number that the reassignment each year.242 Given the comment on whether additional consumer recently used to contact the frequency with which telephone clarification is needed about the debt collector for purposes other than numbers are reassigned, it may be requirement that a debt collector’s opting out of electronic reasonable for a debt collector to procedures include steps to reasonably communications.241 anticipate that sending a text message to confirm and document that the debt Proposed § 1006.6(d)(3)(i)(A) would a telephone number that the consumer collector acted in accordance with apply to any email address or, in the has not recently used could result in the proposed § 1006.6(d)(3)(i) and (ii). In case of a text message, any telephone disclosure of sensitive information to addition, the Bureau requests comment number—including any work email third parties—namely, persons to whom on whether to clarify the meaning of the address or any work telephone the consumer’s telephone number has term email in proposed § 1006.6(d)(3), number—the consumer used to contact been reassigned. Because a telephone such as by specifying that it includes the debt collector for purposes other number the consumer recently used direct messaging technology in mobile than opting out of electronic may be less likely to have been applications or on social media communications. As discussed in the reassigned than a telephone number the platforms. section-by-section analysis of proposed consumer used in the more distant past, § 1006.22(f)(3), the proposed rule proposed § 1006.6(d)(3)(i)(A)’s recency 6(d)(3)(i) Method of Obtaining and generally would prohibit a debt requirement may limit the third-party Using an Email Address or Telephone collector from attempting to disclosure risk posed by the Number communicate with a consumer using an reassignment of telephone numbers. Proposed § 1006.6(d)(3)(i) describes email address that the debt collector Although email addresses do not appear three methods of obtaining and using an knows or should know is maintained by to carry as great a risk of reassignment email address or, in the case of a text the consumer’s employer. Work emails as telephone numbers,243 for message, a telephone number. As appear to present a heightened risk of consistency and ease of administration discussed below, a debt collector whose third-party disclosure because many of the regulation, the Bureau policies and procedures include steps to employers have a legal right to read nevertheless proposes to apply the same reasonably confirm and document messages sent or received by employees recency requirement to email addresses. compliance with proposed on work email accounts, and some The Bureau requests comment on § 1006.6(d)(3)(i) would be entitled to a employers exercise that right. Text proposed § 1006.6(d)(3)(i)(A). In safe harbor from liability for an messages sent to a work telephone particular, the Bureau requests comment unintentional third-party disclosure number appear to present a heightened on what, if anything, a consumer’s resulting from use of one of the three risk of third-party disclosure for the decision to contact a debt collector same reason. However, some consumers using a work email address or, in the methods, assuming the debt collector’s may be in a position to assess the risk case of a text message, a work telephone procedures also include steps to that an employer will read their work number may suggest about the reasonably confirm and document emails or work text messages based on, consumer’s assessment of the risk of compliance with proposed among other things, their knowledge of third-party disclosure. The Bureau also § 1006.6(d)(3)(ii). work policies and practices, so it may be requests comment on what, if anything, 6(d)(3)(i)(A) reasonable for a debt collector to a consumer’s decision to contact a debt presume that a consumer who initiates collector using a non-work email A debt collector who communicates an electronic communication with a address or, in the case of a text message, with a consumer electronically using an debt collector using a work email a non-work telephone number may email address or telephone number that address or work telephone number has suggest about the consumer’s the consumer recently used to contact assessed that risk to be low. the debt collector electronically may not In addition, proposed 242 Advanced Methods to Target and Eliminate have reason to anticipate that the § 1006.6(d)(3)(i)(A) would apply only if Unlawful Robocalls, 83 FR 17631, 17632 (Apr. 23, communication may be read by third the consumer recently used the email 2018) (‘‘Consumers disconnect their old numbers parties with whom the debt collector is and change to new telephone numbers for a variety address or telephone number to contact of reasons, including switching wireless providers not otherwise permitted to without porting numbers and getting new wireline communicate about the debt. This is 240 To be entitled to a safe harbor, the debt telephone numbers when they move.’’). because, the Bureau believes, a collector’s procedures also would need to comply 243 Although email addresses can be reassigned, consumer generally is better positioned with proposed § 1006.6(d)(3)(ii). the Bureau has not identified evidence suggesting than a debt collector to determine 241 As discussed in the section-by-section analysis that reassignment happens frequently. For example, of proposed § 1006.14(h)(2), if a consumer opts out one of the largest email providers states it does not whether third parties have access to a of receiving electronic communications from a debt reassign email addresses. See Delete Your Gmail specific email address or telephone collector, the debt collector would be permitted to Service, Google Account Help, https:// number, and a consumer’s decision to reply once to confirm the consumer’s request to opt support.google.com/accounts/answer/ communicate electronically using a out, provided that the reply contains no information 61177?co=GENIE.Platform%3DDesktop&hl=en (last other than a statement confirming the consumer’s visited May 6, 2019). One industry report suggests specific email address or telephone request. Proposed § 1006.6(d)(3)(i)(A)’s safe harbor that a majority of consumers have never deactivated number may suggest that the consumer would not be available to a debt collector who an email account. Direct Marketing Ass’n, has assessed the risk of third-party sends the reply to an email address or, in the case Consumer Email Tracker 2017, at 6 (2017), https:// disclosure to be low. For this reason, of a text message, a telephone number that the dma.org.uk/uploads/misc/5a1583ff3301a- consumer used only for purposes of opting out of consumer-email-tracking-report-2017-(2)_ proposed § 1006.6(d)(3)(i)(A) provides electronic communications. 5a1583ff32f65.pdf.

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assessment of the risk of third-party employers from reading electronic debt telephone number for debt collection disclosure. In addition, the Bureau collection communications sent to work communications by email or text requests comment on the third-party email addresses and work telephone message. The creditor or the debt disclosure risks to consumers posed by numbers. Unlike a consumer’s collector may provide the notice orally, the practice of reassigning telephone affirmative decision to contact a debt in writing, or electronically, but, if numbers. The Bureau also requests collector using a work email address or, provided electronically, the notice comment on whether the recency in the case of a text message, a work could not be sent to the specific non- requirement in proposed telephone number, as described in work email address or non-work § 1006.6(d)(3)(i)(A) adequately proposed § 1006.6(d)(3)(i)(A), a telephone number the debt collector addresses those risks, and, if not, on consumer’s failure to opt out of the debt seeks to use for future communications. how the Bureau could address them in collector’s use of a work email address This limitation may help avoid a third- a final rule. In addition, the Bureau or a work telephone number may not party disclosure through the notice requests comment on whether to apply indicate that the consumer has assessed itself, which could occur if the opt-out the recency requirement to emails. The the risk of third-party disclosure to be notice were sent to the email address or proposed rule does not define when a low. Instead, it may reflect an telephone number identified in the consumer’s contact would qualify as unwillingness to engage with a debt notice. recent. The Bureau therefore also collector in any manner—even to opt Second, the creditor or the debt requests comment on whether and how out of further communications—using a collector would need to provide the to define recent in the context of work email address or a work telephone notice no more than 30 days before the proposed § 1006.6(d)(3)(i)(A), including number. debt collector engages in debt collection on whether contact by the consumer in Proposed comment 6(d)(3)(i)–1 would communications by email or text the past year should qualify as recent. clarify that an email address qualifies as message. This timing component is a non-work email address unless the meant to ensure that the consumer has 6(d)(3)(i)(B) debt collector knows or should know made a decision about whether to opt A debt collector may not have reason that the email address is provided to the out, including based on the risk of third- to anticipate that an electronic consumer by the consumer’s employer. party disclosure, at a time reasonably communication to a consumer’s non- The proposed comment also refers to contemporaneous with the proposed work email address or non-work § 1006.22(f)(3) and its related electronic communications. telephone number may be read by third commentary for further clarification Third, the notice would need to parties with whom the debt collector is regarding whether a debt collector identify the legal name of the debt not otherwise permitted to knows or should know that an email collector and the non-work email communicate about the debt if the address is provided by a consumer’s address or non-work telephone number consumer has received notice and a employer. The proposed comment also the debt collector proposes to use, reasonable opportunity to opt out of would clarify that a telephone number describe one or more ways the such communications, but the consumer qualifies as a non-work telephone consumer could opt out of such has not done so. This is because, the number unless the debt collector knows communications, and provide the Bureau believes, a consumer’s failure to or should know that the telephone consumer with a specified reasonable opt out in these circumstances may number is provided to the consumer by period during which to opt out before suggest that the consumer has assessed the consumer’s employer. the debt collector would begin such the risk of such a disclosure to be low. The Bureau requests comment on communications. The content of the For this reason, proposed proposed § 1006.6(d)(3)(i)(B) and on notice is meant to ensure that the notice § 1006.6(d)(3)(i)(B) provides that a debt comment 6(d)(3)(i)–1. In particular, the includes enough information for the collector could obtain 244 a safe harbor Bureau requests comment on what, if consumer to make an adequately from liability for an unintentional third- anything, a consumer’s failure to opt out informed decision about whether to opt party disclosure if the debt collector of a debt collector’s use of a non-work out and, should the consumer elect not maintained procedures to reasonably email address or, in the case of a text to opt out, to prepare to receive any 245 confirm and document that: (1) The debt message, a non-work telephone number electronic communications. collector communicated with the may suggest about the consumer’s Although the procedures described in consumer using a non-work email assessment of the risk of third-party proposed § 1006.6(d)(3)(i)(B) include address or, in the case of a text message, disclosure. The Bureau also requests steps to reasonably confirm and a non-work telephone number, after the comment on what, if anything, a document that the creditor or the debt creditor or the debt collector provided consumer’s failure to opt out of a debt collector provided the opt-out notice described in proposed the consumer with notice that the debt collector’s use of a work email address § 1006.6(d)(3)(i)(B)(1), they do not collector might use that non-work email or, in the case of a text message, a work include a requirement to provide the address or non-work telephone number telephone number may suggest about notice itself in writing. Proposed for debt collection communications and the consumer’s assessment of the risk of comment 6(d)(3)(i)(B)(1)–1 would a reasonable opportunity to opt out; and third-party disclosure. clarify that the opt-out notice described (2) the consumer did not opt out. 6(d)(3)(i)(B)(1) Proposed § 1006.6(d)(3)(i)(B) would in § 1006.6(d)(3)(i)(B)(1) may be Proposed § 1006.6(d)(3)(i)(B)(1) apply only to non-work email addresses provided orally, in writing, or describes three requirements that a debt and non-work telephone numbers; it collector using the notice-and-opt-out 245 As explained below, the Bureau proposes would not apply to work email approach would need to confirm and comment 6(d)(3)(i)(B)(1)–2 to clarify that, when an addresses or work telephone numbers. document had been satisfied. First, the opt-out notice is provided orally, the creditor or the A notice-and-opt-out process may not be debt collector may require the consumer to make an creditor or the debt collector would reasonably designed to prevent opt-out decision during that same communication. need to notify the consumer clearly and As also noted below, the Bureau does not propose conspicuously that the debt collector to specify what would qualify as a reasonable opt- 244 To be entitled to a safe harbor, the debt out period when an opt-out notice is provided in collector’s procedures also would need to comply might use a specific non-work email writing or electronically; however, the Bureau with proposed § 1006.6(d)(3)(ii). address or a specific non-work requests comment on this issue.

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electronically. The proposed comment related commentary. In particular, the reason, proposed § 1006.6(d)(3)(i)(B)(2) also would clarify that the opt-out Bureau requests comment on whether to provides that, if the opt-out period notice must be provided clearly and limit further the email addresses or specified in the notice has expired and conspicuously, as defined in telephone numbers to which a creditor the consumer has not opted out, the § 1006.34(b)(1), and that, if the opt-out or a debt collector may send the opt-out debt collector may use the specific non- notice is provided in writing or notice that would be required by work email address or non-work electronically, it must comply with the proposed § 1006.6(d)(3)(i)(B)(1) and, if telephone number to send debt requirements of § 1006.42(a) for so, what those limitations should be. collection communications by email or providing required disclosures.246 The The Bureau also requests comment on text message. Bureau proposes comment proposed § 1006.6(d)(3)(i)(B)(1)’s Proposed comment 6(d)(3)(i)(B)(2)–1 6(d)(3)(i)(B)(1)–1 to provide consumers, requirement to provide the notification would clarify how proposed debt collectors, and creditors with the no more than 30 days before the debt § 1006.6(d)(3)(i)(B)(2) would work with flexibility to satisfy the proposed notice- collector’s first communication proposed § 1006.14(h), which would and-opt-out requirements orally or pursuant to proposed prohibit a debt collector from electronically, which may be more § 1006.6(d)(3)(i)(B), including on communicating or attempting to convenient or efficient in some whether the period should be shortened communicate with a consumer through circumstances. or lengthened. The Bureau also requests a medium of communication if the Proposed comment 6(d)(3)(i)(B)(1)–2 comment on whether to clarify, for consumer has requested that the debt would clarify how to provide the opt- purposes of proposed collector not use that medium to out notice described in proposed § 1006.6(d)(3)(i)(B)(1), what constitutes communicate with the consumer.248 § 1006.6(d)(3)(i)(B)(1) to the consumer a reasonable period within which to opt Proposed comment 6(d)(3)(i)(B)(2)–1 in an oral communication, such as in a out when an opt-out notice is not provides that, if a consumer requests telephone or in-person conversation. provided through a telephone after the expiration of the opt-out period The comment explains that, if a creditor conversation. In addition, the Bureau set forth in the § 1006.6(d)(3)(i)(B)(1) or a debt collector provides the opt-out requests comment on whether, in other opt-out notice that a debt collector not notice orally, the creditor or the debt consumer financial products and use the non-work email address or non- collector may require the consumer to services markets, consumers commonly work telephone number specified in make an opt-out decision during that make decisions about their that notice, § 1006.14(h) would prohibit same communication. Proposed communication preferences during a the debt collector from communicating comment 6(d)(3)(i)(B)(1)–2 appears single telephone call. The Bureau also or attempting to communicate with the consistent with industry practice in requests comment on the benefits and consumer using that email address or other markets for consumer financial risks of allowing debt collectors and telephone number. Likewise, if the products and services, where consumers creditors to include the opt-out notice consumer requests after the expiration may commonly make decisions about described in proposed of the opt-out period that the debt their communication preferences at one § 1006.6(d)(3)(i)(B)(1) in the same collector not communicate with the time, often at origination. communication as the opt-out notice consumer by email or text message, Proposed comment 6(d)(3)(i)(B)(1)–3 described in proposed § 1006.42(d)(1) or § 1006.14(h) prohibits the debt collector would clarify that a debt collector or a (2), as applicable. from communicating or attempting to creditor may provide the opt-out notice communicate with the consumer by together with other notices required 6(d)(3)(i)(B)(2) email or text message, including by under the rule. As discussed in the As discussed above, proposed using the non-work email address or section-by-section analysis of proposed § 1006.6(d)(3)(i)(B)(1) describes non-work telephone number specified § 1006.42(c)(2)(ii) and (d), the proposed requirements that a debt collector using in the § 1006.6(d)(3)(i)(B)(1) opt-out rule would permit a debt collector to the notice-and-opt-out approach would notice. The Bureau requests comment deliver required disclosures by need to confirm and document had been on proposed § 1006.6(d)(3)(i)(B)(2) and hyperlink if, among other things, the satisfied. One such requirement is to its related commentary. debt collector or a creditor first provide the consumer with a reasonable 6(d)(3)(i)(C) provided the consumer with notice and period during which to opt out of an opportunity to opt out. Because it receiving debt collection A debt collector who communicates may be more convenient and cost communications by email or text with a consumer electronically using effective for consumers, debt collectors, message to the non-work email address the consumer’s non-work email address and creditors if consumers can make or non-work telephone number or non-work telephone number recently used by the creditor or a prior debt their various communication identified in the opt-out notice. The collector may not have reason to preferences known at the same time, consumer’s failure to opt out in these anticipate that the communication may proposed comment 6(d)(3)(i)(B)(1)–3 circumstances may suggest that the be read by third parties with whom the would clarify that a debt collector or a consumer has assessed the risk of third- debt collector is not otherwise permitted creditor may include the opt-out notice party disclosure to be low.247 For this described in § 1006.6(d)(3)(i)(B)(1) in to communicate about the debt. The Bureau has not identified data the same communication as the opt-out 247 By contrast, as explained in the section-by- notice described in § 1006.42(d)(1) or section analysis of proposed § 1006.6(d)(3)(i)(B), a suggesting that creditors communicate (2), as applicable. consumer’s failure to opt out of a debt collector’s with consumers at non-work email The Bureau requests comment on use of a work email address or, in the case of a text addresses or non-work telephone message, a work telephone number may not numbers that are generally accessible to proposed § 1006.6(d)(3)(i)(B)(1) and its indicate that the consumer has assessed the risk of third-party disclosure to be low. When it comes to 246 As discussed in the section-by-section analysis a debt collector’s use of a non-work email address collection communication may not wish to engage of proposed § 1006.42(a)(1), that section would or non-work telephone number, a consumer likely with a debt collector in any manner—even to opt apply when debt collectors provide certain required possesses the information necessary to assess the out of further communications—using a work email disclosures in writing or electronically; it would not risk of unwanted third-party disclosure. With address or telephone number. apply when debt collectors provide those respect to work email addresses and telephone 248 See the section-by-section analysis of disclosures orally. numbers, however, a consumer who receives a debt proposed § 1006.14(h).

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such individuals. Further, the Bureau employers.250 Nor does the Bureau 6(d)(3)(ii) Additional Requirements believes that a consumer’s decision to propose that a prior debt collector’s use To fall within the safe harbor from communicate with a creditor or a prior of a consumer’s work email address or liability that proposed § 1006.6(d)(3) debt collector using a non-work email work telephone number would be would establish for unintentional address or non-work telephone number sufficient to justify a later debt violations of proposed § 1006.6(d)(1) may suggest that the consumer has collector’s use of that email address or and FDCPA section 805(b), a debt assessed the risk of third-party telephone number. Even if a consumer collector’s procedures would not only disclosure to be low. had indicated to a prior debt collector need to include steps to reasonably that the risk of monitoring by an For these reasons, proposed confirm and document that the debt employer was low, an employer’s § 1006.6(d)(3)(i)(C) provides that a debt collector obtained and used an email monitoring policies and practices can collector could obtain 249 a safe harbor address or, in the case of a text message, change and debt collectors may differ in from liability for an unintentional third- a telephone number consistent with one their approach to communications with party disclosure if the debt collector of the three methods identified in consumers. maintained procedures to reasonably proposed § 1006.6(d)(3)(i), but the confirm and document that: (1) The debt Proposed § 1006.6(d)(3)(i)(C) would procedures also would need to comply collector communicated with the apply only if the creditor or a prior debt with proposed § 1006.6(d)(3)(ii). consumer using a non-work email collector recently used the non-work Proposed § 1006.6(d)(3)(ii) would address or, in the case of a text message, email address or non-work telephone require a debt collector to take steps to a non-work telephone number that the number to send communications about prevent communications using an email creditor or a prior debt collector the debt. The Bureau proposes this address or telephone number that the obtained from the consumer to recency requirement for the same debt collector knows has led to a communicate about the debt; (2) before reasons that it proposes the recency disclosure prohibited by 251 252 the debt was placed with the debt requirement in § 1006.6(d)(3)(i)(A). § 1006.6(d)(1). The Bureau proposes § 1006.6(d)(3)(ii) collector, the creditor or the prior debt The Bureau requests comment on on the basis that a debt collector whose collector recently sent communications proposed § 1006.6(d)(3)(i)(C), including procedures are not designed to prevent about the debt to the non-work email on how often creditors communicate recurrence of a known violation may address or non-work telephone number; with consumers using non-work email intend to convey information related to and (3) the consumer did not request the addresses and, in the case of text the debt or its collection to a third party. creditor or the prior debt collector to messages, non-work telephone numbers. The Bureau requests comment on stop using the non-work email address The Bureau also requests comment on what, if anything, a consumer’s decision proposed § 1006.6(d)(3)(ii), including on or non-work telephone number to whether the procedures described in communicate about the debt. to communicate with a creditor or a prior debt collector using a non-work proposed § 1006.6(d)(3)(ii) are Proposed § 1006.6(d)(3)(i)(C) would email address or non-work telephone reasonably adapted to avoid a violation apply only to non-work email addresses number may suggest about the of the prohibition on third-party and non-work telephone numbers. As consumer’s assessment of the risk of disclosures in proposed § 1006.6(d)(1) noted above, some employers monitor third-party disclosure. In addition, the and FDCPA section 805(b). work email addresses, and some Bureau requests comment on the third- employers may also monitor text 6(e) Opt-Out Notice for Electronic party disclosure risks to consumers Communications or Attempts To messages sent to and from work posed by the practice of reassigning Communicate telephone numbers. A consumer might telephone numbers. The Bureau also agree to receive electronic requests comment on whether the The Bureau’s proposal includes communications from a creditor to a recency requirement in proposed several provisions designed to facilitate work email address or work telephone § 1006.6(d)(3)(i)(C) adequately addresses debt collectors’ use of electronic number without regard to the risk that these risks, and, if not, on how the communication media, such as emails an employer might monitor or read Bureau could address them in a final and text messages, when collecting those communications because a rule. In addition, the Bureau requests debts. Some consumers, however, may consumer may not consider comment on whether to apply the not wish to receive electronic debt communications from a creditor to be as recency requirement to email addresses. collection communications because, for sensitive as communications from a The proposed rule does not define when example, they receive too many such debt collector. In other words, consumer a creditor’s or a prior debt collector’s communications or because such consent to a creditor’s use of a work communications force them to incur communication about the debt would 253 email address or, in the case of a text qualify as recent. The Bureau therefore charges. To address this concern, message, a work telephone number also requests comment on whether and proposed § 1006.6(e) would require debt might not mean that the risk of third- how to define recent in the context of party disclosure is low. Therefore, 252 As noted above, even if a debt collector selects proposed § 1006.6(d)(3)(i)(C), including an email address or telephone number in procedures that permit a debt collector on whether a communication by the accordance with the procedures in proposed to communicate using a work email creditor or a prior debt collector in the § 1006.6(d)(3), the debt collector would not be address or work telephone number past year should qualify as recent. permitted to communicate or attempt to merely because the creditor communicate with a consumer using that email address or telephone number if doing so would communicated using that email address 250 The special sensitivity of debt collection violate another provision of the proposed rule, such or telephone number might not prevent communications is reflected in the law: The FDCPA as the opt-out-notice requirements of proposed unintentional disclosures of debt regulates a debt collector’s communications at the § 1006.6(e). collection communications to consumer’s place of employment, while consumer 253 CFPB Debt Collection Consumer Survey, supra credit origination and servicing laws, such as the note 18, at 36–37 (noting that almost one-half of Truth in Lending Act, generally do not. See 15 consumers said they would most prefer to be 249 To be entitled to a safe harbor, the debt U.S.C. 1692c(a)(3). reached by written letter and that the second most collector’s procedures also would need to comply 251 See the section-by-section analysis of common preference for contact was through some with proposed § 1006.6(d)(3)(ii). proposed § 1006.6(d)(3)(i)(A). kind of telephone other than a work telephone).

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collectors to notify consumers how to messaging plans may incur a charge the consumer can opt out of further opt out of receiving electronic debt each time they receive a text message, electronic communications or attempts collection communications or or each time they receive a text message to communicate by the debt collector to communication attempts directed at a that exceeds a specified limit.256 For that address or telephone number. specific email address, telephone these consumers, receiving a text Proposed § 1006.6(e) also would number for text messages, or other message from a debt collector may be prohibit a debt collector from requiring, electronic-medium address. similar to accepting a collect call from directly or indirectly, that the consumer, The Bureau generally believes that the a debt collector. in order to opt out, pay any fee or use of electronic media for debt One way to help consumers address provide any information other than the collection communications can further potentially harassing or costly electronic email address, telephone number for the interests of both consumers and debt communications or communication text messages, or other electronic- collectors. But electronic attempts is to provide them with a medium address subject to the opt-out. communications also pose potential convenient way to opt out of such The Bureau proposes to require debt consumer harms. One potential harm communications. In pre-proposal collectors to provide consumers with relates to consumer harassment. The feedback, a debt collector and several opt-out instructions to help ensure that FDCPA recognizes this harm in section consumer advocates supported an opt- a consumer who receives written 806, which prohibits conduct the out requirement. An opt-out electronic communications from a debt natural consequence of which is to requirement also would be consistent collector can, with minimal effort and harass, oppress, or abuse any person in with several established public policies cost, stop the debt collector from connection with the collection of a debt. protecting consumers who receive sending further written electronic Because communicating with electronic communications.257 communications or communication consumers electronically is essentially For these reasons, proposed attempts directed at a specific address costless, debt collectors may have little § 1006.6(e) would require a debt or telephone number.258 Proposed economic incentive to limit the number collector who communicates or attempts comment 6(e)–1 would clarify that clear of such communications. As discussed to communicate with a consumer and conspicuous under § 1006(e) has in the section-by-section analysis of electronically in connection with the the same meaning as in § 1006.34(b)(1) proposed § 1006.14(b), however, collection of a debt using a specific regarding validation notices and repeated or continuous debt collection email address, telephone number for provides examples illustrating the communications may have the natural text messages, or other electronic- proposed rule. consequence of harassing, oppressing, medium address to include in each such Proposed § 1006.6(e) seeks to address or abusing the recipient. In part for this communication or attempt to a group of concerns that are unique to reason, the proposed rule would communicate a clear and conspicuous written electronic communications and establish bright-line rules limiting the statement describing one or more ways attempts to communicate. With respect frequency with which a debt collector to concerns about harassment from may place telephone calls in connection 256 The FCC has found, for example, that excessive communications of other with the collection of a debt. However, unwanted calls and text messages can create types, consumers likely know how to substantial costs for consumers when aggregated the frequency limits in the proposed across many contacts. See, e.g., In re Rules & request debt collectors to stop placing rule would not apply to emails or text Regulations Implementing the Tel. Consumer Prot. unwanted telephone calls, and proposed messages.254 Act of 1991, 30 F.C.C.Rcd. 7961, 8021 (2015) (‘‘In § 1006.14(h) would require debt Another potential consumer harm addition to the invasion of consumer privacy for all collectors to honor such requests. In relates to communication costs. The wireless consumers, the record confirms that some are charged for incoming calls and messages. These addition, the frequency limitations in FDCPA recognizes this harm in section costs can be substantial when they result from the proposed § 1006.14(b)(2) would apply to 808(5), which prohibits debt collectors large numbers of voice calls and texts autodialers telephone calls. Moreover, debt from causing charges to be made to any can generate.’’), set aside in part by ACA Int’l v. collectors are unlikely to communicate person for communications by Fed. Commc’ns Comm’n, 885 F.3d 687 (D.C. Cir. 2018). by mail repeatedly because of the 259 concealment of the true purpose of the 257 For example, with respect to emails, the cost. With respect to concerns about communication and specifies that such Controlling the Assault of Non-Solicited costs, consumers generally do not incur charges include, but are not limited to, Pornography and Marketing (CAN–SPAM) Act costs when they receive written letters, collect telephone calls. Although many reflects a public policy in favor of providing whereas some consumers do incur costs consumers have unlimited text consumers with a specific mechanism to opt out of certain email messages. See 15 U.S.C. 7704(a)(3) when they receive text messages. 255 messaging plans, some do not. (requiring that commercial emails include a Accordingly, proposed § 1006.6(e) Consumers without unlimited text functioning return email address or other internet- would not apply to non-electronic based mechanism, clearly and conspicuously communications and attempts to 254 See the section-by-section analysis of displayed, for the recipient to request not to receive future email messages from the sender at the proposed § 1006.14(b). Proposed § 1006.14(b)(2) 258 provides that, subject to § 1006.14(b)(3), a debt address where the message was received); Fed. For ease of reference, throughout the section- collector violates § 1006.14(b)(1) by placing a Trade Comm’n, CAN–SPAM Act: A Compliance by-section analysis of proposed § 1006.6(e), the telephone call to a particular person in connection Guide for Business (Sept. 2009), https:// Bureau uses the phrase ‘‘written electronic with the collection of a particular debt either: (i) www.ftc.gov/tips-advice/business-center/guidance/ communications’’ to refer to emails, text messages, More than seven times within seven consecutive can-spam-act-compliance-guide-business and other electronic communications that are days, or (ii) within a period of seven consecutive (explaining that messages covered by the CAN– readable. The Bureau’s use of this phrase has no days after having had a telephone conversation with SPAM Act ‘‘must include a clear and conspicuous bearing on the Bureau’s interpretation of the terms the person in connection with the collection of such explanation of how the recipient can opt out of ‘‘written’’ or ‘‘in writing’’ under any law or debt, with the date of the telephone conversation getting email from [the sender] in the future’’). In regulation, including the FDCPA or the E-SIGN Act. being the first day of the seven-consecutive-day addition, the FTC’s regulations implementing the 259 See, e.g., 15 U.S.C. 7701(a)(1) (noting period. CAN–SPAM Act prohibit charging a fee or imposing Congressional finding, in connection with CAN– 255 According to one 2015 estimate, other requirements on recipients who wish to opt SPAM Act, that the ‘‘low cost’’ of email makes it approximately 10 percent of U.S. mobile telephone out of certain email communications. 16 CFR 316.5; ‘‘extremely convenient and efficient’’); Arthur numbers are not enrolled in an unlimited text plan. see also Definitions & Implementation Under the Middleton Hughes, Why Email Marketing is King, See Josh Zagorsky, Almost 90% of Americans Have CAN–SPAM Act, 73 FR 29654, 29675 (May 21, Harv. Bus. Rev. (Aug. 21, 2012), https://hbr.org/ Unlimited Texting, Instant Census Blog (Dec. 8, 2008) (concluding that, to implement an 2012/08/why-email-marketing-is-king (‘‘Direct mail 2015), https://instantcensus.com/blog/almost-90-of- unsubscribe function, requests for personal costs more than $600 per thousand pieces. With americans-have-unlimited-texting. information are unnecessary). email, there are almost no costs at all.’’).

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communicate with a consumer, such as communications, such as emails and convenient unsubscribe option, a letters. Nor would it apply to telephone text messages, without having a simple consumer who wishes to unsubscribe calls. mechanism to make them stop, and the from written electronic communications While emails and text messages are costs consumers incur when trying to may incur time and cost doing so. The common forms of written electronic unsubscribe from written electronic process may require the consumer to communications today, technology communications that do not contain an write an unsubscribe request, search for likely will evolve to introduce newer unsubscribe option. In addition, the and identify the debt collector (an entity forms of written electronic Bureau requests comment on whether to with whom the consumer may not be communications. Proposed § 1006.6(e) identify a non-exclusive list of words or familiar), obtain contact information for would apply to all written electronic phrases that express an opt-out the debt collector, and follow up with communications, regardless of whether instruction. In pre-proposal outreach, the debt collector if necessary. On they are specified in the rule and for example, one consumer advocate balance, these costs to consumers do not regardless of whether they exist now or urged that debt collectors be required to appear to outweigh the benefit to debt come to exist in the future. For example, honor standard phrases, such as ‘‘stop,’’ collectors of omitting an unsubscribe direct messaging communications on ‘‘unsubscribe,’’ ‘‘end,’’ ‘‘quit,’’ and option from written electronic social media and communications in an ‘‘cancel.’’ The Bureau also requests communications. Further, FDCPA application on a private website, mobile comment on whether to specify the section 808(5) specifically prohibits telephone, or computer, would be period within which a debt collector debt collectors from causing charges to covered by proposed § 1006.6(e). must process a consumer’s request to be incurred through the concealment of In its Small Business Review Panel opt out pursuant to proposed the true purpose of a communication, Outline, the Bureau described a § 1006.6(e), and, if so, what that period and it specifies that such charges proposal under consideration to require should be. include collect telephone calls. A debt debt collectors, absent consumer The Bureau proposes § 1006.6(e) as an collector who sends a text message to a consent, to use free-to-end-user (FTEU) interpretation of FDCPA section 806 consumer who lacks an unlimited text text messages so that the debt collector, pursuant to its authority under FDCPA messaging plan may—similar to a debt rather than the consumer, would incur section 814(d) to prescribe rules with collector who places a collect call to a any charge for the message.260 On respect to the collection of debts by debt consumer while concealing the purpose balance, however, requiring FTEU collectors. FDCPA section 806 prohibits of the call—cause the consumer to incur technology may be too restrictive. FTEU conduct the natural consequence of communications charges that the technology may only be supported by which is to harass, oppress, or abuse consumer does not wish to incur. The certain wireless platforms, and industry any person in connection with the Bureau proposes § 1006.6(e) to limit standards may only permit its use with collection of a debt. It is essentially written electronic communications that affirmative consumer consent.261 costless for debt collectors to send cause consumers to incur such charges. Requiring debt collectors to use FTEU written electronic communications, The Bureau also proposes § 1006.6(e) technology could therefore disadvantage such as emails and text messages, to pursuant to its authority under section some consumers by preventing them consumers. Debt collectors may 1032(a) of the Dodd-Frank Act to from receiving text messages, even therefore have little economic incentive prescribe rules to ensure that the when text messages are an equal or to limit the number of such features of any consumer financial preferred medium of communication. communications. Individual consumers product or service are fully, accurately, The Bureau requests comment on may find it harassing, oppressive, or and effectively disclosed to consumers proposed § 1006.6(e) and its related abusive to receive written electronic in a manner that permits consumers to commentary, including on the costs to communications, such as emails and understand the costs, benefits, and risks debt collectors and benefits to text messages, without having a simple associated with the product or service, consumers. In addition, the Bureau mechanism to make them stop. The in light of the facts and circumstances. requests comment on the potential Bureau proposes § 1006.6(e) to provide A consumer’s ability to opt out of consumer harms posed by written consumers with a way to stop written written electronic communications from electronic communications, including electronic communications that they a debt collector is a feature of debt the proportion of consumers in debt find harassing, oppressive, or abusive. collection, and the opt-out instructions collection that do not maintain The Bureau also proposes § 1006.6(e) required by proposed § 1006.6(e) unlimited text messaging plans and the as an interpretation of FDCPA section disclose that feature to consumers. cost to such consumers of receiving text 808 pursuant to its authority under messages. The Bureau also requests FDCPA section 814(d) to prescribe rules Section 1006.10 Acquisition of comment on whether consumers are with respect to the collection of debts by Location Information likely to find it harassing, oppressive, or debt collectors. FDCPA section 808 FDCPA section 804 imposes certain abusive to receive written electronic prohibits the use of unfair or requirements and limitations on a debt unconscionable means to collect or collector who communicates with any 260 Small Business Review Panel Outline, supra attempt to collect any debt. It may be person other than the consumer for the note 56, at appendix H at 1. unfair or unconscionable for a debt purpose of acquiring location 261 According to one industry website, FTEU is 262 supported by six carriers (AT&T, Boost, Sprint, T- collector to send a consumer a written information about the consumer. Mobile, Verizon Wireless, and Virgin Mobile). electronic communication, such as an FDCPA section 803(7) defines the term iVision Mobile, Free to End User (FTEU), http:// email or text message, without location information.263 The Bureau www.ivisionmobile.com/text-messaging-software/ providing an unsubscribe option. understands that there may be some free-to-end-user-fteu.asp (last visited May 6, 2019); Mobile Mkt’g Ass’n, U.S. Consumer Best Practices Because written electronic uncertainty regarding aspects of these for Messaging: Version 7.0, at 43 (Oct. 16, 2012), communications, such as emails and provisions, such as how to determine https://www.mmaglobal.com/files/bestpractices.pdf text messages, are essentially costless whether a debt collector who has (describing FTEU ‘‘Cross Carrier Guidelines’’ as for debt collectors, failing to provide acquired some information about a providing that ‘‘[c]ontent providers must obtain opt- in approval from subscribers before sending them consumers with an unsubscribe option any SMS or MMS messages or other content from may lead to excessive written electronic 262 15 U.S.C. 1692c. a short code’’). communications. In the absence of a 263 15 U.S.C. 1692a(7).

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consumer’s whereabouts no longer has comment 10(b)(2)–1 explains that, if the debt.267 It lists six non-exhaustive the purpose of acquiring location consumer obligated or allegedly examples of such prohibited conduct. information when communicating with obligated to pay the debt is deceased, Proposed § 1006.14 would implement a person other than the consumer. Such and the debt collector is attempting to and interpret FDCPA section 806. uncertainty may relate at least in part to locate a person with the authority to act Except with respect to proposed broader issues regarding the information on behalf of the deceased consumer’s § 1006.14(b) and (h), proposed § 1006.14 debt collectors receive from creditors. estate, the debt collector does not generally restates the statute, with only The Bureau will continue to consider violate § 1006.10(b)(2) by stating that the minor wording and organizational these and other issues related to debt collector is seeking to identify and changes for clarity. Paragraph (a) and location information communications to locate a person who is authorized to act paragraphs (c) through (g) of proposed identify areas that pose a risk of on behalf of the deceased consumer’s § 1006.14 are not addressed further in consumer harm or require clarification. estate. the section-by-section analysis below.268 Accordingly, proposed § 1006.10 In its Policy Statement on Decedent would implement FDCPA sections Debt, the FTC stated that it would 14(b) Repeated or Continuous 803(7) and 804 and generally mirrors refrain from taking enforcement action Telephone Calls or Telephone the statute, with minor wording and under FDCPA section 804(2) against Conversations organizational changes for clarity.264 debt collectors who state that they are FDCPA section 806 generally Proposed 1006.10(c), however, would seeking to locate a person ‘‘with the prohibits a debt collector from engaging clarify that a debt collector who is authority to pay any outstanding bills of in any conduct the natural consequence subject to the frequency restrictions in the decedent out of the decedent’s of which is to harass, oppress, or abuse FDCPA section 804 also must comply estate.’’ 265 FDCPA section 804(2) any person in connection with the with the frequency restrictions in prohibits debt collectors communicating collection of a debt. FDCPA section proposed 1006.14(b)—that is, the with third parties from stating that the 806(5) describes one example of proposal’s limits on telephone calls also consumer owes any debt. The FTC conduct prohibited by section 806: apply to location calls. The Bureau believed that, unlike the word ‘‘debts,’’ Causing a telephone to ring or engaging proposes § 1006.10 pursuant to its a reference to ‘‘outstanding bills’’ would any person in telephone conversation authority under FDCPA section 814(d) be unlikely to reveal information about repeatedly or continuously with intent to prescribe rules with respect to the whether the deceased consumer was to annoy, abuse, or harass any person at collection of debts by debt collectors. delinquent on those bills because nearly the called number.269 Proposed The Bureau also proposes two all consumers leave some bills at the § 1006.14(b)(1) through (5) would comments clarifying what is location time of their death.266 The Bureau is implement and interpret FDCPA section information in the decedent debt concerned that even references to 806(5)—and, by extension, FDCPA context. Proposed comment 10(a)–1 ‘‘outstanding bills’’ may convey that the section 806 270—by restating the would clarify the definition of location consumer owes a debt because the language of section 806(5), with one information in the decedent debt definition of ‘‘debt’’ in FDCPA section clarification, and by proposing context by providing that, if a consumer 803(5) broadly includes ‘‘any obligation numerical limits on the frequency with obligated or allegedly obligated to pay or alleged obligation of a consumer to which a debt collector may place any debt is deceased, location pay money arising out of a transaction telephone calls to a person. The information includes the information . . . primarily for personal, family, or proposed frequency limits include described in proposed § 1006.10(a) for a household purposes.’’ Accordingly, the certain exceptions and would establish person who is authorized to act on Bureau proposes to limit debt collectors whether a debt collector has violated or behalf of the deceased consumer’s to asking for information about a person has complied with FDCPA section estate. The Bureau proposes this authorized to act on behalf of the 806(5). comment on the basis that, as discussed deceased consumer’s estate. However, in the section-by-section analysis of For debt collectors collecting a the FTC’s phrase ‘‘with the authority to consumer financial product or service proposed § 1006.2(e) (definition of pay any outstanding bills of the consumer), the term consumer under debt, as defined in proposed § 1006.2(f), decedent out of the decedent’s estate’’ proposed § 1006.14(b)(1) through (5) the FDCPA includes deceased may be more understandable than the consumers. A debt collector may obtain also would identify an unfair act or Bureau’s proposed phrase ‘‘who is practice under section 1031(b) of the location information for such consumers authorized to act on behalf of the by obtaining location information for Dodd-Frank Act and would prescribe deceased consumer’s estate.’’ The requirements for the purpose of the person with the authority to act on Bureau requests comment on proposed behalf of the deceased consumer’s preventing covered persons from comment 10(b)(2)–1, including on any engaging in that unfair act or estate. Proposed comment 10(a)–1 experiences with the language would enable debt collectors who are contained in the FTC’s Policy Statement trying to collect a deceased consumer’s 267 15 U.S.C. 1692d. on Decedent Debt and on whether the 268 debts to locate a person with the Proposed § 1006.14(a) would implement rule should follow the FTC’s approach. FDCPA section 806’s general prohibition against authority to act on behalf of the conduct the natural consequence of which is to deceased consumer’s estate, thereby Section 1006.14 Harassing, harass, oppress, or abuse any person in connection facilitating the prompt resolution of Oppressive, or Abusive Conduct with the collection of a debt. Proposed § 1006.14(c) through (g) would implement FDCPA section 806(1) estates. FDCPA section 806 prohibits a debt Proposed comment 10(b)(2)–1 would through (4) and (6) (15 U.S.C. 1692d(1)–(4), (6)). collector from engaging in any conduct 269 interpret FDCPA section 804(2) in the 15 U.S.C. 1692d(5). the natural consequence of which is to 270 Because the conduct described in FDCPA decedent debt context. Proposed harass, oppress, or abuse any person in section 806(5) merely illustrates conduct that connection with the collection of a section 806 prohibits, proposed § 1006.14(b)(1) 264 For example, while no change in meaning is through (5) necessarily implements and interprets intended, the proposal substitutes the phrase ‘‘by both FDCPA section 806 and 806(5). For efficiency, mail’’ for the phrase ‘‘effected by the mails or 265 FTC Policy Statement on Decedent Debt, supra the section-by-section analysis of proposed telegram’’ in FDCPA section 804(5) to avoid note 192, at 44918–23. § 1006.14(b)(1) through (5) focuses primarily on obsolete language. 266 Id. at 44921 n.56. interpreting the language of FDCPA section 806(5).

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practice.271 Although FDCPA section Accordingly, the Bureau proposes to § 1006.14(b)(1)(i) that would have 806 and 806(5) and section 1031(b) of interpret the prohibitions in FDCPA prohibited repeated or continuous the Dodd-Frank Act define the conduct section 806 and 806(5) as applying attempts to contact a person by other they proscribe differently, in the interest when a debt collector ‘‘places’’ a media, such as by sending letters, of brevity, the discussion below telephone call.272 emails, or text messages. Under such an generally uses the catchalls ‘‘harass’’ For these reasons, and pursuant to its approach, contacts by such other media and ‘‘harassment’’ to refer to the authority under FDCPA section 814(d) also could be subject to a bright-line conduct addressed by proposed to prescribe rules with respect to the frequency limit, similar to the structure § 1006.14(b)(1) through (5). collection of debts by debt collectors, as for telephone calls in proposed The Bureau proposes § 1006.14(b)(1) well as pursuant to its authority to § 1006.14(b)(2). The Bureau does not through (5) pursuant to its authority implement and interpret FDCPA section propose subjecting communication under FDCPA section 814(d) to 806 and 806(5), the Bureau proposes to media other than telephone calls to the prescribe rules with respect to the provide in § 1006.14(b)(1)(i) that, in prohibitions on repeated or continuous collection of debts by debt collectors, as connection with the collection of a debt, contacts (or to bright-line limits on the well as its authority under section a debt collector must not place number of permissible contacts per 1031(b) of the Dodd-Frank Act to telephone calls or engage any person in week) primarily because the Bureau is prescribe rules to identify and prevent telephone conversation repeatedly or not aware of evidence demonstrating unfair acts or practices in connection continuously with intent to annoy, that debt collectors commonly harass with the collection of a consumer abuse, or harass any person at the called consumers or others through repeated or financial product or service debt, as that number. continuous debt collection contacts by term is defined in proposed § 1006.2(f). The Bureau proposes comment media other than telephone calls. 14(b)(1)–1 to clarify that placing a 14(b)(1) In General As to mail, the Bureau has received telephone call includes placing a few complaints about debt collectors 14(b)(1)(i) FDCPA Prohibition telephone call that results in a ringless sending excessive letters; in fact, FDCPA section 806(5) prohibits a debt voicemail (or ‘‘voicemail drop’’) but available evidence suggests that a collector from ‘‘causing a telephone to does not include sending an electronic significant percentage of consumers ring or engaging any person in message (e.g., a text message or an prefer to communicate with debt email) to a mobile telephone.273 The telephone conversation repeatedly or collectors by mail.274 In addition, in Bureau proposes this clarification continuously with intent to annoy, feedback to the Bureau after publication because, given the specific language of abuse, or harass any person at the called of the Small Business Review Panel FDCPA section 806(5), the Bureau number.’’ Since the FDCPA’s 1977 Outline, industry stakeholders and believes that Congress may have enactment, telephone-calling technology consumer advocates agreed that there intended for this provision to apply to has evolved, and changes in technology currently is not evidence of a need to communications that present the may create uncertainty about whether a regulate the frequency with which debt opportunity for the parties to engage in debt collector has ‘‘caus[ed] a telephone collectors communicate with consumers a live telephone conversation or that to ring.’’ It now is common to place a or others by mail. The cost of sending result in an audio message. In addition, telephone call and be connected to the mail—currently about $0.50 to $0.80 as discussed in the section-by-section cents to print and mail a letter, as noted dialed number without ever causing a analysis of proposed § 1006.14(b)(2), the traditional, audible ring. For example, in part VI—is significantly greater than Bureau understands that few debt the cost of making telephone calls and many telephones afford users the option collectors contact consumers using such may deter debt collectors from sending to have their telephones ring in the form electronic messages and, as a result, that excessive communications by mail.275 of vibrating, visual, or customized audio debt collectors have not been sending alerts. In addition, many callers, As to email and text messages, debt electronic messages to consumers collectors generally have not yet begun including many debt collectors, now repeatedly or continuously with intent can bypass a person’s opportunity to communicating with consumers using to harass them or to cause substantial these or other newer communication answer the telephone by connecting injury. The Bureau requests comment media.276 The Bureau thus is unaware directly to the person’s voicemail. As a on proposed § 1006.14(b)(1)(i) and on of evidence, including from consumer result, debt collectors can place comment 14(b)(1)–1. complaints or feedback from industry telephone calls or leave voicemail The Bureau also requests comment on messages for a person without ever whether to interpret FDCPA section 806 stakeholders or consumer advocates, causing a traditional, audible ring. Such and 806(5) as prohibiting debt collectors demonstrating that debt collectors telephone calls, if made repeatedly and from using communication media other commonly use such media to contact continuously, nonetheless may be than telephone calls frequently and consumers repeatedly or continuously intended to harass or may have the repeatedly with intent to annoy, abuse, with intent to harass or with the effect effect of harassing a person in ways that or harass any person in connection with of harassing them. Indeed, both industry the FDCPA prohibits. For that reason, the collection of any debt. For example, even if a debt collector’s telephone call 274 Forty-two percent of respondents to the the Bureau considered proposing a Bureau’s Debt Collection Consumer Survey who may not cause a traditional ring, the broader version of proposed had been contacted about a debt in the prior year Bureau’s proposal treats the call as identified mail as their preferred medium of within the scope of FDCPA section 272 As explained in the section-by-section communication for debt collection. See CFPB Debt 806(5), or in any event within the scope analysis of proposed § 1006.14(b)(3)(iii), the Collection Consumer Survey, supra note 18, at 37. of FDCPA section 806, if the call is proposed rule also provides that a debt collector’s 275 The Bureau notes that the Commonwealth of telephone calls that are unable to connect to the Massachusetts’s debt collection regulations, which connected to the dialed number. dialed number do not count toward, and are include communication frequency limits for debt permitted in excess of, the frequency limits in collectors and creditors, exclude postal mail from 271 Dodd-Frank Act section 1031 applies to proposed § 1006.14(b)(2). those limits. See 209 Code. Mass. Regs 18.14(1)(d); covered persons and service providers. Debt 273 Proposed comment 14(b)(1)–1 also would 940 Code Mass. Regs. 7.04(1)(f) (frequency limits collectors collecting consumer financial product or clarify that the same interpretation of ‘‘placing a apply to telephone calls and text messages). service debt are covered persons. 12 U.S.C. 5481(5), telephone call’’ applies with respect to proposed 276 See generally the section-by-section analysis (6), (15)(A)(x). § 1006.14(b)(1)(ii). of proposed § 1006.6(d)(3).

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stakeholders and consumer advocates consumers allowed it to greatly reduce financial product or service debt must have suggested that such media may be its number of outbound telephone calls, not exceed the calling frequency limits inherently less harassing than telephone resulting in fewer consumer complaints proposed in § 1006.14(b)(2). The Bureau calls because, for example, recipients and enabling it to monitor proposes § 1006.14(b)(1)(ii) pursuant to may have more freedom to decide when communications for compliance with its authority under section 1031(b) of to engage with an email or a text the FDCPA more easily. In addition, the Dodd-Frank Act to prescribe rules to message than with a debt collection small entity representatives suggested identify and prevent unfair acts or telephone call.277 Although the Bureau that written correspondence (e.g., practices in connection with the currently is unaware of sufficient mailed letters) should be excluded from collection of a consumer financial evidence of consumer injury that would any frequency limits. The Small product or service debt, as that term is suggest a need for restricting the Business Review Panel therefore defined in proposed § 1006.2(f). frequency of email and text message recommended that the Bureau consider 14(b)(2) Frequency Limits communications, the Bureau recognizes whether the frequency limits should that the use of such media, if abused, apply equally to all communication Proposed § 1006.14(b)(2) sets forth could harass consumers in some of the channels.280 Limiting proposed bright-line frequency limits for debt same ways as repeated or continuous § 1006.14(b)(1)(i) and (2) to a collection telephone calls. This section- telephone calls or telephone prohibition against repeated and by-section analysis discusses the conversations.278 The Bureau notes that continuous telephone calls should Bureau’s proposal to establish bright- proposed § 1006.14(a)—which generally address small entity representatives’ line frequency limits generally; the prohibits any conduct the natural concerns about a frequency limit that section-by-section analysis of proposed consequence of which is to harass, would apply to all types of § 1006.14(b)(2)(i) and (ii) addresses the oppress, or abuse any person in communication media. specific numerical frequency limits that connection with the collection of any the Bureau proposes. debt—would apply to harassment 14(b)(1)(ii) Identification and Prevention As noted, FDCPA section 806 through media other than telephone of Dodd-Frank Act Unfair Act or prohibits a broad range of debt calls and could provide sufficient Practice collection communication practices that protection to consumers. The Bureau The Bureau proposes harm consumers and others, and section requests comment on the proposed § 1006.14(b)(1)(ii) to identify that a debt 806(5) in particular prohibits debt approach, including on whether the collector who is engaged in the collectors from making telephone calls frequency limits should apply to collection of a consumer financial or engaging a person in telephone communication media other than product or service debt, as that term is conversation repeatedly or continuously telephone calls and, if so, to which defined in proposed § 1006.2(f), engages with intent to annoy, abuse, or harass. media.279 in an unfair act or practice by placing Section 806(5) does not identify a During the SBREFA process, the telephone calls or engaging any person specific number of telephone calls or Bureau’s proposal under consideration in telephone conversation repeatedly or telephone conversations within any to establish numerical limits on the continuously, such that the natural particular timeframe that would violate frequency with which debt collectors consequence is to harass, oppress, or the statute. In the years since the communicate and attempt to abuse any person at the called number. FDCPA was enacted, courts interpreting communicate with consumers and The Bureau proposes § 1006.14(b)(1)(ii) FDCPA section 806(5) have not others would have applied to all forms on the basis that such conduct by debt developed a consensus or bright-line of communication media, not just to collectors is an unfair act or practice as rule regarding call frequency.283 While telephone calls. Several small entity described in Dodd-Frank Act section several States and localities have representatives suggested that, in their 1031(c) because, as discussed in the imposed numerical limits on debt experience, consumers increasingly section-by-section analysis of proposed collection contacts, the limits vary, and prefer communicating by email, and § 1006.14(b)(2) below,281 the conduct the large majority of jurisdictions have that excluding email from any frequency causes or is likely to cause substantial not established any numerical limits.284 limits would encourage debt collectors injury to consumers that consumers Also in the years since the FDCPA to use email instead of potentially more cannot reasonably avoid and that is not was enacted, technological harassing communication strategies, outweighed by countervailing benefits developments have intensified the such as placing repeated telephone to consumers or to competition.282 The 283 calls. One small entity representative Bureau also proposes § 1006.14(b)(1)(ii) See, e.g., Turner v. Prof’l Recovery Servs., Inc., advised that using email to contact 956 F. Supp. 2d 573, 578 (D.N.J. 2013) (noting the to provide requirements to prevent such lack of consensus or bright-line rule); Neu v. an unfair act or practice; specifically, Genpact Servs., LLC, No. 11–CV–2246 W KSC, 2013 277 As with mail, the Bureau notes that under the proposal, a debt collector WL 1773822, at *4 (S.D. Cal. Apr. 25, 2013) (same); Massachusetts’s debt collection regulations do not Hicks v. Am.’s Recovery Sols., LLC, 816 F. Supp. 2d limit the frequency of a debt collector’s email engaged in the collection of a consumer 509, 515 (N.D. Ohio 2011) (same). communications. See supra note 275. 284 For example, the Commonwealth of 278 Cf. Clements v. HSBC Auto Fin., Inc., Civ. A. 280 Small Business Review Panel Report, supra Massachusetts and City of New York generally limit No. 5:09–cv–0086, 2011 WL 2976558, at *5 (S.D. W. note 57, at 37. debt collectors to initiating two communications Va. July 21, 2011) (‘‘That Plaintiffs were not at 281 Section 1006.14(b)(2) proposes bright-line per week with a consumer. See 209 Code. Mass. home all of the time and, therefore, could not have frequency limits that would determine whether a Regs 18.14(1)(d) (limiting contacts by debt heard each one of the calls is of little moment. They debt collector has violated § 1006.14(b)(1). collectors); 940 Code Mass. Regs. 7.04(1)(f) (limiting had notice of every missed call through Caller 282 Section 1031(c) of the Dodd-Frank Act defines contacts by creditors engaged in debt collection); ID.... Missed calls communicate more than a unfairness without regard to a covered person’s or N.Y.C. Admin. Code 5–77(b)(1)(iv) (limiting phone number. They can, depending on volume service provider’s intent. For FDCPA-covered debt contacts by debt collectors). The State of and frequency, communicate urgency and panic.’’). collectors who are collecting a consumer financial Washington generally limits debt collectors to three 279 The Bureau notes in particular that the FCC produce or service debt, the Bureau’s proposal total communications and one workplace has interpreted a statutory reference to ‘‘mak[ing] therefore identifies the unfair act or practice as communication per week with a consumer. See any call’’ as encompassing the sending of text repeated or continuous telephone calls that have Wash. Rev. Code 19.16.250(13)(a), (b). The States of messages. See In re Rules & Regulations the natural consequence of harassment, oppression, New Hampshire and Oregon limit the frequency of Implementing the Tel. Consumer Prot. Act of 1991, or abuse, without regard to the debt collector’s workplace communications. See N.H. Rev. Stat. 18 FCC Rcd. 14,014, 14,115 ¶ 165 (2003). intent. Ann. 358–C:3(I)(c); Or. Rev. Stat. 646.639(2)(g).

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consumer-protection concerns narrative descriptions along with their as to issue regulations to prevent and underlying FDCPA section 806(5). In complaints to the Bureau, providing a prohibit persons covered under the 1977, placing a telephone call was window into their experiences with Dodd-Frank Act from engaging in typically a manual process that required repeated telephone calls. Some unfair, deceptive, or abusive acts or a caller to dial a telephone number one consumers describe being called practices.291 digit at a time. Since then, the multiple times per day, every day of the Consumers’ experiences with, and development of ‘‘predictive dialers’’ has week, for weeks or months at a time.288 complaints about, repeated or enabled callers, such as debt collectors, Some consumers report that repeated continuous debt collection telephone to load a large number of telephone calls make them feel upset, stressed, calls do not necessarily establish that numbers into a program that intimidated, hounded, or weary, or that the conduct in each instance would automatically dials the numbers and, if such calls interfere with their health or have violated FDCPA section 806(5). the call is answered, connects the call sleep or—when debt collection They do, however, suggest a widespread to a debt collector. Predictive dialers voicemails fill their inboxes—their consumer protection problem that has have substantially reduced the cost to ability to receive other important persisted for 40 years notwithstanding debt collectors of placing telephone messages.289 the FDCPA’s existing prohibitions and calls and have enabled debt collectors to When Congress conferred FDCPA case-by-case enforcement by the FTC place many more calls at a very low rulemaking authority on the Bureau and the Bureau as well as private cost.285 through the Dodd-Frank Act in 2010, it FDCPA actions.292 To address this In light of these developments, and in relied, in part, on consumers’ persistent harm, the Bureau proposes the absence of a bright-line rule about experiences with repeated or § 1006.14(b)(2) to establish bright-line how many telephone calls is too many, continuous debt collection telephone rules for determining whether a debt numerous problems with call frequency calls to observe that case-by-case collector has violated FDCPA section persist. Frequent telephone calls are a enforcement of the FDCPA had not 806(5) (and, in turn, FDCPA section consistent source of consumer-initiated ended the consumer harms that the 806), as implemented and interpreted in litigation and consumer complaints to statute was designed to address. In a proposed § 1006.14(b)(1). Federal and State regulators. 2010 report prepared in connection with Proposed § 1006.14(b)(2) provides Consumers’ lawsuits allege injuries such the Restoring American Financial that, subject to § 1006.14(b)(3), a debt as feeling harassed, stressed, Stability Act of 2010 (the Senate’s collector violates proposed intimidated, or threatened, and predecessor bill to the Dodd-Frank Act), § 1006.14(b)(1) by placing a telephone sometimes allege adverse impacts on the Senate Committee on Banking, call to a particular person in connection employment.286 In addition, from 2011 Housing, and Urban Affairs cited with the collection of a particular debt through 2018, the Bureau and the FTC consumer complaints to the FTC about, either: (i) More than seven times within received over 100,000 complaints about among other things, debt collectors seven consecutive days, or (ii) within a repeated debt collection telephone ‘‘bombarding [them] with continuous period of seven consecutive days after calls.287 Some consumers submit calls’’ to conclude that abusive debt having had a telephone conversation collection practices had continued to with the person in connection with the 285 See In re Rules & Regulations Implementing proliferate since the FDCPA’s collection of such debt, with the date of the Tel. Consumer Prot. Act of 1991, 30 F.C.C. Rcd. passage.290 In connection with that 7961, 8021 (2015) (‘‘Autodialers can quickly dial 291 15 U.S.C. 1692l; Dodd-Frank Act sections thousands of numbers, a function that costs large finding, among others, Congress granted 1031(b), 1032; 12 U.S.C. 5531(b), 5532 (2010). numbers of wireless consumers money and the Bureau the authority to prescribe 292 See, e.g., Complaint at ¶¶ 63, 124–28, Fed. aggravation.’’), set aside in part by ACA Int’l v. Fed. rules with respect to the activities of Trade Comm’n & Consumer Fin. Prot. Bureau v. Commc’ns Comm’n, 885 F.3d 687 (D.C. Cir. 2018). FDCPA-covered debt collectors, as well Green Tree Servicing LLC, No. 0:15–cv–02064 (D. 286 See, e.g., Meadows v. Franklin Collection Minn. Apr. 21, 2015), https://www.ftc.gov/ Serv., Inc., 414 F. App’x 230, 233–34 (11th Cir. enforcement/cases-proceedings/112-3008/green- 2011) (reversing district court’s dismissal of collection-practices-act.pdf; Bureau of Consumer tree-servicing-llc (alleging that defendant violated consumer’s FDCPA section 806(5) claim where Fin. Prot., Fair Debt Collection Practices Act: CFPB FDCPA section 806(5) by, among other things, ‘‘[plaintiff] testified that [the debt collector’s] phone Annual Report 2014, at 11–13, 19 (Mar. 2014), _ _ having frequently called consumers between seven calls eventually made her feel harassed, stressed, https://files.consumerfinance.gov/f/201403 cfpb and 20 times per day, every day, week after week); upset, aggravated, inconvenienced, frustrated, fair-debt-collection-practices-act.pdf; 2013 FDCPA Complaint at ¶¶ 20–22, 41, Fed. Trade Comm’n v. shaken up, intimidated, and threatened on Annual Report, supra note 9, at 17; Bureau of K.I.P., LLC, No. 1:15–cv–02985 (N.D. Ill. Apr. 6, occasion. And, several times the calls woke her up Consumer Fin. Prot., Fair Debt Collection Practices 2015), https://www.ftc.gov/enforcement/cases- from sleep and caused her difficulty sleeping.’’); Act: CFPB Annual Report 2012, at 8 (Mar. 2012), _ _ proceedings/152-3048/kip-llc-payday-loan- Roots v. Am. Marine Liquidators, Inc., No. 0:12– https://files.consumerfinance.gov/f/201203 cfpb _ _ recovery-group (alleging that defendant violated CV–00602–JFA, 2012 WL 3136462, at *1–2 (D.S.C. FDCPA annual report.pdf. This total reflects FDCPA section 806(5) by, among other things, Aug. 1, 2012) (awarding damages to consumer complaints about all persons collecting debt, ‘‘call[ing] consumer multiple times per day or night where, among other things, ‘‘[p]laintiff testified that including creditors and other first-party collectors . . . over an extended period of time’’); Complaint after his manager learned that Plaintiff was getting in addition to debt collectors covered by the at ¶¶ 22, 50–53, Fed. Trade Comm’n v. Expert Glob. repeated collection calls at work, they treated him FDCPA. For complaints submitted to the Bureau, Sols, Inc., No. 3–13 CV 2611–M (N.D. Tex. July 8, differently which caused him to seek out other complaint data reflects the number of complaints 2013), https://www.ftc.gov/enforcement/cases- employment. Plaintiff took a new job in April, 2012, that consumers self-identified as being primarily proceedings/1023201/expert-global-solutions-inc- which resulted in a pay reduction of $2.00 per hour about frequent or repeated debt collection nco-group-inc (alleging that defendants violated for a period of 52 weeks. He works 40 hours each communications (consumers must choose only one FDCPA section 806(5) by, among other things, week, for a total loss of income in the amount of topic when filing their complaints). The Bureau has ‘‘call[ing] multiple times per day or frequently over $ 4,160.’’). not attempted to identify the specific number of an extended period of time [including,] for 287 See 2019 FDCPA Annual Report, supra note communications-related consumer complaints that example, calling some persons three or more time 11, at 15–17; 2018 FDCPA Annual Report, supra it has received because many complaints that per day’’); Complaint at ¶¶ 80, 97(b), Fed Trade note 16, at 14–16; 2017 FDCPA Annual Report, consumers self-identify as being primarily about a Comm’n v. Jefferson Capital Sys., LLC, No. 1:08–cv– supra note 21, at 15–17; Bureau of Consumer Fin. different issue also may include concerns about a 1976 BBM (N.D. Ga. June 10, 2008), https:// Prot., Fair Debt Collection Practices Act: CFPB debt collector’s communication practices. www.ftc.gov/enforcement/cases-proceedings/062- Annual Report 2016, at 18–19 (Mar. 2016), https:// 288 See generally Bureau of Consumer Fin. Prot., 3212/compucredit-corporation-jefferson-capital- files.consumerfinance.gov/f/201603_cfpb-fair-debt- Consumer Complaints, https:// systems-llc (alleging that defendant violated FDCPA collection-practices-act.pdf; Bureau of Consumer data.consumerfinance.gov/dataset/Consumer- section 806(5) by, among other things, ‘‘[calling] Fin. Prot., Fair Debt Collection Practices Act: CFPB Complaints/s6ew-h6mp (last visited May 6, 2019). individual consumers in excess of twenty times per Annual Report 2015, at 12–14 (Mar. 2015), https:// 289 Id. day, in some cases, at intervals of only twenty to files.consumerfinance.gov/f/201503_cfpb-fair-debt- 290 S. Rept. 111–176, at 19 (2010). thirty minutes’’).

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the telephone conversation being the the consumer who is alleged to owe the exceptions for certain types of contacts, first day of the seven-consecutive-day debt.294 but the Outline did not identify any period.293 As discussed in the section- The Bureau requests comment on the particular exceptions that were under by-section analysis of proposed proposal to establish a bright-line rule to consideration.296 Small entity § 1006.14(b)(2)(i) and (ii), which determine when a debt collector’s representatives suggested that contacts addresses the specific frequency limits calling frequency has violated FDCPA initiated by consumers should not count that the Bureau proposes, the Bureau section 806(5) and the prohibition in toward the frequency limits, and the proposes § 1006.14(b)(2) pursuant to its proposed § 1006.14(b)(1)(i), as well as to Small Business Review Panel Report authority under FDCPA section 814(d) prevent an unfair act or practice under recommended that the Bureau consider to prescribe rules with respect to the Dodd-Frank Act section 1031(b). As whether consumer-initiated contacts collection of debts by debt collectors, its discussed, under such a bright-line rule, should be excluded.297 Proposed authority to implement and interpret a debt collector who exceeds the § 1006.14(b)(2) would count only FDCPA section 806 and 806(5), and its frequency limits would per se violate telephone calls that a debt collector authority under Dodd-Frank Act section FDCPA section 806(5) and the ‘‘places’’ to a person toward the 1031(b) to prescribe rules to prevent prohibitions in proposed frequency limits, which may help to Bureau-identified unfair acts or § 1006.14(b)(1), while a debt collector address small entity representatives’ practices in connection with any who stays within the frequency limits concerns about consumer-initiated transaction with a consumer for a would per se comply with those contacts. consumer financial product or service. provisions. In lieu of a bright-line rule, 14(b)(2)(i) it would be possible, for example, to Proposed § 1006.14(b)(2) would apply have a rebuttable-presumption rule. Proposed § 1006.14(b)(2)(i) provides not only to debt collection calls placed Under a rebuttable presumption, a debt that, subject to the exceptions in to consumers who owe or are alleged to collector who exceeded the frequency § 1006.14(b)(3), a debt collector violates owe debt, but to any person (with limits presumptively would violate § 1006.14(b)(1)(i) by placing a telephone certain exceptions described below). FDCPA section 806(5) and the call to a person more than seven times Congress recognized the potential harm prohibitions in proposed within seven consecutive days in from debt collectors placing repeated or § 1006.14(b)(1), but the debt collector connection with the collection of a continuous telephone calls to persons would have the opportunity to rebut particular debt. Under this bright-line other than consumers when it enacted that presumption. rule, and subject to the exceptions in FDCPA section 806(5), which protects As discussed further in the section- proposed § 1006.14(b)(3), a debt ‘‘any person’’ from repeated or by-section analysis of proposed collector who places more than seven continuous telephone calls or § 1006.14(b)(4) below, the Bureau does telephone calls to any person within conversations made with intent to not propose a rebuttable presumption seven consecutive days about a debt annoy, abuse, or harass. Likewise, because the benefits of a rebuttable would per se violate FDCPA section 806 Dodd-Frank Act section 1031 applies to presumption approach are unclear. It and 806(5) and the prohibitions in 298 acts or practices ‘‘in connection with a appears that most, if not all, of the proposed § 1006.14(b)(1). transaction with a consumer for a circumstances that might require a debt The Bureau’s proposed frequency consumer financial product or service’’ collector to exceed the frequency limits limits take into account a number of (or ‘‘the offering of a consumer financial could be addressed by specific competing considerations. One product or service’’), provided that ‘‘the exceptions to a bright-line rule.295 It consideration is that, for many— act or practice causes or is likely to thus appears that a well-defined, bright- perhaps most—people, even a small cause substantial injury to consumers’’ line rule with specific exceptions could number of debt collection telephone and meets the other criteria for provide needed flexibility without calls may have the natural consequence unfairness. Like the language of FDCPA sacrificing the clarity of a bright-line of causing them to experience section 806(5), the language of Dodd- rule. A bright-line rule may also harassment, oppression, or abuse, and Frank Act section 1031 suggests that an promote predictability and reduce the therefore, assuming a debt collector is act or practice may be unfair to risk and uncertainty of litigation. The aware of this effect, the debt collector’s consumers generally, presumably even Bureau requests comment on this aspect placement of even a small number of if the injury is to a consumer who is not of the proposal and on whether, if a such calls may indicate that the debt a party to the transaction creating the rebuttable presumption approach were collector has the requisite intent to debt, so long as the injury is ‘‘in adopted, the Bureau should retain any annoy, abuse, or harass. In the Bureau’s connection with’’ a transaction with a of the exceptions described in proposed Debt Collection Consumer Survey, consumer for a consumer financial § 1006.14(b)(3). nearly 90 percent of respondents who product or service. The frequency limits During the SBREFA process, the in proposed § 1006.14(b)(2) thus would Bureau’s proposal under consideration 296 Small Business Review Panel Outline, supra apply to any person (with certain note 56, at 25. would have applied to any of a debt 297 See Small Business Review Panel Report, exceptions described below), not only to collector’s communications or attempts supra note 57, at 37. to communicate. The Bureau’s Small 298 Because proposed § 1006.14(b)(1)(ii) provides 293 Because proposed § 1006.14(b)(1)(ii) provides Business Review Panel Outline noted that a debt collector engaged in the collection of a that a debt collector engaged in the collection of a that a bright-line rule could provide consumer financial product or service debt must consumer financial product or service debt must not exceed the frequency limits proposed in not exceed the calling frequency limits proposed in § 1006.14(b)(2), such a debt collector who places § 1006.14(b)(2), such a debt collector who exceeds 294 While proposed § 1006.14(b)(2) would apply more than seven telephone calls within seven the frequency limits also would violate proposed to ‘‘any person,’’ the Bureau uses the term consecutive days also would violate § 1006.14(b)(1)(ii). Separately, proposed ‘‘consumer’’ throughout this section-by-section § 1006.14(b)(1)(ii). Separately, under the proposal, a § 1006.14(b)(4) provides a parallel bright-line rule analysis as a shorthand to refer both to consumers, debt collector who placed seven or fewer telephone that debt collectors who place telephone calls or as defined by the FDCPA, and others who may be calls within a period of seven consecutive days engage in telephone conversations at or below the contacted by debt collectors. would per se not have placed telephone calls levels in § 1006.14(b)(2) do not, based on their 295 See the section-by-section analysis of repeatedly or continuously to the person at the calling frequency, violate the FDCPA, the Dodd- proposed § 1006.14(b)(3) for a discussion of the called number. See the section-by-section analysis Frank Act, or § 1006.14(b)(1). Bureau’s proposed exceptions. of proposed § 1006.14(b)(4).

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said they were contacted more than and consumers to communicate with and 1006.42 are designed to clarify that three times per week indicated that they one another could prevent debt ambiguity so that debt collectors may were contacted too often; 74 percent of collectors from establishing right-party communicate electronically with respondents who said they were contact and resolving debts, even when consumers who prefer to communicate contacted one to three times per week doing so is in the interests of both that way. Further, for the reasons indicated that that they were contacted consumers and debt collectors. For discussed in the section-by-section too often; and 22 percent of respondents example, during the SBREFA process, analysis of proposed § 1006.14(b)(1), the who said that they were contacted less small entity representatives reported Bureau does not propose subjecting than once per week indicated that even that consumers who do not email, text messages, or other electronic this level of contact was too often.299 communicate with a debt collector may communications to the proposed The effect on a consumer of a single have negative information furnished to frequency limits. debt collector placing repeated or consumer reporting agencies or may Taking all of these factors into continuous telephone calls is amplified face additional fees or a collection account, the Bureau proposes to draw by the fact that, according to the lawsuit, which can entail the financial the line at which a debt collector places Bureau’s research, almost 75 percent of or opportunity cost of the lawsuit or telephone calls repeatedly or consumers with at least one debt in subject a consumer to wage continuously with intent to annoy, collection have multiple debts in garnishment. And as much as some abuse, or harass any person at the called collection, such that many consumers consumers might prefer to avoid number (and the line at which such may receive calls from multiple debt speaking to debt collectors, many calls have the natural consequence of collectors each week.300 Debt collectors consumers benefit from harassing, oppressing, or abusing any who are aware that many consumers communications that enable them to person) 304 at seven telephone calls in a have multiple debts in collections and promptly resolve a debt through partial seven-day period about a particular that these consumers are already or full payment or an acknowledgement debt. The proposal would allow debt receiving telephone calls from other that the consumer does not owe some or collectors to call up to seven times per debt collectors may be placing all of the alleged debt. week across multiple telephone additional calls with intent to annoy, The Bureau also has considered numbers (e.g., a home landline, mobile, abuse, or harass those consumers. whether debt collectors’ reliance on and work), and to leave a limited- At the same time, debt collectors have making repeated telephone calls to content message each time. It also a legitimate interest in reaching establish contact with consumers could would not limit how many mailed consumers. The FDCPA’s purposes be reduced by other aspects of the letters, emails, and text messages debt include ‘‘eliminat[ing] abusive debt proposed rule that are designed to collectors could send. At the same time, collection practices by debt collectors’’ address legal ambiguities regarding how by making clear that debt collectors and ensuring that debt collectors who and when debt collectors may cannot call consumers more than seven refrain from such practices ‘‘are not communicate with consumers. For times each week about a particular debt competitively disadvantaged.’’ 301 The example, as discussed above, debt in collection, the proposal would FDCPA does not contemplate that the collectors who leave voicemails for protect consumers and others from elimination of abusive practices entails consumers currently face a dilemma being harmed by debt collectors making the elimination of ‘‘the effective about whether to risk liability under repeated or continuous telephone calls collection of debts.’’ 302 Communicating FDCPA sections 806(6) and 807(11) by with intent to annoy, abuse, or harass. with consumers is central to debt omitting disclosures required under For the reasons discussed above, the collectors’ ability to recover amounts those sections, or risk liability under Bureau proposes § 1006.14(b)(2)(i) to owed to creditors. Debt collectors FDCPA section 805(b) by including the provide that, subject to proposed typically must make multiple attempts disclosures and potentially disclosing a § 1006.14(b)(3), a debt collector violates before establishing what in industry debt to a third party who might overhear proposed § 1006.14(b)(1)(i) by placing parlance is referred to as ‘‘right-party the message. Proposed § 1006.2(j) seeks more than seven telephone calls within contact’’—that is, before they actually to address that dilemma by defining a seven consecutive days to a particular speak to a consumer. Too greatly limited-content message that debt person in connection with the collection restricting the ability of debt collectors collectors may leave for consumers of a particular debt. Proposed comment without violating FDCPA sections 14(b)(2)(i)–1 provides illustrative 305 299 See CFPB Debt Collection Consumer Survey, 805(b), 806(6), or 807(11). Permitting examples of the proposed rule. supra note 18, at 31. Consumers were asked ‘‘How such messages should ensure that debt often did this creditor or debt collector usually try 304 Litt v. Portfolio Recovery Assocs. LLC, 146 F. to reach you each week, including times they did collectors can leave voicemails with a Supp. 3d 857, 873 (E.D. Mich. 2015) (‘‘[W]hile the not reach you?’’ Response options included: Less return call number for a consumer to general proscription of § 1692d does not use the than once per week; one to three times per week; use at the consumer’s convenience, word ‘intent,’ such a requirement is inferred from four to seven times per week; eight to 14 times per which may help reduce the need for the necessity to establish that the natural tendency week; 15 to 21 times per week; and more than 21 of the conduct is to embarrass, upset or frighten a times per week. A separate question asked debt collectors to place repeated debtor. If the natural tendency of certain conduct 303 consumers whether the debt collector had contacted telephone calls to contact consumers. is to embarrass, upset or frighten, then one who them too often. Survey respondents had the option Another legal ambiguity regarding engages in such conduct can be presumed to have of indicating that they were not sure whether how and when debt collectors may intended the natural consequences of his act.’’); see contacts had come from a debt collector, creditor, communicate with consumers is that the also United States v. Falstaff Brewing Corp., 410 or another source. The data reflects responses given U.S. 526, 570 n.22 (1973) (Marshall, J., concurring by any respondent who reported being contacted FDCPA does not address how debt in result) (‘‘[P]erhaps the oldest rule of evidence— about a debt in collection. Limitations on the survey collectors may use electronic that a man is presumed to intend the natural and data include that respondents were not asked to communication media such as emails or probable consequences of his acts—is based on the distinguish between contact attempts and actual text messages to communicate. The common law’s preference for objectively contacts and were not asked to specify whether they measurable data over subjective statements of already had spoken with the debt collector who was Bureau’s proposals in §§ 1006.6(d)(3) opinion and intent.’’). trying to contact them. Id. at 30–31. 305 The examples would clarify how the proposed 300 Id. at 13, table 1. 303 See the section-by-section analysis of rule would apply to calls to consumers or to third 301 15 U.S.C. 1692(e) (emphasis added). proposed § 1006.2(j) for a full discussion of the parties. The Bureau understands that debt collectors 302 15 U.S.C. 1692(c). proposed limited-content message. may make location calls to several numbers, but

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Proposed comment 14(b)(2)(i)–2 therefore have recommended that the times of the day. It also is not clear that would clarify how to determine the Bureau prohibit a debt collector from many debt collectors would respond to number of telephone calls a debt placing, for example, more than three the proposed weekly limit on telephone collector has placed if the debt collector telephone calls per week to any one calls by placing all of their permitted learns that the telephone number that consumer, regardless of how many debts calls in rapid succession, thus foregoing the debt collector previously used to the debt collector is trying to recover the opportunity to call the consumer at call a person is not, in fact, that person’s from that consumer. a different time of day or on a different number. The comment would clarify The Bureau encourages commenters day of the week for the following seven that telephone calls placed to the wrong who believe the Bureau should set a days. Further, a rule with both daily and number are not counted towards the higher or lower limit to provide data weekly frequency limits would sacrifice frequency limit in proposed supporting any recommended numbers, the ease of implementing and § 1006.14(b)(2)(i) with respect to the such as data regarding the frequency of monitoring one frequency limit. The person the debt collector is trying to calls that debt collectors currently make Bureau requests comment on its contact. The Bureau proposes this and how that frequency relates to the approach and on the merits of limiting clarification because a person is time needed to establish right-party telephone calls based on a different time unlikely to be harassed by debt contact and payments received from period (e.g., by day, by month, or collection calls that are placed to a consumers. The Bureau also encourages through a combination of time periods). number that belongs to someone else. commenters to provide data Third, the Bureau requests comment The Bureau requests comment on demonstrating the marginal impact on on the proposal to apply frequency several aspects of proposed consumers and debt collectors, as well limits on a per-debt, rather than on a § 1006.14(b)(2)(i). First, the Bureau as on competition and the cost of credit, per-consumer, basis.307 As proposed, requests comment on the proposal to set of adjusting the weekly limit on § 1006.14(b)(2)(i) could permit, for the frequency limit at seven telephone telephone calls from the proposed seven example, a debt collector who is calls to a particular consumer within calls per week to a different number. To attempting to collect two debts from the seven consecutive days regarding a the extent that a commenter same consumer to place up to 14 particular debt, including on the harms recommends a higher limit on telephone telephone calls in one week to that to consumers that may be prevented by calls to permit debt collectors to recover consumer without violating the FDCPA, this limit and on how such a limit may more payments from consumers, the the Dodd-Frank Act, or Regulation F impact debt collectors. Some Bureau encourages the commenter to based on the frequency of its calling. stakeholders may take the position that submit data quantifying the benefits The Bureau requests comment on this this proposed line should be adjusted such increased recovery would have on aspect of the proposal, which also is upward or downward to account for competition or consumers, such as by discussed further in the section-by- certain concerns. Debt collectors and lowering the cost of credit. The Bureau section analysis of proposed other industry stakeholders have also requests data regarding the § 1006.14(b)(5). advised the Bureau that, today, they financial, emotional, or other impact on Fourth, the Bureau requests comment often need to make more telephone calls consumers of calls from debt collectors on the proposal to count telephone calls than would be allowed under the at varying levels of frequency. In placed about a particular debt to proposal in order to establish right-party addition, the Bureau requests comment different telephone numbers associated contact; they have expressed concern on whether debt collectors currently are with the same consumer together for that a too-restrictive limit may hamper able to, or under the proposed rule purposes of determining whether a debt their ability to reach consumers and would expect to be able to, establish collector has exceeded the limit in collect debts. Consumer advocates have right-party contact through voicemails proposed § 1006.14(b)(2)(i) (i.e., an suggested that a lower call limit is or electronic media, such that debt aggregate approach). The Bureau necessary to prevent harassment in part collectors may have less of a need to considered a proposal that would have because consumers with multiple debts place repeated telephone calls to limited the number of calls permitted to in collection could receive multiple consumers. any particular telephone number (e.g., at calls about each debt each week; under Second, the Bureau requests comment most two calls to each of a consumer’s the proposed limits, for example, a on the proposal to measure the landline, mobile, and work telephone consumer with four or five debts in frequency of telephone calls on a per- numbers). The Bureau considered such collection could receive up to two or week basis. This framework could result a limit either instead of or in addition three dozen telephone calls each in debt collectors placing, for example, to an overall limit on the frequency of week.306 Some consumer advocates seven telephone calls about one debt to telephone calls to one consumer. The a consumer in one day. The Bureau Bureau instead proposes an aggregate that location calls do not generally involve considered combining a seven-day approach because of concerns that a frequently calling each number. Therefore the frequency limit with a per-day Bureau does not expect that debt collectors would more prescriptive, per-telephone be affected by the proposed limits as they apply to frequency limit that would have number approach could produce location calls made to third parties. prohibited, for example, more than one undesirable results—for example, some 306 The proposed frequency limits generally telephone call to a consumer per debt consumers could receive (and some debt would apply per debt in collection (see proposed per day, up to a limit of seven telephone § 1006.14(b)(5)), and the Bureau’s research shows collectors could place) more telephone that a majority of consumers who have at least one calls per consumer per debt every seven calls simply based on the number of debt in collection have multiple debts in collection. days. The Bureau does not propose a telephone numbers that certain For example, 57 percent of consumers with at least combined daily and weekly limit consumers happened to have (and that one debt in collection reported having between two because, while such an approach would and four debts in collection. See CFPB Debt Collection Consumer Survey, supra note 18, at 13, eliminate multiple telephone calls about 307 As discussed in the section-by-section analysis table 1. Overall, the Bureau’s research shows that a single debt on any given day, it might of proposed § 1006.14(b)(5), with respect to student almost 75 percent of consumers with at least one not provide flexibility for unforeseen loan debts, all debts that a consumer owes or debt in collection have multiple debts in collection. situations or the need to attempt to allegedly owes that were serviced under a single See id.; see also CFPB Medical Debt Report, supra account number at the time the debts were obtained note 20, at 20 (reporting that most consumers with contact some consumers at different by the debt collector would be treated as a single one tradeline have multiple tradelines). telephone numbers and at different debt for purposes of the frequency limits.

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debt collectors happened to know exceptions to the proposal under Some debt collectors may, in fact, place about). Such an approach also could consideration, including telephone calls more than seven telephone calls to a incentivize debt collectors to place about which a consumer was unaware person each week precisely because telephone calls to less convenient because, for example, the telephone they believe that additional telephone telephone numbers after exhausting number called was not, in fact, calls may cause sufficient harassment or their telephone calls to consumers’ associated with that consumer.309 In its annoyance to pressure the person to preferred numbers. The Bureau requests report, the Small Business Review Panel respond or make a payment that the comment on the merits of an aggregate recommended, among other things, that person otherwise would not have made. versus a per-telephone number limit. the Bureau consider whether the With respect to a debt collector who Finally, the Bureau requests comment frequency limits should apply equally to is collecting a consumer financial on proposed comment 14(b)(2)(i)–2. In all communication media (e.g., product or service debt, as defined in particular, the Bureau requests comment telephone, postal mail, email, text proposed § 1006.2(f), the Bureau also on whether the Bureau should provide messages, and other newer proposes § 1006.14(b)(2)(i) pursuant to additional clarification about how a communication media).310 its authority under section 1031(b) of debt collector determines that a The Bureau considered the small the Dodd-Frank Act to prescribe rules telephone number is not associated with entity representatives’ feedback in applicable to a covered person or a particular person, or whether, for developing the proposed frequency service provider that identify, and that purposes of the proposed frequency limits and believes that proposed may include requirements to prevent, limits, there is an alternative way to § 1006.14(b)(2)(i) responds to many of unfair acts or practices in connection treat telephone calls inadvertently made the small entity representatives’ with any transaction with a consumer to the wrong person. concerns. In particular, proposed for a consumer financial product or The Bureau’s Small Business Review § 1006.14(b)(2)(i) would permit a debt service. To identify an act or practice as Panel Outline described a proposal collector to place seven telephone calls unfair under the Dodd-Frank Act, the under consideration that would have to a consumer in a seven-day period Bureau must have a reasonable basis to limited a debt collector’s weekly contact regarding a particular debt, without a conclude that: (1) The act or practice attempts with consumers by any different numerical limit on the number causes or is likely to cause substantial communication medium. Before a debt of calls the debt collector could make injury to consumers, which consumers collector confirmed contact with a during a seven-day period after having cannot reasonably avoid; and (2) such consumer, the proposal under established initial contact with the substantial injury is not outweighed by consideration would have imposed consumer. The proposal thus avoids countervailing benefits to consumers or weekly limits of (i) three contact potential ambiguities regarding when a to competition.312 attempts per unique communication debt collector has confirmed or lost The Bureau proposes 313 medium and (ii) six total contact contact with a consumer and may § 1006.14(b)(2)(i) to prevent the attempts. After confirming contact with represent the type of bright-line, unfair act or practice, identified in the consumer, a debt collector would simplified approach that small entity proposed § 1006.14(b)(1)(ii), of placing, have been subject to weekly limits of (i) representatives sought. The proposal in connection with the collection of a two contact attempts per unique would not limit debt collectors to consumer financial product or service communication medium and (ii) three sending a particular number of letters, debt, telephone calls to any person total contact attempts.308 Many small emails, and text messages, and proposed repeatedly or continuously such that the entity representatives expressed a strong comment 14(b)(2)(i)–2 would clarify natural consequence is to harass, preference for bright-line, simplified that a telephone call to a number that oppress, or abuse any person at the rules. Many also stated that the proposal the debt collector later determines is not called number. The Bureau proposes to under consideration would inhibit associated with the consumer does not set the frequency limit at seven communications between debt count toward the frequency limit. As telephone calls within seven collectors and consumers and extend discussed in the section-by-section consecutive days about a particular debt the time necessary to reach consumers. analysis of proposed § 1006.14(b)(3), the because such a limit appears to bear a In particular, small entity Bureau proposes several other reasonable relationship to preventing representatives stated that they regularly the unfair practice.314 attempt to contact consumers more than exceptions to the frequency limits in seven times per week when trying to response to small entity representatives’ feedback. abusing a person at the called number, and, as establish right-party contact. Small noted above, the Bureau assumes that debt As noted above, the Bureau proposes entity representatives suggested several collectors intend the natural consequences of their § 1006.14(b)(2)(i) and its related actions. 312 Dodd-Frank Act section 1031(c), 12 U.S.C. 308 commentary pursuant to its authority The proposals under consideration described 5531(c). in the Small Business Review Panel Outline would under FDCPA section 814(d) to 313 The Bureau has not determined in connection have applied the same limits for contact attempts prescribe rules with respect to the with this proposal whether telephone calls in to individuals other than the consumer, except that collection of debts by debt collectors, all third-party contact attempts would have been excess of the limit in proposed § 1006.14(b)(2)(i) by prohibited after the debt collector had successfully and as an interpretation of FDCPA creditors and others generally not covered by the contacted the consumer, on the theory that the debt section 806(5), because a debt collector FDCPA would constitute an unfair act or practice collector at that point would have had no reason to under section 1031(c) of the Dodd-Frank Act if who places more than seven telephone engaged in by those persons, rather than by an continue to engage in third-party outreach. The calls to a particular person about a Bureau’s proposal does not include the aspect of the FDCPA-covered debt collector. The Bureau’s Small Business Review Panel Outline that would particular debt within seven proposal does not address, for example, whether have prohibited third-party contact attempts after consecutive days may have the intent to consumers could reasonably avoid harm from the debt collector had successfully contacted the annoy, abuse, or harass the person.311 creditor contacts or whether frequent creditor consumer. Proposed § 1006.10, which would contacts provide greater benefits to consumers or implement FDCPA section 804’s general prohibition competition. 309 against communicating more than once with a See Small Business Review Panel Report, 314 Dodd-Frank Act section 1031(c). Some courts person to obtain location information, may provide supra note 57, at 36–37. have held that the consumer stated a claim under sufficient protection regarding the making of 310 Id. at 37. FDCPA section 806(5) where the debt collector location information communications when 311 Calls in excess of this limit may have the called, on average, more than seven times per week. location information has already been obtained. natural consequence of harassing, oppressing, or See, e.g., U.S. v. Cent. Adjustment Bureau, Inc., 667

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Consumers may suffer or be likely to aggregating all injuries (including small communication.321 Section 805(c), suffer substantial injury from repeated injuries) caused by a practice to however, may be insufficient to permit or continuous debt collection telephone determine whether the practice is consumers to reasonably avoid injuries calls. Consumers have alleged in unfair.318 from repeated or continuous telephone complaints lodged with the FTC and the Consumers may not be reasonably calls. First, many consumers may Bureau, and in litigation, that such able to avoid the substantial injuries invoke the cease communication right telephone calls can cause them, among that could stem from frequent or only after they are harassed. Second, other things, to suffer great emotional repeated debt collection telephone calls. some consumers, even if they are aware distress and anxiety, and that such calls Many consumers carry their mobile of their rights, may not invoke them can interfere with their health or telephones at all times to coordinate because ceasing communication entirely 315 sleep. Consumers may pay debts that essential tasks or to be available in case could make it more difficult to resolve they otherwise might not have paid of emergency.319 Consumers also may the debt and, in turn, subject the simply to stop the telephone calls. For share their mobile or landline consumer to other injuries. In particular, example, consumers may pay debts that telephones with family members. For an unresolved debt could cause the they do not owe or to which they have these consumers, disengaging from all consumer to incur additional fees, legal defenses; pay debts using funds telephone calls to avoid debt collectors interest, adverse credit reporting, or, in that are exempt from collection; or pay may not be an option. Moreover, courts the case of secured debts, loss of a the particular debt being collected have held that the ringing or vibrating home, automobile, or other property. instead of other debts or expenses that alert caused by a debt collector’s calls Numerous debt collectors also have the consumer otherwise would can contribute to harassment by reported that a consumer who ceases prioritize, such as a secured or conveying a sense of urgency to the communications is more likely to be nondischargable debt or expenses for consumer,320 which can overwhelm sued and subjected to wage garnishment food, shelter, clothing, or medical some consumers, especially those with because the debt collector has no other treatment. A debt collector’s telephone 322 multiple debts in collection. way to recover on the debt. calls also may cause some consumers to Accordingly, a consumer who is aware incur charges on their mobile FDCPA section 805(c) provides, in of these potential outcomes, even if only telephones.316 Although the charge for part, that a debt collector generally shall in the abstract, or who wishes to resolve an individual call may be minimal, the not communicate further with a the debt in the future, may be reluctant FCC has found that ‘‘[t]hese costs can be consumer with respect to a debt if the to invoke the cease communication right substantial’’ when aggregated across all consumer notifies the debt collector in to prevent harassment. Moreover, it may consumers,317 which is consistent with writing that the consumer wishes the not be reasonable to expect a consumer the FTC’s and the Bureau’s approach of debt collector to cease further to avoid harassment by invoking the cease communication right if doing so F. Supp. 370, 376, 394 (N.D. Tex. 1986), aff’d as 318 Fed. Trade. Comm’n v. Pantron I Corp., 33 makes it more likely that the debt modified, 823 F.2d 880 (5th Cir. 1987) (per curiam) F.3d 1088, 1102–03 (9th Cir. 1994) (‘‘Both the (holding that debt collector violated FDCPA section Commission and the courts have recognized that collector will sue the consumer to 806(5) by, among other things, placing successive consumer injury is substantial when it is the recover on the debt. Third, only a telephone calls in a single day and calling at least aggregate of many small individual injuries.’’) consumer as defined in FDCPA sections one consumer four-to-five times in a single day); (citing Orkin Exterminating Co. v. Fed. Trade. 803(3) and 805(d) may invoke the cease Schwartz-Earp v. Advanced Call Ctr. Techs., LLC, Comm’n, 849 F.2d 1354, 1365 (11th Cir. 1988)); FTC No. 15–CV–01582–MEJ, 2016 WL 899149, at *4 Policy Statement on Unfairness, supra note 100, at communication right, leaving other (N.D. Cal. Mar. 9, 2016) (denying debt collector’s 1073 n.12 (‘‘An injury may be sufficiently persons unable to invoke this remedy. summary judgment motion where the debt collector substantial . . . if it does a small harm to a large The Bureau proposes called the consumer ‘‘multiple times a day, with as number of people, or if it raises a significant risk § 1006.14(b)(2)(i) because the injuries many as five calls in a day,’’ and remarking that of concrete harm.’’); Bureau of Consumer Fin. Prot., described above appear not to be ‘‘the volume and pattern of calls alone is sufficient CFPB Examination Procedures, Unfair, Deceptive, to raise a genuine dispute of material fact’’); Neu or Abusive Acts or Practices, at 2 (Oct. 2012), outweighed by the countervailing v. Genpact Servs., LLC, No. 11–CV–2246 W KSC, https://www.consumerfinance.gov/documents/ benefits to consumers or to competition 2013 WL 1773822, at *4 (S.D. Cal. Apr. 25, 2013) 4576/102012_cfpb_unfair-deceptive-abusive-acts- of more frequent telephone calls from _ (holding that 150 telephone calls in 51 days raised practices-udaaps procedures.pdf (‘‘An act or FDCPA-covered debt collectors. If the a triable issue of fact as to the debt collector’s intent practice that causes a small amount of harm to a to harass and observing that ‘‘[a] reasonable trier of large number of people may be deemed to cause proposed limit on telephone calls fact could find that [calling the consumer six times substantial injury.’’). adversely affects debt collectors’ ability in one day] alone, apart from the sheer volume of 319 See, e.g., Fed. Comms. Comm’n, In re Rules & to collect debts, the reduction in calls placed by [the debt collector], is sufficient to Regulations Implementing the Tel. Consumer Prot. recoveries and corresponding increases find that [the debt collector] had the ‘intent to Act of 1991, 30 FCC Rcd. 7961, 7996 ¶ 61 (2015) annoy, abuse or harass’ ’’); Forrest v. Genpact Servs., at 7996 ¶ 61 (‘‘Indeed, some consumers may find in losses could result in an increase in LLC, 962 F. Supp. 2d 734, 737 (M.D. Pa. 2013) unwanted intrusions by phone more offensive than the cost of credit. However, as discussed (holding that consumer stated a claim under FDCPA home mailings because they can cost them money above and more fully in part VI, debt section 806(5) by alleging that debt collector called and because, for many, their phone is with them at the consumer 225 times within 54 days); Bassett v. collectors may not need to make almost all times.’’). repeated or continuous telephone calls I.C. Sys., Inc., 715 F. Supp. 2d 803, 810 (N.D. Ill. 320 See, e.g., Clements v. HSBC Auto Fin., Inc., 2010) (denying debt collector’s summary judgment Civ. A. No. 5:09–cv–0086, 2011 WL 2976558, at *5 to collect debts effectively, and debt motion where debt collector called the consumer 31 (S.D. W. Va. July 21, 2011) (noting that ‘‘[m]issed collectors may face diminishing returns times in 12 days). calls communicate more than a phone number’’ and as they increase the frequency of their 315 See supra notes 286 and 287. ‘‘can, depending on volume and frequency, calling. Further, the Bureau has sought 316 See the section-by-section analysis of communicate urgency and panic,’’ but nevertheless proposed § 1006.6(e). finding that, based on the facts of the case, plaintiffs 317 Fed. Comms. Comm’n, In re Rules & had suffered minimal emotional harm); Bassett v. 321 15 U.S.C. 1692c(c). Proposed § 1006.6(c) Regulations Implementing the Tel. Consumer Prot. I.C. Sys., Inc., 715 F. Supp. 2d 803, 807–810 (N.D. would implement FDCPA section 805(c). Act of 1991, 30 FCC Rcd. 7961, 8020 ¶ 118 (2015) Ill. 2010) (denying debt collector’s summary 322 As noted earlier in this section-by-section (‘‘In addition to the invasion of consumer privacy judgment motion where debt collector placed 31 analysis, the Bureau has received feedback from for all wireless consumers, the record confirms that telephone calls to a consumer’s blocked telephone small entity representatives and other industry some are charged for incoming calls and messages. and explaining that, although the consumer’s stakeholders that overly restrictive frequency limits These costs can be substantial when they result telephone did not ring, the consumer could still could result in some of these same consumer harms, from the large numbers of voice calls and texts have been harassed because the telephone and the Bureau requests comment on the proposed autodialers can generate.’’). displayed the incoming calls). frequency limits for that reason.

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to mitigate concerns about increasing telephone calls with intent to harass or and other agencies have found that the cost of credit by limiting only the abuse either consumers who owed debts consumers are harmed by repeated number of telephone calls placed per or third parties, explaining that these telephone calls. These established seven days, not the total number of calls can cause substantial injuries by, policies support a finding that it is an telephone calls placed throughout the among other things, affecting the unfair act or practice for a debt collector course of collections, thus permitting consumer’s reputation, impairing the who is collecting a consumer financial debt collectors to continue making as consumer’s relationship with family, product or service debt to place many telephone calls as needed, albeit friends, and co-workers, and inducing telephone calls to a person repeatedly or over a longer period. Further, even if the payment of disputed debts.324 continuously such that the natural preventing harassing or oppressive Similarly, the Bureau has alleged that a consequence is to harass, oppress, or contacts did have some marginal effect party engaged in unfair acts or practices abuse any person at the called number, on collections success, the injuries under section 1031 by making an and they evince public policy that caused by such contacts do not appear excessive number of telephone calls to supports the Bureau’s proposed to be outweighed by countervailing consumers and by calling third parties frequency limits. The Bureau gives benefits to consumers or to competition. repeatedly even after being informed weight to this policy and bases its For similar reasons, the FTC and the that the calls were to the wrong proposed finding that the identified act Bureau previously have alleged through person.325 or practice is unfair in part on this body enforcement actions that repeated or Section 1031(c)(2) of the Dodd-Frank of public policy. continuous telephone calls or telephone Act allows the Bureau to ‘‘consider 14(b)(2)(ii) conversations can constitute an unfair established public policies as evidence act or practice in violation of section 5 to be considered with all other Proposed § 1006.14(b)(2)(ii) would of the FTC Act and section 1031 of the evidence’’ in determining whether an provide that, subject to the exceptions Dodd-Frank Act.323 For example, the act or practice is unfair, as long as the in proposed § 1006.14(b)(3), a debt FTC has alleged that a party engaged in public policy considerations are not the collector must not place a telephone call an unfair act or practice under section primary basis of the determination.326 to a person in connection with the 5 by making repeated or continuous Established public policy appears to collection of a particular debt after support the Bureau’s proposed finding already having had a telephone 323 Complaint at ¶¶ 56–58, Fed. Trade Comm’n v. that it is an unfair act or practice for a conversation with that person in Citigroup Inc., No. 1:01–CV–00606 JTC (N.D. Ga. debt collector who is collecting a connection with the collection of such Mar. 6, 2001), https://www.ftc.gov/sites/default/ debt within a period of seven files/documents/cases/2001/03/ consumer financial product or service consecutive days ending on the date of citigroupcmp.pdf(alleging that defendant engaged debt to place telephone calls repeatedly the call. Proposed comment 14(b)(2)(ii)– in an unfair act or practice under section 5 of the or continuously such that the natural FTC Act by ‘‘making repeated and continuous 1 provides examples of the proposed consequence is to harass, oppress, or telephone calls to consumers with intent to annoy, rule. abuse, or harass any person at the called number’’); abuse any person at the called number. In developing this proposal, the Consent Order at ¶¶ 5, 6, 19, In re Avco Fin. Servs., Several consumer financial statutes and 104 F.T.C. 485, 1984 WL 565343, at *2–3 (1984) Bureau has considered both the (settling FTC’s allegations that defendant engaged regulations, as well as industry 327 legitimate interests of consumers and in an unfair act or practice under section 5 of the standards, require or recommend that debt collectors in resolving debts and FTC Act by ‘‘[m]aking repeated or continuous debt collectors or others who are the potentially harmful effects on telephone calls to debtors or third parties with engaged in marketing or collections intent to harass or abuse persons at the called consumers of repeated or continuous number,’’ and explaining that these ‘‘acts and limit the frequency of their telephone telephone calls after a telephone practices * * * had and now [have] the capacity calls to consumers. These include conversation. A debt collector who and tendency to cause substantial injury to debtors several State and local laws that limit already has engaged in a telephone or third parties who are contacted by [defendant] the number of times a debt collector or by, among other things, adversely affecting the conversation with a consumer about a debtor’s reputation, interfering with the debtor’s or creditor may call a consumer each debt may have less of a need to place 328 third party’s employment relations including, but week, as well as the Telemarketing additional telephone calls to that not limited to, causing warnings by employers of and Consumer Fraud and Abuse possible discharge, impairing the debtor’s relations consumer about that debt within the with friends, relatives, neighbors, and co-workers, Prevention Act, the Telephone next seven days than a debt collector and inducing the payment of disputed debts.’’); Consumer Protection Act, and related who has yet to reach a consumer. As a Consent Order at ¶¶ 12, 19–23, In re Ace Cash FTC and FCC rulemakings that establish result, the debt collector who has Express, No. 2014–CFPB–0008 (July 10, 2014), the Do Not Call Registry, limit the use https://files.consumerfinance.gov/f/201407_cfpb_ already conversed with a consumer may consent-order_ace-cash-express.pdf (settling of autodialers, and impose requirements be more likely than the debt collector 329 Bureau’s allegations that defendant engaged in related to Caller ID. In short, who has not conversed with a consumer unfair acts or practices under section 1031 of the Congress, State and local legislatures, to intend to annoy, abuse, or harass the Dodd-Frank Act by, among other things, ‘‘[m]aking consumer by placing additional an excessive number of calls to consumers’ home, 324 Avco Fin. Servs., 104 F.T.C. 485, 1984 WL telephone calls within one week after a work, and cell phone numbers’’ and ‘‘[c]ontinuing 565343, at *2–3. to call consumers with no relation to the debt after 325 Ace Cash Express, No. 2014–CFPB–0008. telephone conversation. At the same being told that [defendant] had the wrong person’’); 326 time, a consumer who has spoken to a see also Consent Order, In re DriveTime Auto. Grp., 12 U.S.C. 5531(c)(2). Inc., 2014–CFPB–0017 (Nov. 19, 2014), https:// 327 Many creditors and debt collectors have found debt collector about a debt by telephone files.consumerfinance.gov/f/201411_cfpb_consent- it advantageous to adopt voluntary daily or weekly may be more likely than a consumer order_drivetime.pdf (settling Bureau’s allegations limits on telephone calls that they or their service who has not spoken to a debt collector that defendant engaged in unfair acts or practices provider make in connection with collecting debts. about a debt by telephone to experience under section 1031 of the Dodd-Frank Act ‘‘by See, e.g., Bureau of Consumer Fin. Prot., The failing: (A) To prevent account servicing and Consumer Credit Card Market, at 313–14 (Dec. annoyance, abuse, or harassment if the collection calls to consumers’ workplaces after 2017), https://files.consumerfinance.gov/f/ debt collector places additional, _ consumers asked [defendant] to stop such calls; (B) documents/cfpb consumer-credit-card-market- _ unwanted telephone calls to the to prevent calls to consumers’ third-party references report 2017.pdf. See also infra part VI.B.2. consumer about that debt again within after the references or consumers asked [defendant] 328 See supra note 284. to stop calling them; and (C) to prevent calls to 329 15 U.S.C. 6101 et seq.; 47 U.S.C. 227; 16 CFR the next seven days. people at wrong numbers after they have asked part 310; 47 CFR 64.1200 et seq.; 47 CFR 64.1600 A consumer may experience, and a [defendant] to stop calling’’). et seq. debt collector may intend to cause, such

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annoyance, abuse, or harassment from a With respect to a debt collector who § 1006.6(d)(1)(ii) through (vi). As second telephone conversation within is collecting a consumer financial discussed in the section-by-section one week even if the consumer, rather product or service debt, as defined in analysis of proposed § 1006.14(b)(3)(i) than the debt collector, initiated the first proposed § 1006.2(f), the Bureau also through (iv) below, the Bureau proposes telephone conversation. Therefore, proposes § 1006.14(b)(2)(ii) pursuant to these exclusions pursuant to its under the proposal, if a consumer its authority under section 1031(b) of authority under FDCPA section 814(d) initiated a telephone conversation with the Dodd-Frank Act to prescribe rules to prescribe rules for the collection of the debt collector, that telephone identifying and preventing unfair acts or debts by debt collectors and to conversation generally would count as practices.331 Specifically, the Bureau implement and interpret FDCPA section the debt collector’s one permissible proposes § 1006.14(b)(2)(ii) to prevent 806(5). The Bureau proposes to exclude telephone conversation for the next the unfair act or practice described in these telephone calls from counting week. In some instances, a consumer proposed § 1006.14(b)(1)(ii).332 For the toward the proposed frequency limits might request additional information reasons discussed in the section-by- because they are unlikely to be when speaking with a debt collector and section analysis of proposed harassing to consumers, and debt would not view a follow-up telephone § 1006.14(b)(2)(i), and based on the collectors are unlikely to place such call from the debt collector as harassing. evidence currently available to the calls with intent to annoy, abuse, or For that reason, proposed Bureau, the Bureau believes that, if a harass a person. The Bureau further § 1006.14(b)(3)(i), discussed below, debt collector places a telephone call to proposes to exclude these telephone would create an exception for telephone a particular person about a particular calls from counting toward the proposed calls that are made to respond to a debt after already having spoken to that frequency limits because they are request for information from the person about that debt within the unlikely to contribute to substantial consumer. Similarly, proposed previous seven days, the person injury that a person cannot reasonably § 1006.14(b)(3)(ii), also discussed below, naturally may feel harassed by the avoid and that is not outweighed by would create an exception under which subsequent telephone call. For the countervailing benefits to consumers or a consumer who wishes to speak to a reasons discussed in the section-by- competition. The Bureau requests debt collector more than once in one section analysis of proposed comment on proposed § 1006.14(b)(3) week could consent, in the first § 1006.14(b)(2)(i), the debt collector’s and its related commentary, including telephone conversation or by other conduct may cause or be likely to cause on whether any other types of telephone media, to additional telephone calls the person to suffer substantial injury calls should be excluded from the from the debt collector. that is not reasonably avoidable and is frequency limits. During the SBREFA process, the The Bureau requests comment on not outweighed by countervailing benefits to consumers or to Bureau’s proposal under consideration proposed § 1006.14(b)(2)(ii). The Bureau competition.333 The Bureau thus noted that a bright-line frequency limit considered, but does not propose, a proposes § 1006.14(b)(2)(ii) to establish could except certain types of contacts, frequency limit that would have limited a frequency limit that would prevent but it did not identify any specific only the total number of telephone calls debt collectors from engaging in this exceptions. Many small entity that a debt collector could place to a unfair act or practice and, as detailed representatives suggested exceptions, person about a debt during a defined above, the Bureau proposes a limit of including for: (1) Contacts that respond time period, regardless of whether the one telephone conversation per seven to a consumer’s request or question; (2) debt collector had engaged in a days on the theory that such a limit contact attempts that leave no telephone conversation with that person bears a reasonable relationship to ‘‘footprint,’’ such that the consumer is about that debt during the relevant time preventing the unfair practice. unaware of the telephone call or other period. The Bureau requests comment contact attempt; (3) contacts with a on the merits of such an alternative 14(b)(3) Certain Telephone Calls consumer’s attorney; and (4) contacts approach. Excluded From the Frequency Limits that are legally required. The Small The Bureau proposes Proposed § 1006.14(b)(3) describes Business Review Panel Report § 1006.14(b)(2)(ii) and its commentary four types of telephone calls that would recommended that the Bureau consider pursuant to its authority under FDCPA not count toward, and that would be incorporating such exceptions into the section 814(d) to prescribe rules with permitted in excess of, the frequency proposal.334 The Panel Report also respect to the collection of debts by debt limits in proposed § 1006.14(b)(2). specifically recommended that the collectors and its authority to interpret These are telephone calls that are: (i) Bureau consider whether the frequency FDCPA section 806(5). The Bureau Made to respond to a request for limits should be modified for proposes § 1006.14(b)(2)(ii) on the basis information from the person whom the communications that occur after a law that, unless an exception (such as debt collector is calling; (ii) made with firm files a complaint, on the grounds consent) applies, once a debt collector such person’s consent given directly to that one conversation per week might and a consumer engage in a telephone the debt collector; (iii) unable to connect not be sufficient in various litigation conversation regarding a particular debt, to the dialed number; or (iv) placed to situations. Proposed § 1006.14(b)(3) a debt collector who places additional a person described in proposed takes into account the small entity calls to that person about that debt representatives’ suggestions and the within the following seven days may 331 The Bureau has not determined in connection with this proposal whether telephone calls in recommendations in the Panel Report. intend to annoy, abuse, or harass the The Bureau does not propose an 330 excess of the limit in proposed § 1006.14(b)(2)(ii) by person. creditors and others not covered by the FDCPA would constitute an unfair act or practice under 334 See Small Business Review Panel Report, 330 Unless an exception applies, a person who Dodd-Frank Act 1031(c) if engaged in by those supra note 57, at 36. Other suggested exceptions in receives such a telephone call after already having persons, rather than by an FDCPA-covered debt the Small Business Review Panel Report—including spoken to the debt collector within the previous collector. for contacts initiated by the consumer, contacts that seven days may naturally feel harassed, oppressed, 332 As with § 1006.14(b)(2)(i), proposed occur through written correspondence (e.g., letters), or abused, and, as noted above, the Bureau assumes § 1006.14(b)(2)(ii) would apply when a debt and misdirected contact attempts—are addressed that debt collectors intend the natural consequences collector places a telephone call to ‘‘a person.’’ elsewhere in the section-by-section analysis of of their actions. 333 12 U.S.C. 5531(c). proposed § 1006.14(b).

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exception for legally required an unlimited number of unanswered on the number of telephone calls that a communications because the Bureau telephone calls to the consumer during debt collector could place under the understands that very few legally the next seven days in an effort to proposed exception or whether there required communications must be provide the requested information. As should be any other type of limitation delivered by telephone and that, with proposed, § 1006.14(b)(3)(i) also would or condition on the proposed exception. respect to the few such communications permit the debt collector to continue to 14(b)(3)(iii) that must be delivered telephonically, it exceed the frequency limits until the appears unlikely that a debt collector debt collector reached the consumer to Proposed § 1006.14(b)(3)(iii) would would need to place more than seven respond to the request. A debt collector exclude from the frequency limits telephone calls to a consumer within a responding to a person’s request for telephone calls that a debt collector period of seven consecutive days to information may not need to place places to a person but that are unable to deliver the required communication. repeated or continuous telephone calls connect to the dialed number (e.g., that to reach the consumer, however, result in a busy signal or are placed to 14(b)(3)(i) because such a debt collector is likely to an out-of-service number). The Bureau Proposed § 1006.14(b)(3)(i) would have reliable contact information and proposes this exclusion because a exclude from the frequency limits the consumer presumably will be person is unlikely to know about, let telephone calls that a debt collector expecting the debt collector’s telephone alone be harassed by, a debt collector’s places to a person to respond to a call. The Bureau requests comment on telephone call in response to which the request for information from that this approach and on alternatives to it. debt collector receives a busy signal or person. The Bureau proposes this The Bureau also requests comment on a message indicating that the dialed exclusion because the Bureau believes whether additional clarification is number is not in service. Similarly, it that, if a person is speaking to a debt needed on how to determine whether a appears that a debt collector who places collector and asks for information that debt collector makes a particular several calls to a person in response to the debt collector does not have at the telephone call in response to a request which the debt collector receives a busy time of the telephone conversation, the for information, as opposed to for some signal or out-of-service notification is person likely would expect (and not be other purpose, or on how to determine likely to place additional telephone harassed by) a return telephone call (or whether the debt collector has calls to the person in an effort to contact calls) from the debt collector providing responded to a request for information, the person and not with the intent to the requested information; nor would such that the exclusion no longer annoy, abuse, or harass the person.336 the debt collector place the return applies. The proposed exclusion also responds telephone call with intent to annoy, to feedback from small entity abuse, or harass the person. Proposed 14(b)(3)(ii) representatives suggesting that, for comment 14(b)(3)(i)–1 would clarify Proposed § 1006.14(b)(3)(ii) would example, a telephone call met with a that, once a debt collector provides a exclude from the proposed frequency busy signal should not count toward the response to a person’s request for limits telephone calls that a debt frequency limit.337 Proposed comment information, the exception in proposed collector places to a person with the 14(b)(3)(iii)–1 and –2 provide examples § 1006.14(b)(3)(i) would not apply to person’s prior consent given directly to of telephone calls that are able and subsequent telephone calls placed by the debt collector. The Bureau proposes unable to connect to the dialed number. the debt collector to the person, unless to exclude such telephone calls from the The Bureau requests comment on the person makes another request. frequency limits because the Bureau proposed § 1006.14(b)(3)(iii), including Proposed comment 14(b)(3)(i)–2 believes that a person can determine on whether the Bureau should include provides an example of the rule.335 when additional telephone calls from, any other specific examples in The Bureau requests comment on the or telephone conversations with, a debt commentary. proposal to exclude from the frequency collector would not be harassing, and limits the placement of telephone calls that a debt collector who has a person’s 14(b)(3)(iv) that are made to respond to a request for consent to additional telephone calls Proposed § 1006.14(b)(3)(iv) would information. The Bureau specifically would not be likely to place such calls exclude from the frequency limits requests comment on whether there with intent to annoy, abuse, or harass telephone calls that a debt collector should be any separate limit on the the person. The Bureau also believes places to the persons described in number of telephone calls a debt that proposed § 1006.14(b)(3)(ii) may proposed § 1006.6(d)(1)(ii) through (vi). collector could place under the address small entity representatives’ Proposed § 1006.6(d)(1)(ii) through (vi) exception. As proposed, concerns about the frequency limits would implement, in part, FDCPA § 1006.14(b)(3)(i) would permit a debt precluding necessary conversations in section 805(b)’s exception from the collector who engages in a telephone various litigation contexts because it general prohibition on communicating conversation with a consumer to place would enable a person to consent to additional telephone calls if, for 336 The Bureau’s approach in proposed 335 Some State and local laws exclude responsive example, the parties were negotiating a § 1006.14(b)(3)(iii) is informed, in part, by State and communications from their frequency limits. For settlement or resolving a discovery local laws that exclude undeliverable contact example, Massachusetts’ creditor-collection law attempts from their frequency limits. See provides that ‘‘a creditor shall not be deemed to dispute. Commonwealth of Mass., Off. of the Att’y Gen., have initiated a communication with a debtor if the Proposed comment 14(b)(3)(ii)–1 Guidance with Respect to Debt Collection communication by the creditor is in response to a refers to the commentary to proposed Regulations (2013), https://www.mass.gov/files/ request made by the debtor for said § 1006.6(b)(4)(i) for guidance concerning documents/2016/08/xc/debt-collection-guidance- communication’’). 940 Code Mass. Regs. 7.04(1)(f). 2013.pdf (‘‘unsuccessful attempts . . . to reach a See also 9 Wash. Rev. Code 19.16.250(13)(a) (debt a person giving prior consent directly to debtor via telephone’’ do not count toward the collector may exceed the weekly contact limit when a debt collector. Proposed comment frequency limit in 940 Code Mass. Regs. 7.04(1)(f) ‘‘responding to a communication from the debtor or 14(b)(3)(ii)–2 provides an example of ‘‘if the creditor is truly unable to reach the debtor spouse’’); N.Y.C. Admin. Code 5–77(b)(1)(iv) the rule. The Bureau requests comment or to leave a message for the debtor); N.Y.C. Admin. (weekly contact limit does not include ‘‘any Code 5–77(b)(1)(iv) (weekly contact limit does not communication between a consumer and the debt on proposed § 1006.14(b)(3)(ii) and its include ‘‘returned unopened mail’’). collector which is in response to an oral or written related commentary, including on 337 See Small Business Review Panel Report, communication from the consumer’’). whether there should be a separate limit supra note 57, at 37.

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about a debt with a person other than to annoy, abuse, or harass the person. contacts under FDCPA section 806 and the consumer; it would permit a debt Based on the evidence currently 806(5). Consistent with this view, collector to communicate with a available to the Bureau, the Bureau during the SBREFA process, small consumer’s attorney, a consumer believes that a debt collector who places entity representatives expressed a reporting agency, a creditor, a creditor’s seven or fewer telephone calls to, and preference for a bright-line approach. attorney, or a debt collector’s attorney. engages in one telephone conversation For consumers, a bright-line rule could Proposed § 1006.14(b)(3)(iv) would with, a particular consumer about a make it easier to identify violations of exclude from the frequency limits particular debt within a period of seven the FDCPA. Providing a bright-line rule telephone calls placed to such persons consecutive days, including the for determining compliance with the on the basis that these persons are additional telephone calls permitted FDCPA and the Dodd-Frank Act unlikely to be harassed by frequent and under proposed § 1006.14(b)(3), may not therefore may be appropriate to advance repeated telephone calls from a debt have the natural consequence of the objectives of the FDCPA and title X collector and that a debt collector is harassing, oppressing or abusing a of the Dodd-Frank Act. unlikely to place calls to such persons person; that a debt collector who places Proposed § 1006.14(b)(4) would not with intent to annoy, abuse, or harass such calls or engages in such provide a debt collector with protection them. Unlike most consumers, each of conversations does not intend to annoy, from liability as to any other provision these persons has professional training abuse, or harass the person; and that of the proposed rule, the FDCPA, or the and experience in, and is likely such a frequency of telephone calls and Dodd-Frank Act. For example, proposed engaging in, the debt collection process conversations would not be repeated or § 1006.14(b)(4) would not protect a debt in a professional capacity. Moreover, the continuous as those terms are used in collector from liability for using obscene Bureau is not aware of evidence that FDCPA section 806(5). language or false representations in such persons receive an excessive Proposed § 1006.14(b)(4) also would connection with collection of a debt, in number of telephone calls from debt clarify the consequence under the Dodd- violation of FDCPA sections 806 or 807 collectors. Frank Act of complying with the (as proposed to be implemented by The Bureau also proposes to exclude frequency limits. Proposed §§ 1006.14 and 1006.18). Similarly, telephone calls to such persons from the § 1006.14(b)(4) provides that a debt proposed § 1006.14(b)(4) would not frequency limits because debt collectors collector who complies with protect a debt collector from liability for may have non-harassing reasons for § 1006.14(b)(2) does not violate Dodd- communicating with a consumer in calling these persons more often than Frank Act sections 1031(c) or violation of FDCPA section 805(a) or (c) proposed § 1006.14(b)(2) would permit. 1036(a)(1)(B) by engaging in the unfair (as proposed to be implemented by For example, during litigation, a debt act or practice of, in connection with the § 1006.6(b)(1) and (c)). Nor would collector may need to speak frequently collection of a consumer financial proposed § 1006.14(b)(4) protect a debt with its own attorneys, as well as with product or service debt, placing collector from liability under the Dodd- the creditor’s or the consumer’s telephone calls or engaging any person Frank Act for engaging in other unfair, attorneys; the Bureau’s proposal would in telephone conversation repeatedly or deceptive, or abusive acts or practices. not limit such contacts. The Bureau continuously such that the natural The Bureau requests comment on all requests comment on proposed consequence is to harass, oppress, or aspects of proposed § 1006.14(b)(4). The § 1006.14(b)(3)(iv), including on abuse the person. The Bureau proposes Bureau specifically requests comment whether telephone calls that a debt § 1006.14(b)(4) on the basis that on whether proposed § 1006.14(b)(4) collector places to certain other persons telephone calls that do not exceed the adequately addresses concerns about also should be excluded from the frequency limits in § 1006.14(b)(2) do debt collectors making telephone calls frequency limits and, if so, which not cause substantial injury and that any in rapid succession and, if not, what categories of persons should be possible injury is outweighed by the approach would address such calling excluded. benefits to consumers or to competition. behavior without imposing undue or Under this interpretation, telephone unnecessary costs on debt collectors. 14(b)(4) Effect of Complying With calls at or below the frequency limits are For example, under the Bureau’s Frequency Limits unlikely to harass consumers and, in proposed approach, a debt collector Proposed § 1006.14(b)(4) would turn, are unlikely to cause substantial would not violate § 1006.14(b)(1) by clarify the effect of complying with the injury. Further, under this placing seven or fewer telephone calls frequency limits in § 1006.14(b)(2). interpretation, debt collection provides in rapid succession, so long as the debt Under proposed § 1006.14(b)(4), a debt substantial benefits to the consumer collector did not exceed seven collector who complies with (i.e., does credit marketplace, and debt collectors telephone calls or one telephone not exceed) the frequency limits in may need to make telephone calls up to conversation with the same person § 1006.14(b)(2) would per se comply the frequency limits to collect debts about the same debt during a period of with § 1006.14(b)(1). Proposed effectively. Given these premises, any seven consecutive days. § 1006.14(b)(4) also would clarify that a injury that might result from telephone The Bureau also requests comment on debt collector who complies with calls at or below the frequency limits whether, instead of a bright-line rule, § 1006.14(b)(2) does not violate either: would be outweighed by the benefits to the Bureau should adopt a rebuttable (1) FDCPA section 806’s general consumers or to competition. presumption of compliance and of a prohibition as it applies to placing The Bureau further believes that violation. Under a rebuttable telephone calls or engaging any person clarifying the effect of complying with presumption approach, a debt collector in telephone conversation repeatedly or proposed § 1006.14(b)(2), and creating a who places telephone calls at or below continuously such that the natural bright-line rule for compliance with it, the frequency limits presumptively consequence is to harass, oppress, or could benefit both consumers and debt would comply with § 1006.14(b)(1). abuse the person; or (2) FDCPA section collectors. For debt collectors, the Likewise, a debt collector who exceeds 806(5)’s specific prohibition against clarification should provide greater legal the frequency limits presumptively causing a telephone to ring or engaging certainty and, in turn, should reduce the would violate § 1006.14(b)(1). These any person in telephone conversation costs of litigation and threats of presumptions could be rebutted based repeatedly or continuously with intent litigation about repeated or continuous on the facts and circumstances of a

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particular situation. For example, a how the frequency limits in collector could place telephone calls to consumer could rebut the presumption § 1006.14(b)(2) would apply when a any one person within seven days (i.e., of compliance for a debt collector who consumer has multiple debts being a per-person limit), regardless of how stayed below the frequency limits by collected by the same debt collector at many debts the debt collector was showing that the debt collector knew or the same time.338 attempting to collect from that person. should have known that telephone calls, In some cases, when a consumer has Creditors, however, could sidestep a even below the frequency limits, would multiple debts in collection, either from per-person limit by placing debts with have the natural consequence of one creditor or from multiple creditors, debt collectors who collect for only one harassing, oppressing, or abusing the a single debt collector will attempt to or a limited number of creditors, or by consumer. Similarly, a debt collector collect some or all of them. Debt assigning only a single debt to any one who exceeded the frequency limits collectors in this situation typically debt collector. Alternatively, if one debt could rebut the presumption of a make distinct efforts to collect each debt collector were collecting multiple debts violation by showing that, under the rather than, for example, asking the for multiple creditors, a per-person limit circumstances, additional calls above consumer about all of the debts during could incentivize the debt collector to the limits would not have the natural a single telephone call. One reason for discuss all of those debts with the consequence of harassing, oppressing, this segregation is that larger debt consumer in the single permissible or abusing the consumer. collectors often collect multiple debts telephone conversation each week. This Finally, the Bureau requests comment owed by the same consumer to different could result in consumers receiving an on the alternative of adopting only a creditors, and each creditor may require overwhelming amount of information rebuttable presumption of a violation or its debt collectors to keep information about, for example, different settlement only a rebuttable presumption of about its debts separate from or payment structures for different compliance. For example, one information about other creditors’ debts. creditors. This also could complicate alternative would be to provide a safe A creditor may require this so that it can debt collection conversations if, for harbor only for telephone calls below ensure that debt collectors are example, consumers wanted to dispute the frequency limits, with no provision complying with the creditor’s specific one or some, but not all, of the debts. for telephone calls above the frequency debt collection guidelines. Alternatively, a per-person limit could limits. Such an approach would provide Consequently, some larger debt encourage debt collectors to sequence certainty to both debt collectors and collectors may have groups of collection of a consumer’s debts, consumers about a per se permissible employees dedicated to collecting only thereby prolonging the collections level of calling, but it would leave open a particular creditor’s debts. process for some debts. For these the question of how many telephone In addition, some debt collectors reasons, and pursuant to its authority calls is too many under the FDCPA and segregate debts because they have under FDCPA section 814(d) to the Dodd-Frank Act. The Bureau does employees who specialize in collecting prescribe rules for the collection of debt not propose such an approach because different types of debts. In other cases, by debt collectors, the Bureau proposes it appears that it would not provide the such as with medical debts, privacy § 1006.14(b)(5) to define the term clarity that debt collectors and concerns or State or Federal laws may particular debt, as used in proposed consumers have sought; nor does it require a debt collector to segregate § 1006.14(b)(2), generally to mean each appear to provide the same degree of information about a particular debt from of a consumer’s debts in collection. consumer protection as a per se information about a consumer’s other The concerns outlined above may not prohibition against telephone calls in debts. A consumer’s debts also may apply to the collection of multiple excess of a specified frequency. Another enter collection at different points in student loan debts that were serviced alternative that the Bureau considered is time and thus be at different stages of under a single account number at the a safe harbor for telephone calls below the collections process, such that the time the debts were obtained by the debt the limits paired with a rebuttable different debts may be eligible for collector. In these situations, the debt presumption of a violation for telephone different types of settlement offers. Debt collector and consumer appear to calls above the limits. (The Bureau also collectors report that, in many cases, interact as if there were only a single considered the opposite: A rebuttable their systems are not structured to debt. This would be consistent with presumption of compliance for consolidate information about different how the loans were likely serviced telephone calls below the limits paired debts owed by the same consumer. before entering collection, as multiple with a per se prohibition against Finally, debt collectors may not find it student loan debts are often serviced telephone calls in excess of the limits). productive to discuss multiple debts on under a single account number and The Bureau requests comment on the a single telephone call because billed on a single, combined account merits of these alternative approaches consumers may not be able or prepared statement, with a single total amount and others that the Bureau may not have to discuss more than one debt during due and requiring a single payment considered. the telephone call or may find it from the consumer. For this reason, in overwhelming, confusing, or simply too 14(b)(5) Definition the case of student loan debts, the time consuming to discuss multiple Proposed § 1006.14(b)(5) generally Bureau proposes to define the term debts, with different related terms and would define the term particular debt, particular debt to mean all such debts offers, during a single telephone call. that a consumer owes or allegedly owes as that term is used in proposed The Bureau considered proposing a that were serviced under a single § 1006.14(b)(2), to mean each of a limit on the number of times a debt consumer’s debts in collection. With account number at the time the debts were obtained by the debt collector. respect to student loan debts, however, 338 This clarification may be necessary because the term particular debt would mean all most consumers with at least one debt in collection Under proposed § 1006.14(b)(5), the debts that a consumer owes or allegedly have multiple debts in collection. See CFPB Debt frequency limits in proposed owes that were serviced under a single Collection Consumer Survey, supra note 18, at 13, § 1006.14(b)(2) would apply to all such table 1; see also CFPB Medical Debt Report, supra debts collectively. Proposed comment account number at the time the debts note 20, at 20 (reporting that most consumers with were obtained by the debt collector. one collections tradeline have multiple collections 14(b)(5)–1 provides illustrative Proposed § 1006.14(b)(5) would clarify tradelines). examples.

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The Bureau requests comment on the 14(h) Prohibited Communication debt, a debt collector must not proposed definition of particular debt. Media 339 communicate or attempt to The Bureau specifically requests 14(h)(1) In General communicate with a consumer through comment on the proposal to apply the a medium of communication if the Proposed § 1006.14(h)(1) would frequency limits in proposed consumer has requested that the debt prohibit a debt collector from § 1006.14(b)(2) generally on a per-debt, collector not use that medium to communicating or attempting to as opposed to per-person, basis. The communicate with the consumer. The communicate with a consumer through Bureau also proposes commentary to Bureau requests comment on whether, if a medium of communication if the the proposed per-debt approach is § 1006.14(h)(1). Proposed comment consumer has requested that the debt 14(h)(1)–1 refers to comment 2(d)–1 for adopted, additional clarification is collector not use that medium to examples of communication media. needed about how to count telephone communicate with the consumer. Proposed comment 14(h)(1)–2 would calls when a debt collector places one Pursuant to its authority under FDCPA clarify that, within a medium of telephone call to a consumer to discuss section 814(d) to write rules with communication, a consumer may more than one particular debt. In respect to the collection of debts by debt request that a debt collector not use a particular, the Bureau requests comment collectors, the Bureau proposes specific address or telephone number on whether the rule should clarify how § 1006.14(h)(1) as an interpretation of and provides an example. The Bureau the frequency limits apply when a debt FDCPA section 806, which, as discussed proposes this comment on the grounds collector places an unanswered in part IV, prohibits a debt collector that a specific address or telephone telephone call to a consumer to discuss from engaging in any conduct the number may be considered a medium, two of the consumer’s debts (e.g., a natural consequence of which is to and that contacting a consumer through credit card debt and a medical debt), or harass, oppress, or abuse any person in a specific address or telephone number when a debt collector who is collecting connection with the collection of a debt. that the consumer has requested the two such debts leaves the consumer Since the enactment of the FDCPA, debt collector not use may be just as only a general message that does not the possible media through which harassing as contacting the consumer communications generally are refer specifically to either debt (e.g., through a medium of communication conducted has expanded beyond ‘‘Please remember to pay what you that the consumer has requested the telephone, mail, and in-person owe’’). The Bureau similarly requests debt collector not use. The Bureau conversations to include various mobile requests comment on proposed comment on whether clarification is and portable technologies that were not needed for the situation in which a debt § 1006.14(h)(1) and its related contemplated in 1977. For example, commentary. collector has a telephone conversation with the advent of the mobile telephone, As discussed above, pursuant to its with a consumer about more than one a consumer may receive a telephone call authority under FDCPA section 814(d) debt but does not specifically refer to at any time or place. As the CFPB Debt to write rules with respect to the either debt, and on whether the Collection Consumer Survey indicated, collection of debts by debt collectors, proposal appropriately counts the single consumers have varied but strong the Bureau proposes § 1006.14(h)(1) as conversation as having been about all of preferences about the media that debt an interpretation of FDCPA section 806, the debts for purposes of the frequency collectors use to communicate with on the basis that once a consumer has limits. them.340 requested that a debt collector not use Finally, the Bureau requests comment Once a consumer has requested that a a specific medium of communication to on: (1) The proposal to aggregate certain debt collector not use a specific medium communicate with the consumer, a debt student loan debts for purposes of of communication to communicate with collector who nevertheless continues to the consumer, the Bureau believes that § 1006.14(b)(2), including whether some communicate or attempt to the natural consequence of further student loan debts serviced under the communicate with the consumer using communications or attempts to that medium is engaging in conduct the same account number should be communicate from the debt collector to natural consequence of which is to counted separately; and (2) whether any the consumer using that same medium harass, oppress, or abuse. The Bureau types of debts other than student loans likely is harassment, oppression, or believes that proposed § 1006.14(h)(1) is should be aggregated, such that multiple abuse of the consumer. Consistent with consistent with this statutory language debts that were serviced under a single this interpretation, the Bureau and the purpose of the FDCPA. As account number at the time the debts understands that some debt collectors FDCPA section 802(e) explains, in were obtained by the debt collector (or currently refrain from communicating relevant part, the purpose of the Act is met other specified conditions) would with a consumer through a medium that to eliminate abusive debt collection be treated as a single debt for purposes the consumer has requested that the practices by debt collectors.341 The of the frequency limits. Under such an debt collector not use to communicate Bureau interprets FDCPA section 806’s approach, for example, multiple with the consumer, including, for general prohibition on engaging in medical debts could be aggregated for example, specific telephone numbers conduct the natural consequence of purposes of § 1006.14(b)(2) if they met that the consumer has asked the debt which is to harass, oppress, or abuse in certain conditions, such as being collector not to call. light of this purpose specified in the serviced under the same account For these reasons, the Bureau FDCPA, as well as in light of similar number at the time the debt collector proposes § 1006.14(h)(1) to provide that, conduct specifically prohibited by the obtained them. The Bureau requests in connection with the collection of any FDCPA. comment on such an approach, 339 14(h)(2) Exceptions including on the possible difficulties of As noted above, proposed § 1006.14(c) through (g) generally mirror the statute, with minor wording Proposed § 1006.14(h)(2) provides two aggregating accounts other than student and organizational changes for clarity, and are not exceptions to the general prohibition in loan accounts given the different facts discussed further in this section-by-section proposed § 1006.14(h)(1). Proposed that could apply to each debt. analysis. 340 See CFPB Debt Collection Consumer Survey, supra note 18, at 36–37. 341 15 U.S.C. 1692(e).

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§ 1006.14(h)(2)(i) provides that, organizational changes and legal action.346 Proposed § 1006.18(e) notwithstanding the prohibition in interpretations in § 1006.18(e) through would implement FDCPA section § 1006.14(h)(1), if a consumer opts out (g), which are discussed below, 807(11). in writing of receiving electronic proposed § 1006.18 generally restates Proposed comment 18(e)(1)–1 communications from a debt collector, a the statute with only minor wording describes the circumstances in which debt collector may reply once to confirm changes for clarity. The Bureau debt collectors would be required to the consumer’s request to opt out, proposes § 1006.18 pursuant to its provide disclosures in initial provided that the reply contains no authority under FDCPA section 814(d) communications under proposed information other than a statement to prescribe rules with respect to the § 1008.18(e)(1). Proposed comment confirming the consumer’s request. collection of debts by debt collectors. 18(e)(1)–1 specifies that a debt collector Proposed § 1006.14(h)(2)(ii) provides The Bureau proposes to organize must provide the disclosures in the debt that, if a consumer initiates contact with § 1006.18 by grouping the 16 non- collector’s initial communication with a debt collector using an address or a exhaustive examples of prohibited false the consumer, regardless of whether that telephone number that the consumer or misleading representations in FDCPA initial communication is written or oral, previously requested the debt collector section 807 into categories of related and regardless of whether the debt not use, the debt collector may respond conduct, as follows. Proposed collector or the consumer initiated the once to that consumer-initiated § 1006.18(a) would implement the communication. Proposed comment communication. The Bureau proposes general prohibition in FDCPA section 18(e)(1)–1 also provides an example of § 1006.14(h)(2) because a single 807 by prohibiting a debt collector from the rule regarding required disclosures communication from a debt collector of using any false, deceptive, or misleading during initial communications. the types described likely would not representation or means in connection Proposed comment 18(e)–1 provides have the natural consequence of with the collection of any debt. general commentary to explain how the harassing, oppressing, or abusing the Proposed § 1006.18(b) restates FDCPA disclosure requirements in proposed consumer within the meaning of FDCPA section 807’s examples of false, § 1006.18(e) interact with the proposed section 806.342 The Bureau requests deceptive, or misleading rule’s limited-content message, a comment on the exceptions in proposed representations.344 Proposed message that is not a communication § 1006.14(h)(2). § 1006.18(c) restates FDCPA section under proposed § 1006.2(d). Proposed As discussed above, a consumer may 807’s examples of false, deceptive, or comment 18(e)–1 would clarify that, request that a debt collector not misleading collection means.345 because a limited-content message is not communicate with the consumer using Proposed § 1006.18(d) restates the catch- a communication, a debt collector who a specific medium of communication. all prohibition against false leaves only a limited-content message However, there may be circumstances in representations or deceptive means as for a consumer does not need to provide which applicable law requires the debt described in FDCPA section 807(10). the disclosures required under proposed collector to communicate with the Proposed § 1006.18(e) addresses the § 1008.18(e)(1) and (2). For a more consumer only through that specific disclosures required under FDCPA detailed discussion of the terms medium and does not offer an section 807(11). Finally, proposed communication and limited-content alternative medium for compliance (e.g., § 1006.18(f) addresses the use of message, see the section-by-section by permitting a debt collector to assumed names by debt collectors’ analysis of proposed § 1006.2(d) and (j), electronically provide a notice that employees, and proposed § 1006.18(g) respectively. otherwise would be mailed). The addresses misrepresentations of The Bureau requests comment on all Bureau requests comment on whether meaningful attorney involvement in aspects of proposed § 1006.18 and on there are specific laws that require debt collection litigation. whether additional clarification would communication with the consumer be useful. In particular, the Bureau 18(e) Disclosures Required through one specific medium, and if so, requests comment on whether whether additional clarification is FDCPA section 807(11) requires debt additional clarification regarding false needed regarding the delivery of legally collectors to disclose in their initial or misleading representations would be required communications through a communications with consumers that helpful in the decedent debt context, or specific medium of communication they are attempting to collect a debt and whether to require any affirmative required by applicable law if the that any information obtained will be disclosures when debt collectors consumer has generally requested that used for that purpose, and to disclose in communicate in connection with the the debt collector not use that medium their subsequent communications with collection of a debt owed by a deceased to communicate with the consumer. consumers that the communication is consumer. As discussed in the section- from a debt collector, except in a formal by-section analysis of proposed Section 1006.18 False, Deceptive, or pleading made in connection with a §§ 1006.2(e) and 1006.6(a)(4), this Misleading Representations or Means proposal would define the term FDCPA section 807 generally 344 Proposed § 1006.18(b)(1)(i) through (viii) consumer to clarify with whom debt prohibits a debt collector from using any would implement, respectively, paragraphs (1), collectors may communicate when false, deceptive, or misleading (16), (3), (7), (6), (12), (13), and (15) of FDCPA attempting to resolve the debts of a section 807, and proposed § 1006.18(b)(2) would representations or means in connection implement FDCPA section 807(2). Restating the deceased consumer. In its Policy with the collection of any debt. The statutory language is not intended to suggest any Statement on Decedent Debt, the FTC section lists 16 non-exhaustive particular interpretation of that language. For expressed concern that, even absent examples of such prohibited conduct.343 example, the omission of the words ‘‘or imply’’ explicit misrepresentations, a debt from the introductory language to § 1006.18(b)(2) Proposed § 1006.18 would implement consistent with the statutory language in FDCPA collector might violate FDCPA section FDCPA section 807. Except for certain section 807(2) is not intended to suggest that the 807 by communicating with such Bureau would not regard implied false individuals in a manner that conveys 342 Proposed § 1006.14(h)(2) also is consistent representations as violations of FDCPA section 807 the misleading impression that the with the regulations implementing the CAN–SPAM or 807(2) or proposed § 1006.18(b)(2). Act, which permit senders to send a reply 345 Proposed § 1006.18(c)(1) through (4) would individual is personally liable for the electronic message. See 16 CFR 316.5. implement, respectively, paragraphs (5), (8), (9), 343 15 U.S.C. 1692e. and (14) of FDCPA section 807. 346 15 U.S.C. 1692e(11).

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deceased consumer’s debts, or that the provided that the name used does not 18(g) Safe Harbor for Meaningful debt collector could seek assets outside mislead the consumer about the debt at Attorney Involvement in Debt of the deceased consumer’s estate to issue and who is attempting to collect Collection Litigation Submissions satisfy the consumer’s debt. The FTC’s it. For example, the FTC previously FDCPA section 807 contains certain Policy Statement suggested two possible issued guidance stating that a debt provisions designed to protect disclosures that debt collectors collector’s employee does not violate consumers from false, deceptive, or generally could use to avoid deceiving the FDCPA by using an assumed name misleading representations made by, or such individuals about their liability for if the employee uses the assumed name means employed by, attorneys in debt the decedent’s debts.347 The FTC also consistently and the debt collector can collection litigation. FDCPA section noted that the information that would readily ascertain the employee’s 807(3) prohibits the false representation need to be disclosed to avoid deception identity.348 An employee’s consistent or implication that any individual is an would depend on the circumstances. use of that name is not likely to affect attorney or that any communication is While the Bureau believes that the the decisions a consumer makes about from an attorney. In addition, debt FTC’s suggested disclosures generally the debt. Further, a debt collector’s collection communications sent under would be sufficient to avoid deception ability to readily ascertain the an attorney’s name may violate FDCPA in many circumstances, proposed employee’s identity would enable the section 807(10) if the attorney was not § 1006.18 would not require such debt collector to monitor and address meaningfully involved in the disclosures. Since the FTC issued its the conduct of such employee. preparation of the communication.349 Policy Statement in 2011, neither the Therefore, an approach similar to the The meaningful attorney involvement FTC nor the Bureau has brought any FTC’s prior guidance may be case law has been applied in the cases against debt collectors for making appropriate for the use of assumed specific context of debt collection deceptive claims in the decedent debt names. litigation submissions.350 context, including any such claims For these reasons, proposed It may be particularly important for concerning the liability of other § 1006.18(f) provides that nothing in consumers, attorneys, and law firms individuals for the decedent’s debts. § 1006.18 prohibits a debt collector’s engaged in such litigation to be Proposed § 1006.18’s general employee from using an assumed name protected by a clear articulation of what prohibition against false, deceptive, or when communicating or attempting to meaningful attorney involvement in misleading representations, however, communicate with a person, provided debt collection litigation submissions would apply to express or implied that the employee uses the assumed means under FDCPA section 807, as misrepresentations that a personal name consistently and that the would be implemented by proposed representative is liable for the deceased employer can readily identify the § 1006.18. A clear articulation of consumer’s debts. The Bureau requests employee even if the employee is using meaningful attorney involvement also comment on whether the general the assumed name. The Bureau requests may be useful to avoid confusion and prohibition against false, deceptive, or comment on proposed § 1006.18(f), unnecessary conflicts between State misleading representations in proposed including on the use of assumed names standards and Federal standards under § 1006.18 is sufficient to protect by debt collectors’ employees in general, the FDCPA and any implementing individuals who communicate with as well as on whether and how regulations. debt collectors about a deceased employers can readily identify their To provide clarity for law firms and consumer’s debts, or whether employees who are using assumed attorneys submitting pleadings, written affirmative disclosures in the decedent names. motions, or other papers to courts in debt context are needed. debt collection litigation, proposed The Bureau proposes § 1006.18(f) section § 1006.18(g) provides a safe 18(f) Use of Assumed Names pursuant to its authority under FDCPA harbor for attorneys and law firms Debt collectors commonly instruct or section 814(d) to prescribe rules with against claims that they violated permit their employees to use assumed respect to the collection of debts by debt § 1006.18 due to the lack of meaningful names when interacting with collectors. Specifically, the Bureau attorney involvement in debt collection consumers, including by telephone. interprets FDCPA section 807’s litigation materials signed by the They do so for a variety of reasons. For prohibition on false or misleading attorney and submitted to the court, example, some employees may have representations, and 806(6)’s names that are difficult for some prohibition on placing telephone calls 349 See, e.g., Clomon v. Jackson, 988 F.2d 1314, consumers to spell or pronounce. These without ‘‘meaningful disclosure of the 1320 (2d Cir. 1993); Nielsen v. Dickerson, 307 F.3d caller’s identity,’’ to allow a debt 623, 635 (7th Cir. 2002). Courts have found employees may find that assuming a violations of other subsections of FDCPA section simpler name facilitates collector’s employee to disclose an 807 for similar conduct. See e.g., Avila v. Rubin, 84 communications with consumers. Other assumed name as long as the employee F.3d 222, 229 (7th Cir. 1996); Lesher v. Law Offices employees may have privacy or safety uses the name consistently and the debt of Mitchell N. Kay, PC, 650 F.3d 993, 1002 (3d Cir. concerns about revealing their true collector can readily ascertain that 2011). employee’s true identity. 350 See Miller v. Upton, Cohen & Slamowitz, 687 name and employer to a potentially F.Supp.2d 86, 100 (applying meaningful large number of consumers. involvement liability to, among other actions, filing From a consumer’s perspective, it 348 Fed. Trade Comm’n, Staff Commentary on the of complaint in court); Bock v. Pressler & Pressler, may not be relevant whether employees Fair Debt Collection Practices Act, 53 FR 50097, 30 F.Supp.3d 283, 303 (D.N.J. 2014) (‘‘The claimed 50105 (Dec. 13, 1988) (‘‘1. Aliases. A debt collector misrepresentation here does not relate to the use true names or assumed names, employee’s use of an alias that permits ultimate veracity of the numbered factual identification of the debt collector (i.e., where he allegations of the complaint; it concerns the 347 FTC Policy Statement on Decedent Debt, supra uses the alias consistently, and his true identity can veracity of the implied representation that an note 192, at 44922. The FTC’s suggested disclosures be ascertained by the employer) constitutes a attorney was meaningfully involved in the were: ‘‘(1) That the collector is seeking payment ‘‘meaningful disclosure of the caller’s identity.’’); preparation of the complaint. If, in fact, the attorney from the assets in the decedent’s estate; and (2) see also id. at 50103 (‘‘An individual debt collector who signed the complaint is not involved and [that] the individual could not be required to use may use an alias if it is used consistently and if it familiar with the case against the debtor, then the the individual’s assets or assets the individual does not interfere with another party’s ability to debtor has been unfairly misled and deceived owned jointly with the decedent to pay the identify him (e.g., the true identity can be within the meaning of the FDCPA. . . .’’), reaff’d decedent’s debt.’’ Id. ascertained by the employer).’’). on remand, 254 F.Supp.3d 724, 729 (D.N.J. 2017).

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provided that they meet the with a court rule that is substantially communicate with a consumer using an requirements in proposed § 1006.18(g). similar to the standard in § 1006.18(g), email address that the debt collector Proposed § 1006.18(g) provides that an will have complied with FDCPA section knows or should know is provided to attorney has been meaningfully 807 regarding the attorney’s meaningful the consumer by the consumer’s involved in the preparation of debt involvement in submissions made in employer, unless the debt collector has collection litigation submissions if the debt collection litigation. The Bureau received directly from the consumer attorney: (1) Drafts or reviews the requests comment on whether the safe either prior consent to use that email pleading, written motion, or other harbor proposed for meaningful attorney address or an email from that email paper; and (2) personally reviews involvement in debt collection litigation address. information supporting the submission submissions provides sufficient clarity The FDCPA contains both general and and determines, to the best of the for consumers, attorneys, and law firms. specific prohibitions intended to protect attorney’s knowledge, information, and Section 1006.22 Unfair or consumers from the harms that belief, that, as applicable: The claims, Unconscionable Means defenses, and other legal contentions are workplace collections communications warranted by existing law; the factual FDCPA section 808 prohibits a debt can cause. For example, absent contentions have evidentiary support; collector from using any unfair or obtaining the consumer’s prior consent, and the denials of factual contentions unconscionable means to collect or a debt collector who discloses a debt to are warranted on the evidence or, if attempt to collect any debt and lists a consumer’s employer generally would specifically so identified, are reasonably eight non-exhaustive examples of such violate FDCPA section 805(b)’s based on belief or lack of information. prohibited conduct.353 The Bureau prohibition on communicating with a The factors in proposed § 1008.18(g) proposes § 1006.22 to implement and third party about a debt.355 A debt are similar to some of the nationally interpret FDCPA section 808 and collector also could violate FDCPA recognized standards for attorneys pursuant to its authority under FDCPA section 805(a)(3) by communicating making submissions in civil section 814(d) to write rules with with the consumer at the consumer’s litigation.351 Because most FDCPA respect to the collection of debts by debt place of employment if the debt claims are considered by Federal courts, collectors. collector knows or has reason to know and Federal court rules are adopted and Proposed § 1006.22(a) would that the consumer’s employer prohibits apply nationwide, Federal Rule of Civil implement FDCPA section 808’s general the consumer from receiving such Procedure 11(b)(2) through (4) as prohibition against unfair debt communications.356 currently adopted may provide an collection practices, and proposed Debt collectors and consumers may § 1006.22(b) through (f)(2) would appropriate guide for judging whether a have questions about how the FDCPA’s implement the prohibited conduct submission to the court has complied protections against third-party examples in FDCPA section 808.354 with § 1006.18(g). Indeed, courts that disclosures apply to workplace contacts These proposed paragraphs generally have applied the meaningful attorney by newer means of communication, mirror the statute, with minor wording involvement doctrine to litigation such as email. Debt collectors should be and organizational changes for clarity. submissions have considered that aware that many employers have a legal 352 The following section-by-section standard. Accordingly, the safe right to read, and in fact frequently do harbor in proposed § 1006.18(g) restates analysis thus discusses only proposed § 1006.22(f)(3) and (4) and (g). read, messages sent or received by certain provisions of Federal Rule of employees on their work email Civil Procedure Rule 11(b). An attorney 22(f) Restrictions on Use of Certain accounts.357 Workplace emails therefore or law firm who establishes compliance Media present a particularly high risk of third- with the factors set forth in proposed party disclosure through an employer § 1006.18(g), including when a court in Proposed § 1006.22(f)(3) and (4) reading an email sent by a debt collector debt collection litigation determines would restrict a debt collector’s use of to a consumer’s work account. In that the debt collector has complied two specific types of electronic media: Work email accounts and public-facing addition, Congress and the courts have recognized that an employer learning 351 The factors in proposed § 1008.18(g) omit the social media. As to electronic media following two aspects of Federal Rule of Civil more generally, the Bureau plans to that an employee has a debt in Procedure 11(b)(2) through (4): First, that the monitor their evolution and use by debt collection may cause the consumer to claims, defenses, or other legal contentions are a collectors, as well as any trends in suffer significant harms, including loss non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law; FDCPA section 808 litigation and second, that the factual contentions are likely concerning such media, to identify 355 15 U.S.C. 1692c(b). to have evidentiary support after a reasonable issues that pose a risk of consumer harm 356 15 U.S.C. 1692c(a)(3). opportunity for further investigation or discovery. or require clarification as part of any 357 See, e.g., Am. Mgmt. Ass’n & ePolicy Inst., This safe harbor is proposed in part to set clearer future rulemakings. Electronic Monitoring and Surveillance 2007 Survey standards for routine debt collection litigation (2008), http://www.amanet.org/training/articles/ cases, in which there is unlikely to be an argument 22(f)(3) 2007-electronic-monitoring-and-surveillance- to extend, modify, or reverse existing law or to survey-41.aspx (reporting that a survey of establish new law. The Bureau also understands Proposed § 1006.22(f)(3) would employers conducted in 2007 found that, among that most factual contentions pled in debt collection prohibit a debt collector from other things, 43 percent of employers monitored litigation should be supported by evidence in the communicating or attempting to their employees’ email accounts and 66 percent of creditor’s or debt collector’s possession, thereby employers monitored their employees’ internet negating the need for further investigation or connection, with 45 percent of employers tracking discovery. Moreover, proposed § 1006.18(g) would 353 15 U.S.C. 1692f. the content, keystrokes, and time spent at the provide a safe harbor; thus, meeting one of these 354 Specifically, proposed § 1006.22(b) would keyboard); Bingham v. Baycare Health Sys., No. omitted aspects may permit an attorney to establish implement FDCPA section 808(1); proposed 8:14–CV–73–T–23JSS, 2016 WL 3917513, at *4 meaningful attorney involvement even if doing so § 1006.22(c) would implement FDCPA section (M.D. Fla. July 20, 2016) (collecting cases and would not entitle the attorney to the safe harbor that 808(2) through (4); proposed § 1006.22(d) would concluding that ‘‘the majority of courts have found proposed § 1006.18(g) would establish. implement FDCPA section 808(5); proposed that an employee has no reasonable expectation of 352 See, e.g., Bock v. Pressler & Pressler, 2017 WL § 1006.22(e) would implement FDCPA section privacy in workplace emails when the employer’s 4711472 at *7 n.5 (discussing initial decision at 30 808(6); proposed § 1006.22(f)(1) would implement policy limits personal use or otherwise restricts F.Supp.3d 283, 299–302); Miller, 687 F.Supp.2d at FDCPA section 808(7); and proposed § 1006.22(f)(2) employees’ use of its system and notifies employees 101 (analogizing to Rule 11). would implement FDCPA section 808(8). of its policy’’).

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of employment.358 The Bureau proposes As suggested by numerous consumer the consumer either prior consent to use § 1006.22(f)(3) on the ground that a debt advocacy groups and a consortium of that email address or an email from that collector who sends a communication to State attorneys general in comments to email address. a consumer’s work email account the Bureau’s ANPRM, requiring a debt Proposed comment 22(f)(3)–1 notes violates the FDCPA if the debt collector collector to obtain a consumer’s that, even after providing prior consent knows or can reasonably anticipate that consent, or to have received an email directly to a debt collector, a consumer a communication sent to a consumer’s from the consumer, before sending could opt out of receiving emails at a work email account might be opened emails to the consumer’s work account work email address at any time using and read by someone other than the could protect the consumer’s privacy instructions provided by a debt collector consumer. There is support for this interest in avoiding the disclosure of the pursuant to proposed § 1006.6(e), or interpretation in court decisions holding debt to the consumer’s employer. This otherwise request not to receive emails that a debt collector who sends a letter privacy interest is implicated by both at that address pursuant to proposed to a consumer’s place of employment communications and attempts to § 1006.14(h). Proposed comment violates the FDCPA if the debt collector communicate. A debt collector’s initial, 22(f)(3)–1 also refers to the commentary ‘‘knew or could reasonably anticipate unsolicited email that does not convey to proposed § 1006.6(b)(4)(i) for that [such] a letter . . . might be opened information regarding a debt additional guidance on prior consent. and read by someone other than the nonetheless may induce a recipient Proposed comment 22(f)(3)–2 would debtor as it made its way to [the such as a consumer or an employer to clarify that a debt collector who receives consumer].’’ 359 inquire about the purpose of the debt an email directly from a consumer from collector’s message. The debt collector’s an email address provided by the 358 S. Rept. No. 382, supra note 70, at 1699 (‘‘[A] attempt to communicate thus may lead consumer’s employer may communicate debt collector may not contact third persons such to the disclosure of the debt to a third or attempt to communicate with the as a consumer’s friends, neighbors, relatives, or party before the consumer has had a consumer at that email address, even if employer. Such contacts are not legitimate collection practices and result in serious invasions meaningful opportunity to provide prior the consumer’s email does not provide of privacy, as well as the loss of jobs.’’); id. at 1696 consent. A consumer who chooses to prior consent to the debt collector. (‘‘Collection abuse takes many forms, including use a work email account to contact a Proposed comment 22(f)(3)–2 also . . . disclosing a consumer’s personal affairs to debt collector, or who provides prior provides an example of such a situation. friends, neighbors, or an employer.’’); 122 Cong. Rec. H730707 (daily ed. July 19, 1976) (remarks of consent for the debt collector to use Proposed comment 22(f)(3)–3 Rep. Annunzio on H. Rept. 13720) (Clearinghouse such an email account to contact the provides examples of email addresses No. 31,059U) (‘‘Communication with a consumer at consumer, presumably has made a that a debt collector knows or should work or with his employer may work a tremendous determination that the benefits of know are provided to the consumer by hardship for a consumer because such calls can communicating with a debt collector embarrass a consumer and can result in his losing the consumer’s employer. Proposed a deserved promotion’’ and ‘‘[i]f a consumer loses about a debt using a work email account comment 22(f)(3)–3 also states that, in his job, he is in a worse, not better, position to pay outweigh the potential risks, and a debt the absence of contrary information, a the debt.’’); Am. Fin. Servs. Ass’n v. Fed. Trade collector who receives such an email or debt collector neither would know nor Comm’n, 767 F.2d 957, 974 (D.C. Cir. 1985) prior consent from the consumer may (upholding provision in the FTC’s Credit Practices should know that an email address is Rule that prohibited certain wage assignments not reasonably anticipate that its emails provided to the consumer by the because, among other things, the rulemaking record to the consumer would be read by the consumer’s employer if the email showed that ‘‘employers tend to view the consumer’s employer. Accordingly, after address’s domain name is one consumer’s failure to repay the debt as a sign of a consumer uses the work email account irresponsibility. As a consequence many lose their commonly associated with a provider of jobs after wage assignments are filed. Even if the to contact the debt collector or provides non-work email addresses. Examples of consumer retains the job, promotions, raises, and prior consent, it would not appear to be domain names that are commonly job assignments may be adversely affected.’’) (citing an unfair or unconscionable practice associated with a provider of non-work Credit Practices Rule, 49 FR 7740, 7758 (1984) under FDCPA section 808 for a debt (codified at 16 CFR 444)); Fed. Trade Comm’n v. email addresses would include LoanPointe, LLC, No. 2:10–CV–225DAK, 2011 WL collector to communicate or attempt to gmail.com, yahoo.com, hotmail.com, 4348304, at *6–8 (D. Utah Sept. 16, 2011) (holding communicate with the consumer using aol.com, or msn.com, among others.360 that ‘‘Defendants’ practice of disclosing debts and an email address that the debt collector During the SBREFA process, small the amount of the debts to consumers’ employers’’ knows or should know is provided by violated the FDCPA and ‘‘qualifies as an unfair entity representatives sought guidance practice under the FTC Act’’), aff’d, 525 F. App’x the consumer’s employer. on how they would know whether an 696 (10th Cir. 2013). The State of New York For all of these reasons, pursuant to email address is provided to a consumer prohibits a debt collector from corresponding with its authority to implement and interpret by an employer and also suggested that a consumer by email unless, among other things, FDCPA section 808 and its authority a consumer’s consent to use a work the consumer voluntarily provided the email under FDCPA section 814(d) to write address to the debt collector and has affirmed that email should transfer from the creditor the email is not ‘‘furnished or owned by the rules with respect to the collection of to the debt collector.361 Proposed consumer’s employer.’’ 23 N.Y. Comp. Codes R. & debts by debt collectors, the Bureau comment 22(f)(3)–3, which addresses Regs. tit. 23, sec. 1.6(a) (2018). proposes § 1006.22(f)(3) to prohibit a when a debt collector knows or should 359 Evon v. Law Offices of Sidney Mickell, 688 debt collector from communicating or F.3d 1015, 1025–26 (9th Cir. 2012) (holding that a attempting to communicate with a letter addressed ‘‘in care of [consumer’s] employer’’ 360 See, e.g., Email-Verify.My.Addr.com, List of and delivered to her at work, ‘‘manifestly consumer using an email address that Most Popular Email Domains (By Number of Live constitutes a violation [of the FDCPA because the the debt collector knows or should Emails), https://email-verify.my-addr.com/list-of- debt collector] knew or could reasonably anticipate know is provided to the consumer by most-popular-email-domains.php (last visited May that a letter sent to a class member’s employer the consumer’s employer, unless the 6, 2019) (listing the most popular email domain might be opened and read by someone other than names, ranked by number of live emails). the debtor as it made its way to him/her. This is debt collector has received directly from 361 These comments were similar to ANPRM exactly what happened to [the consumer], causing comments submitted by several industry members, her stress and embarrassment, precisely what the easily accessible to third parties. For example, he who noted that debt collectors may not be able to Act is designed to prevent.’’); see also Fed. Trade may not use a computerized billing statement that determine accurately whether an email address is Comm’n, Staff Commentary on the Fair Debt can be seen on the envelope itself. A debt collector provided by an employer because, among other Collection Practices Act, 53 FR 50097–02, 50104 may use an ‘in care of’ letter only if the consumer things, the domain name may not signify that it is (Dec. 13, 1988) (‘‘Accessibility by third party. A debt lives at, or accepts mail at, the other party’s a work email or the consumer may consolidate collector may not send a written message that is address.’’). multiple email accounts.

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know that an email address is provided is communicating using a consumer’s many of the consumer’s social or by a consumer’s employer, is designed work email address and, if so, what professional contacts, who may to provide such guidance. In addition, circumstances should indicate to a debt interpret a widely distributed message proposed § 1006.22(f)(3) would not collector that an email address is asking that the consumer return a call as apply a strict liability standard, so a provided by a consumer’s employer. an indication that the consumer is debt collector would not violate the rule The Bureau further requests comment delinquent on an obligation. if the debt collector neither knew nor on the scope of proposed § 1006.22(f)(3). Accordingly, a debt collector may should have known that the debt As proposed, it would apply only to engage in an unfair or unconscionable collector used a consumer’s work email email contacts with the person obligated act by, in connection with the collection address. The Bureau does not propose, or allegedly obligated to pay a debt (i.e., of a debt, communicating or attempting however, that a consumer’s prior a person defined as a consumer under to communicate with a consumer by consent to receive email on the proposed § 1006.2(e)). The Bureau publicly viewable social media consumer’s work account from a requests comment on whether it should platform. creditor would transfer to a debt be broadened to apply to email contacts Such conduct also may have the collector. A consumer may enter into a with a consumer as defined in proposed natural consequence of harassing, transaction with, and consent to § 1006.6(a). oppressing, or abusing the consumer. receiving emails on their work account Although some social media contacts, 22(f)(4) from, a creditor based on the such as a limited-content message, may characteristics of that particular Proposed § 1006.22(f)(4) provides that not convey information regarding a debt creditor; in contrast, consumers a debt collector must not communicate directly or indirectly to any person, generally have no ability to choose or attempt to communicate with a given the many other ways a debt which debt collector attempts to collect consumer in connection with the collector could attempt to communicate their debt. collection of a debt by a social media with a consumer that are not viewable One small entity representative platform that is viewable by a person by a potentially wide array of the recommended that emails to a other than the consumer or other person consumer’s social or professional consumer’s work address be described in proposed § 1006.6(d)(1)(i) colleagues—such as by telephone, text presumptively prohibited only if the through (vi). message, postal mail, email, or private debt collector knows or should know The FDCPA contains numerous message through the same social media that the employer prohibits such contact provisions that guard against the platform—a debt collector may have no (i.e., applying the FDCPA section disclosure of the consumer’s financial legitimate purpose in contacting a 805(a)(3) framework to work email affairs to individual third parties or the consumer by publicly viewable social accounts).362 As discussed above, broader public.363 For example, FDCPA media. As a result, such conduct may workplace email communications section 805(b) generally prohibits serve only to harass, oppress, or abuse. present a particularly high risk of third- communicating with third parties in For these reasons, and pursuant to its party disclosure because many connection with the collection of a debt; authority under FDCPA section 814(d) employers have a legal right to read FDCPA section 806(3) prohibits and to interpret FDCPA sections 806 messages sent or received by employees publishing public ‘‘shame lists’’ of and 808, proposed § 1006.22(f)(4) on their work email accounts. For this consumers who allegedly refuse to pay provides that a debt collector must not reason, the prohibition in proposed their debts; 364 and FDCPA section communicate or attempt to § 1006.22(f)(3) does not apply the 808(7) and (8) prohibits communicating communicate with a consumer in FDCPA section 805(a)(3) framework. with a consumer regarding a debt by connection with the collection of a debt Rather, to protect consumers from loss postcard or using most language or by a social media platform that is of employment and risk of symbols on the outside of an envelope. viewable by a person other than a embarrassment, the Bureau proposes to The Bureau believes that person described in proposed require that a debt collector obtain prior communications or attempts to § 1006.6(d)(1)(i) through (vi). Proposed consent to use that email address communicate by social media platforms comment 22(f)(4)–1 provides examples directly from the consumer, or have that are viewable by a person other than illustrating the proposed rule. received an email sent from the a person with whom a debt collector The Bureau requests comment on all consumer’s work email account, before may communicate under FDCPA section aspects of proposed § 1006.22(f)(4), using the consumer’s work email 805(b) similarly risk exposing a including on whether debt collectors account. consumer’s affairs to the public. For anticipate that they will use social The Bureau requests comment on all example, a debt collector’s message to a media platforms to contact consumers. aspects of proposed § 1006.22(f)(3). In consumer posted on a public-facing The Bureau also requests comment on particular, the Bureau requests comment social media page may be viewed by whether debt collectors have any non- on whether FDCPA section 805(a)(3)’s harassing purpose for attempting to framework should apply to emails to a 363 Invasion of individual privacy appears to have communicate with consumers using consumer’s work account, so that such been one of the primary harms that Congress sought public-facing social media platforms to eliminate through the FDCPA. FDCPA section and, if so, whether proposed emails are presumptively prohibited 802(a), (e); 15 U.S.C. 1692(a), (e); S. Rept. No. 382, only when a debt collector knows or supra note 70, at 1699 (‘‘[A] debt collector may not § 1006.22(f)(4) should have an exception should know that a consumer’s contact third persons such as a consumer’s friends, for attempts to communicate such as employer prohibits the consumer from neighbors, relatives, or employer. Such contacts are limited-content messages. The Bureau not legitimate collection practices and result in further requests comment on the scope receiving such communications. The serious invasions of privacy, as well as the loss of Bureau also requests comment on jobs.’’); id. at 1696 (‘‘Collection abuse takes many of proposed § 1006.22(f)(4). As whether more clarification is necessary forms, including . . . disclosing a consumer’s proposed, it would apply only to social regarding when a debt collector knows personal affairs to friends, neighbors, or an media contacts with the person employer.’’); see also Douglass v. Convergent obligated or allegedly obligated to pay a or should know that the debt collector Outsourcing, 765 F.3d 299, 303 (3d Cir. 2014) (describing ‘‘the invasion of privacy’’ as ‘‘a core debt (i.e., a person defined as a 362 See the section-by-section analysis of concern animating the FDCPA’’). consumer under proposed § 1006.2(e)). proposed § 1006.6(b)(3). 364 S. Rept. No. 382, supra note 70, at 1696. The Bureau requests comment on

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whether it should be broadened to apply consumer’s shoulder. However, this Section 1006.26 Collection of Time- to social media contacts with any feedback did not include any actual Barred Debts person described as a consumer in evidence of the prevalence of such Proposed § 1006.26 contains proposed § 1006.6(a). behavior. Moreover, consumers interventions related to the collection of generally should be able to manage 22(g) Safe Harbor for Certain Emails and time-barred debts. Proposed § 1006.26(a) over-the-shoulder risk by choosing Text Messages Relating to the Collection would define several terms, and of a Debt where and when to read electronic proposed § 1006.26(b) would prohibit communications and how to configure debt collectors from suing or threatening FDCPA section 808 contains certain their devices. to sue consumers to collect time-barred provisions designed to protect consumer Proposed § 1006.22(g) would provide debts. The Bureau proposes § 1006.26 privacy. As noted, FDCPA section a safe harbor only as to claims that a pursuant to its authority under FDCPA 808(7) prohibits a debt collector from debt collector violated § 1006.22 by section 814(d) to prescribe rules with communicating with a consumer revealing in the email or text message respect to the collection of debts by debt regarding a debt by postcard, and the debt collector’s name or other collectors. FDCPA section 808(8) generally information indicating that the prohibits a debt collector from using any 26(a) Definitions language or symbol, other than the debt communication relates to the collection Proposed § 1006.26(a) would define collector’s address, on any envelope of a debt. The proposed provision several terms used in § 1006.26 but not when communicating with a consumer would not provide a safe harbor as to defined in the FDCPA. These definitions by postal mail. As courts have claims that a debt collector’s email or would facilitate compliance with recognized, these provisions aim to text message violated the FDCPA or proposed § 1006.26(b), which would protect consumer privacy by limiting Regulation F in other ways. The Bureau interpret FDCPA section 807 to prohibit public disclosure of a consumer’s requests comment on proposed debt collectors from suing and debts.365 The examples in FDCPA § 1006.22(g). threatening to sue consumers to collect section 808(7) and (8) apply to postal In the Small Business Review Panel time-barred debts. mail practices. In pre-proposal feedback, Outline, the Bureau described a industry groups noted that uncertainty proposal under consideration to 26(a)(1) Statute of Limitations prohibit a debt collector from sending about how similar prohibitions might be Proposed § 1006.26(a)(2), discussed an email message to a consumer if the applied to emails and text messages below, would define the term time- ‘‘from’’ or ‘‘subject’’ lines contained discourages the use of those barred debt to mean a debt for which the technologies to communicate with information revealing that the email was 366 applicable statute of limitations has consumers. about a debt. The Bureau’s concern expired. Proposed § 1006.26(a)(1), in To mitigate such uncertainty while was that such information could reveal turn, would define the term statute of also protecting consumer privacy, to others that the communication 367 limitations to mean the period proposed § 1006.22(g) provides that a related to a debt. The Bureau does prescribed by applicable law for debt collector who communicates with not propose this restriction described in bringing a legal action against the a consumer using an email address, or the Small Business Review Panel consumer to collect a debt. telephone number for text messages, Outline. In pre-proposal feedback, debt Statutes of limitations typically are and follows the procedures described in collectors suggested that the restriction established by State law and provide proposed § 1006.6(d)(3) does not violate would make electronic communication time limits for bringing suit on legal § 1006.22(a) by revealing in the email or generally more difficult. Some industry claims.369 They reflect a public policy text message the debt collector’s name participants predicted that, if debt determination that it is unjust to subject or other information indicating that the collectors were required to exclude from defendants to suit after a specified communication relates to the collection an email’s ‘‘from’’ or ‘‘subject’’ lines all period.370 For debt collection claims, of a debt. The procedures in proposed information suggestive of debt the length of the applicable statute of § 1006.6(d)(3) are designed to ensure collection, consumers would be less limitations often varies by State and, that a debt collector who uses a likely to understand the email’s purpose within each State, by debt type.371 Most particular email address or telephone and more likely to treat the email like statutes of limitations applicable to debt number to communicate with a spam and delete or ignore it. This is collection claims are between three and consumer by email or text message does consistent with research suggesting that six years, although some are as long as not have a reason to anticipate that an the most important factors in whether a 15 years.372 unauthorized third-party disclosure may consumer will open an email are occur. If the proposed procedures work whether they recognize the sender and 369 Federal law sometimes establishes the statute 368 as designed, there would not be a reason the content of the subject line. of limitations. For example, legal actions to recover to anticipate that a third party would Proposed § 1006.6(d)(3), which, as noted certain telecommunications debt are subject to a see the debt collector’s name or other above, describes procedures for statute of limitations set by Federal law. See 47 debt-collection-related information obtaining and using an email address or U.S.C. 415(a). included in a communication sent to 370 See, e.g., United States v. Kubrick, 444 U.S. a telephone number that is unlikely to 111, 117 (1979) (‘‘Statutes of limitations . . . such an email address or telephone lead to a third-party disclosure, may be represent a pervasive legislative judgment that it is number. Some pre-proposal feedback a more effective initial step to minimize unjust to fail to put the adversary on notice to raised the possibility that a third party the risk of third-party disclosure. defend within a specified period of time and that could read an electronic communication the right to be free of stale claims in time comes to prevail over the right to prosecute them.’’ on, for example, the consumer’s mobile 366 Small Business Review Panel Outline, supra (internal citation and quotation marks omitted)). telephone by looking over the note 56, at appendix H. 371 See Fed. Trade Comm’n, Repairing a Broken 367 Id. System: Protecting Consumers in Debt Collection 365 See, e.g., Douglass v. Convergent Outsourcing, 368 Direct Marketing Ass’n, Consumer Email Litigation and Arbitration, at 24 (July 2010) 765 F.3d 299, 302 (3d Cir. 2014) (‘‘Section 1692f Tracker 2017, at 18 (2017), https://dma.org.uk/ (hereinafter FTC Litigation Report). evinces Congress’s intent to screen from public uploads/misc/5a1583ff3301a-consumer-email- 372 See FTC Debt Buying Report, supra note 14, view information pertinent to the debt collection.’’). tracking-report-2017-(2)_5a1583ff32f65.pdf. at 42.

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Debt collectors generally are familiar words, in most States, a debt collector conduct with regard to the collection of with the concept of statutes of may use non-litigation means to collect that debt, including, for example, limitations, and the proposed definition a time-barred debt, as long as those whether to pay it.380 In response to the generally should be consistent with debt means do not violate the FDCPA or Bureau’s ANPRM, some consumer collectors’ understanding of the term. other laws. If a debt collector does sue advocacy groups and State Attorneys The Bureau requests comment on the to collect a time-barred debt and the General observed that consumers are proposed definition and whether any consumer proves the expiration of the often uncertain about their rights additional clarification is needed. statute of limitations as an affirmative concerning time-barred debt. The defense, the court will dismiss the suit. Bureau’s consumer testing to date is 26(a)(2) Time-Barred Debt Multiple courts have held that suits and consistent with those observations.381 In Proposed § 1006.26(a)(2) would define threats of suit on time-barred debt addition, as courts have recognized, the the term time-barred debt to mean a violate the FDCPA, reasoning that such passage of time ‘‘dulls the consumer’s debt for which the applicable statute of practices violate FDCPA section 807’s memory of the circumstances and limitations has expired. Debt collectors prohibition on false or misleading validity of the debt’’ and ‘‘heightens the generally are familiar with the concept representations, FDCPA section 808’s probability that [the consumer] will no of time-barred debt, and the definition prohibition on unfair practices, or longer have personal records detailing of time-barred debt in proposed both.376 The FTC has also concluded the status of the debt.’’ 382 Consumers § 1006.26(a)(2) is consistent with debt that the FDCPA bars actual and sued or threatened with suit on a time- collectors’ understanding of the term. threatened suits on time-barred debt.377 barred debt may not recognize that the Many debt collectors already In addition, at least one industry group debt is time barred, that time-barred determine whether the statute of requires its members to refrain from debts are unenforceable in court, or that limitations applicable to a debt has suing or threatening to sue on time- generally they must raise the expiration expired. Some do so to comply with barred debts.378 Nevertheless, the of the statute of limitations as an State and local disclosure laws that Bureau’s enforcement experience affirmative defense. require them to inform consumers when suggests that some debt collectors may Suits and threats of suit on time- debts are time barred.373 Others do so to continue to sue or threaten to sue on barred debts can harm consumers in assess whether they can sue to collect time-barred debts.379 multiple ways. A debt collector’s threat the debt, which may affect their A debt collector who sues or threatens to sue on a time-barred debt may collection strategy. The information that to sue a consumer on a time-barred debt prompt some consumers to pay or debt buyers generally receive when may explicitly or implicitly prioritize that debt over others in the bidding on and purchasing debts, and misrepresent to the consumer that the mistaken belief that doing so is the information that other debt debt is legally enforceable, and that necessary to forestall litigation. collectors generally receive at misrepresentation likely is material to Similarly, suits on time-barred debts placement, should allow them to consumers because it may affect their may lead to judgments against determine whether the applicable consumers on claims for which those statute of limitations has expired.374 Stat. Ann. § 893.05 (‘‘When the period within consumers had meritorious defenses, which an action may be commenced on a including, but not limited to, a statute- The Bureau requests comment on the Wisconsin cause of action has expired, the right is proposed definition and on whether any extinguished as well as the remedy.’’). of-limitations defense. Such judgments additional clarification is needed. 376 See, e.g., Pantoja v. Portfolio Recovery Assocs., may be especially likely given that few LLC, 852 F.3d 679, 683–84 (7th Cir. 2017); consumers sued for allegedly unpaid 26(b) Suits and Threats of Suit McMahon v. LVNV Funding, LLC, 744 F.3d 1010, debts—whether time-barred or not— Prohibited 1020 (7th Cir. 2014); Phillips v. Asset Acceptance, LLC, 736 F.3d 1076, 1079 (7th Cir. 2013); Huertas actually defend themselves in court, and Under the laws of most States, v. Galaxy Asset Mgmt., 641 F.3d 28, 33 (3d Cir. those who do often are unrepresented. expiration of the applicable statute of 2011); Goins v. JBC & Assocs., P.C., 352 F. Supp. As a result, the vast majority of limitations, if raised by the consumer as 2d 262, 273 (D. Conn. 2005); Kimber v. Fed. Fin. judgments on unpaid debts, including Corp., 668 F. Supp. 1480, 1487–89 (M.D. Ala. 1987). on time-barred debts, are default an affirmative defense, precludes the 377 FTC Litigation Report, supra note 371, at 23. debt collector from recovering on the 378 Receivables Mgmt. Ass’n Int’l, Receivables judgments, entered solely on the debt using judicial processes, but it does Management Certification Program, at 32 (Jan. representations contained in the debt not extinguish the debt itself.375 In other 2018), https://rmassociation.org/wp-content/ collector’s complaint.383 uploads/2018/02/Certification-Policy-version-6.0-

373 FINAL-20180119.pdf (‘‘A Certified Company shall 380 See, e.g., Cal. Civ. Code § 1788.52(d)(3); Conn. not knowingly bring or imply that it has the ability See, e.g., Kimber, 668 F. Supp. at 1489 (‘‘By Gen. Stat. § 36a–805(a)(14); Mass. Code Regs., tit. to bring a lawsuit on a debt that is beyond the threatening to sue Kimber on her alleged debt . . . 940, § 7.07(24); N.M. Code. R. § 12.2.12.9(A); N.Y. applicable statute of limitations, even if state law FFC implicit[ly] represented that it could recover in Comp. Codes R. & Regs., tit. 23, § 1.3; New York revives the limitations period when a payment is a lawsuit, when in fact it cannot properly do so.’’). City, N.Y., Rules, tit. 6, § 2–191(a); W. Va. Code received after the expiration of the statute.’’); see 381 See FMG Focus Group Report, supra note 38, § 46a–2–128(f). also David E. Reid, Out-of-Statute Debt: What is a at 9–10; FMG Cognitive Report, supra note 40, at 374 See FTC Debt Buying Report, supra note 14, Smart, Balanced, and Responsible Approach, at 8 36–37; FMG Summary Report, supra note 42, at 35– at 49 (‘‘The data the Commission received from debt (Receivables Mgmt. Ass’n Int’l, White Paper, 2015), 36; see also FTC Litigation Report, supra note 371, buyers suggests that debt buyers usually are likely https://rmassociation.org/wp-content/uploads/ at iii, 26. to know or be able to determine whether the debts 2017/04/RMA_Whitepaper_OOS.pdf (‘‘Although, as 382 Phillips, 736 F.3d at 1079 (quoting Kimber, on which they are collecting are beyond the statute noted, the statute of limitations is an affirmative 668 F. Supp. at 1487). of limitations.’’); CFPB Debt Collection Operations defense that, in almost all states, must be raised by 383 See FTC Debt Buying Report, supra note 14, Study, supra note 45, at 23 (noting that the majority the defendant or it is waived, it is improper to at 45 (observing that ‘‘90 percent or more of of respondents reported always or often receiving, knowingly file OSD [i.e., out-of-statute debt] suits consumers sued in [debt collection actions] do not among other things, debt balance at charge off, and wait to see if the defense is pled.’’). appear in court to defend,’’ which ‘‘creates a risk account agreement documentation, and billing 379 Consent Order at ¶¶ 65–69, In re Encore that consumer will be subject to a default judgment statements). Capital Group, Inc., No. 2015–CFPB–0022 (Sept. 9, on a time-barred debt’’); Peter A. Holland, The One 375 In Mississippi and Wisconsin, debts are 2015), http://files.consumerfinance.gov/f/201509_ Hundred Billion Dollar Problem in Small Claims extinguished when the applicable statute of cfpb_consent-order-encore-capital-group.pdf; Court: Robo-Signing and Lack of Proof in Debt limitations expires. See Miss. Code Ann. § 15–1–3 Consent Order at ¶¶ 56–59, In re Portfolio Recovery Buyer Cases, 6 J. Bus. & Tech. L. 259, 265 (2011) (‘‘The completion of the period of limitation Assocs. LLC, No. 2015–CFPB–0023 (Sept. 9, 2015), (‘‘In the majority of debt buyer cases, the courts prescribed to bar any action, shall defeat and http://files.consumerfinance.gov/f/201509_cfpb_ grant the debt buyer a default judgment because the extinguish the right as well as the remedy.’’); Wis. consent-order-portfolio-recovery-associates-llc.pdf. consumer has failed to appear for trial. . . . Debtors

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According to the small entity should know are time-barred debts whether that take-away changes representatives who participated in the because such suits and threats of suit depending on the age of the debt. In SBREFA process, debt collectors explicitly or implicitly misrepresent, many States, a consumer’s partial generally do not sue on debt they know and may cause consumers to believe, payment on a time-barred debt or to be time barred. Similarly, a trade that the debts are legally enforceable. In acknowledgment of a time-barred debt association representing debt buyers has addition, threats to sue consumers on in writing restarts the statute of reported that, in a poll of its members, time-barred debts are similar to threats limitations period and ‘‘revives’’ the not one responded that they knowingly to take actions that cannot legally be debt collector’s right to sue for the full or intentionally file lawsuits after the taken, which FDCPA section 807(5) amount. The Bureau is also completing applicable statute of limitations has specifically prohibits, because both its evaluation of how a time-barred debt expired.384 During the SBREFA process, involve the threat of action to which the disclosure might affect consumers’ however, several small entity consumer has a complete legal defense. understanding of whether debts can be representatives stated that determining The Bureau’s proposed interpretation of revived. The disclosures under whether the statute of limitations has FDCPA section 807 is generally consideration include a disclosure that expired can be complex. The consistent with well-established case would inform a consumer that, because determination may involve analyzing law holding that lawsuits and threats of of the age of the debt, the debt collector which statute of limitations applies, lawsuits on time-barred debt violate cannot sue to recover it. They also when the statute of limitations began to FDCPA section 807.385 The proposed include, where applicable, a disclosure run, and whether the statute of rule may provide debt collectors with that would inform a consumer that the limitations has been tolled or reset. The greater certainty as to what the law right to sue on a time-barred debt can Bureau believes that, in many cases, a prohibits while also protecting be revived in certain circumstances. The debt collector will know, or can readily consumers and enabling them to prove Small Business Review Panel Outline determine, whether the statute of legal violations without having to discussed certain such disclosures, and limitations has expired. In some litigate in each case whether lawsuits the Bureau has received feedback from instances, however, a debt collector may and threats of lawsuits on time-barred stakeholders about both the need for, be genuinely uncertain even after debt violate the FDCPA. and the content of, such disclosures.387 undertaking a reasonable investigation; The Bureau requests comment on The Bureau plans to conduct this could occur, for example, when the proposed § 1006.26(b) and on whether additional consumer testing of possible case law in a State is unclear as to any additional clarification is needed. In time-barred debt and revival which statute of limitations applies to a particular, the prohibitions in proposed disclosures, and expects this additional particular type of debt. § 1006.26(b) would apply only if the testing to further inform the Bureau’s For these reasons, the Bureau debt collector knows or should know evaluation of any time-barred debt proposes to interpret FDCPA section that the applicable statute of limitations disclosures. At a later date, the Bureau 807 to provide that a debt collector must has expired. It sometimes may be intends to issue a report on such testing not bring or threaten to bring a legal difficult, however, to determine whether and any disclosure proposals related to action against a consumer to collect a a ‘‘know or should have known’’ the collection of time-barred debt. debt that the debt collector knows or standard has been met. Such Stakeholders will have an opportunity should know is a time-barred debt. uncertainty could increase litigation to comment on such testing if the FDCPA section 807 generally prohibits costs and make enforcement of Bureau intends to use it to support debt collectors from using ‘‘any false, proposed § 1006.26(b) more difficult. In disclosure requirements in a final rule. deceptive, or misleading representation part to address this concern, the Small The Bureau reserves § 1006.26(c) and or means in connection with the Business Review Panel Outline appendix B of the regulation for any collection of any debt,’’ and FDCPA described an alternative strict-liability such proposals. section 807(2)(A) specifically prohibits standard pursuant to which a debt falsely representing ‘‘the character, collector would be liable for suing or Section 1006.30 Other Prohibited amount, or legal status of any debt.’’ The threatening to sue on a time-barred debt Practices Bureau interprets FDCPA section 807 even if the debt collector neither knew Proposed § 1006.30 contains several and 807(2)(A) to prohibit debt collectors nor should have known that the debt measures designed to protect consumers from suing or threatening to sue was time barred.386 The Bureau from certain harmful debt collection consumers on debts they know or specifically requests comment on using practices. Specifically, proposed a ‘‘knows or should know’’ standard in § 1006.30(a) would regulate debt who do receive notice usually appear without legal proposed § 1006.26(b) and on the merits collectors’ furnishing practices under representation.’’); CFPB Debt Collection Operations of using a strict liability standard certain circumstances; proposed Study, supra note 45, at 18 (observing that respondents reported obtaining default judgments instead. § 1006.30(b) would limit the transfer of in 60 to 90 percent of their filed suits); cf. Kimber, 26(c) Reserved certain debts; and proposed 668 F. Supp. at 1487 (‘‘Because few unsophisticated § 1006.30(c), (d), and (e) would consumers would be aware that a statute of The Bureau is likely to propose that generally restate statutory provisions limitations could be used to defend against lawsuits debt collectors must provide disclosures based on stale debts, such consumers would regarding allocation of payments, venue, unwittingly acquiesce to such lawsuits. And, even to consumers when collecting time- and the furnishing of certain deceptive if the consumer realizes that she can use time as barred debts. The Bureau currently is forms, respectively. a defense, she will more than likely still give in completing its evaluation of whether rather than fight the lawsuit because she must still consumers take away from non- 30(a) Communication Prior to expend energy and resources and subject herself to Furnishing Information the embarrassment of going into court to present the litigation collection efforts that they can defense; this is particularly true in light of the costs or may be sued on a debt and, if so, Debt collectors may actively attempt of attorneys today.’’). to collect debts about which they 384 See David E. Reid, Out-of-Statute Debt: What 385 See, e.g., Pantoja, 852 F.3d at 683; McMahon, furnish information to consumer is a Smart, Balanced, and Responsible Approach, 744 F.3d at 1020; Phillips, 736 F.3d at 1079; Kimber, at 8, (Receivables Mgmt. Ass’n Int’l, White Paper, 668 F. Supp. at 1488–89. reporting agencies by, for example, 2015), https://rmassociation.org/wp-content/ 386 Small Business Review Panel Outline, supra uploads/2017/04/RMA_Whitepaper_OOS.pdf. note 56, at 20. 387 Id. at 20–21.

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calling or writing to consumers. furnishing information about debts in FDCPA section 806 regarding However, some debt collectors engage in collection. The Bureau thus proposes harassment, oppression, or abuse in ‘‘passive’’ collections by furnishing § 1006.30(a), which provides that a debt connection with the collection of a debt; information to consumer reporting collector must not furnish to a consumer and its authority to interpret FDCPA agencies for inclusion in consumer reporting agency, as defined in section section 808 regarding unfair or reports without first communicating 603(f) of the Fair Credit Reporting Act unconscionable means to collect or with consumers.388 Debt collectors may (FCRA),392 information regarding a debt attempt to collect any debt. As attempt to collect debts passively where before communicating with the discussed in part IV, a debt collector the expected return from that technique consumer about the debt. Taken violates FDCPA section 806 if the debt exceeds the cost of attempting to collect together with proposed § 1006.34— collector engages in conduct that has the the debt by communicating with which generally would require debt natural consequence of harassing, consumers.389 collectors to provide consumers oppressing, or abusing any person in A consumer may suffer harm if a debt important information about debts at the connection with the collection of a debt. collector furnishes information to a outset of collection, including A debt collector violates FDCPA section consumer reporting agency without first consumers’ options for resolving them— 808 if the debt collector uses unfair or communicating with the consumer. If proposed § 1006.30(a) should reduce the unconscionable means to collect or debt collectors do not communicate harms that result from consumers being attempt to collect any debt. with consumers prior to furnishing, unaware of or uninformed about their Courts have interpreted FDCPA consumers are likely to be unaware that debts in collection. sections 806 and 808 to prohibit certain they have a debt in collection unless During the SBREFA process, small coercive collection methods that may they obtain and review their consumer entity representatives expressed concern cause consumers to pay debts not report. In turn, many consumers may over the potential burden to a debt actually owed.393 Passive collection not obtain and review their consumer collector of documenting, such as by practices are similar to these other types reports until they apply for credit, using certified mail, that a consumer of prohibited conduct because, as housing, employment, or another received a communication. The Small discussed above, they exert significant product or service provided by an entity Business Review Panel recommended pressure in circumstances that that reviews consumer reports during that the Bureau consider clarifying the undermine the ability of consumers to the application process. At that point, type of communication that would be decide whether to pay debts, sometimes consumers may face pressure to pay sufficient to satisfy the requirement, resulting in them paying debts they do debts that they otherwise would including clarifying that debt collectors not owe or would have otherwise dispute, including debts that they do do not need to send the validation disputed. The Bureau thus proposes 390 not owe, in an effort to remove the notice by certified mail. § 1006.30(a) to prohibit a debt collector Proposed comment 30(a)–1 is debts from their consumer reports and from furnishing information about a designed to address the Panel’s more quickly obtain a mortgage or job or debt to consumer reporting agencies recommendation. Proposed comment desired product or service. Consumers prior to communicating with the 30(a)–1 would clarify that a debt unaware of the debt before a financial consumer about that debt, on the basis collector would satisfy proposed institution, landlord, employer, or other that subjecting a consumer to pressure § 1006.30(a)’s requirement to similar person makes a decision also by furnishing information to a consumer communicate if the debt collector may face the denial of an application, a reporting agency without first providing higher interest rate, or other negative conveyed information regarding a debt notice to the consumer constitutes consequences.391 If the debt collector directly or indirectly to the consumer conduct that may have the natural had instead communicated with the through any medium, but a debt consequence of harassment, oppression, consumer prior to furnishing by, for collector would not satisfy the or abuse in violation of FDCPA section example, sending the consumer a communication requirement if the debt 806, and that is an unfair or validation notice, then the consumer collector attempted to communicate unconscionable means to collect or would have been more likely to have with the consumer but no attempt to collect a debt under FDCPA information about the debt and to have communication occurred. For example, section 808. the opportunity to resolve the debt with a debt collector communicates with the the debt collector by either paying or consumer if the debt collector provides 30(b) Prohibition on the Sale, Transfer, disputing it. a validation notice to the consumer, but or Placement of Certain Debts These consumer harms could be a debt collector does not communicate 30(b)(1) In General avoided if debt collectors with the consumer by leaving a limited- communicated with consumers before content message for the consumer. The sale, transfer, and placement for Proposed comment 30(a)–1 also would collection of debts that have been paid 388 See CFPB Medical Debt Report, supra note 20, clarify that a debt collector may refer to or settled or discharged in bankruptcy, at 36. proposed § 1006.42 for more 389 See id. information on how to provide 393 See, e.g., Fox v. Citicorp Credit Servs., Inc., 15 390 In some cases, the information furnished to disclosures in a manner that is F.3d 1507, 1517 (9th Cir. 1994) (reversing grant of consumer reporting agencies may be inaccurate. See summary judgment to debt collector in part because id. at 51 (‘‘Significant questions exist as to the reasonably expected to provide actual ‘‘a jury could rationally find’’ that filing writ of accuracy of collections tradeline reporting.’’). notice to consumers. The Bureau garnishment was unfair or unconscionable under 391 Such consumers generally would receive requests comment on proposed section 808 when debt was not delinquent); Ferrell adverse action notices alerting them to the negative § 1006.30(a) and its related commentary. v. Midland Funding, LLC, No. 2:15–cv–00126–JHE, item on their consumer report, but these notices 2015 WL 2450615, at *3–4 (N.D. Ala. May 22, 2015) would occur too late to prevent the initial harm The Bureau proposes § 1006.30(a) (denying debt collector’s motion to dismiss section from passive collection practices. See 15 U.S.C. pursuant to its authority under FDCPA 806 claim where debt collector allegedly initiated 1681m(a). Consumers who obtained credit from section 814(d) to prescribe rules with collection lawsuit even though it knew plaintiff did financial institutions also generally would have respect to the collection of debts by debt not owe debt); Pittman v. J.J. Mac Intyre Co. of Nev., received notices that the financial institutions Inc., 969 F. Supp. 609, 612–13 (D. Nev. 1997) furnish negative information to nationwide collectors; its authority to interpret (denying debt collector’s motion to dismiss claims consumer reporting agencies. See 15 U.S.C. 1681s– under sections 807 and 808 where debt collector 2(a)(7). 392 15 U.S.C. 1681a(f). allegedly attempted to collect fully satisfied debt).

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or that are subject to an identity theft more frequent.396 The general growth in For these reasons, proposed report creates risk of consumer harm. If debt sales and transfers may have § 1006.30(b)(1)(i) generally would a debt is paid or settled, or discharged increased the likelihood that a debt that prohibit a debt collector from selling, in bankruptcy, the debt is either has been paid, settled, or discharged in transferring, or placing for collection a extinguished or uncollectible. If a debt bankruptcy may be transferred or debt if the debt collector knows or is listed on an identity theft report, the sold.397 Moreover, identity theft, which should know that the debt has been paid debt likely resulted from fraud, in has emerged as a major consumer or settled, discharged in bankruptcy, or which case the consumer may not have protection concern, may increase the that an identity theft report has been a legal obligation to repay it. Identity number of debts that are created if filed with respect to the debt.403 The theft frequently results in fraudulent use consumers’ identities are stolen and Bureau understands that debt collectors of credit and often is discovered only their personal information misused.398 may be required to sell or transfer such after unauthorized account activity has Other Federal regulators have raised debts for non-debt collection purposes occurred.394 similar concerns about the risk of and proposes certain exceptions in consumer harm from the sale, transfer, § 1006.30(b)(2) to accommodate those Because debts that have been paid or and placement of these categories of situations. Proposed comment settled or discharged in bankruptcy are debt. The FTC has considerable 30(b)(1)(i)(C)–1 provides an example either extinguished or uncollectible, and expertise with respect to the debt clarifying that a debt collector knows or because consumers likely do not owe buying industry 399 and has identified a should know that an identity theft debts that are subject to an identity theft risk of consumer harm if a debt collector report was filed with respect to a debt report, debt collectors seeking to collect purchases and seeks to collect if, for example, the debt collector has such debts almost inevitably will make discharged debt.400 The Office of the received a copy of the identity theft an express or implied false claim that Comptroller of the Currency (OCC) has report. consumers owe the debts. For example, advised its supervised institutions that The Bureau proposes in response to the ANPRM, consumer certain categories of debt—including § 1006.30(b)(1)(i) pursuant to its advocates noted that debt collectors settled debts, debts belonging to authority under FDCPA section 814(d) who sue consumers to recover debts that borrowers seeking bankruptcy to prescribe rules with respect to the were paid or settled with previous protection, and debts incurred as a collection of debts by debt collectors, creditors may rely on an incomplete result of fraudulent activity—are not and pursuant to its authority to interpret account history that does not reflect a appropriate for sale because of the FDCPA section 808 regarding unfair or consumer’s prior payment or settlement. reputational risk and the threat of legal unconscionable debt collection The FDCPA in many places reflects a liability related to the unlawful tactics practices. The Bureau proposes to concern with debt collectors collecting employed to collect these debts.401 prohibit the sale, transfer, or placement or attempting to collect debts that Segments of the debt collection of such debts as unfair under FDCPA consumers likely do not owe.395 industry also appear to recognize the section 808 on the basis that, because risks of transferring these categories of When the FDCPA became law in consumers do not owe or cannot be debt. Some debt collectors have adopted 1977, debt sales and related transfers subject to collections on alleged debts policies to identify and exclude certain were not common. In subsequent years, that have been paid or settled or debts from sale or transfer. For example, debt sales and transfers have become discharged in bankruptcy, and likely do a trade association representing debt not owe alleged debts that are subject to buyers administers a certification identity theft reports, the sale, transfer, 394 In 2014, approximately 86 percent of identity program that prohibits the sale of debts theft victims reported that their most recent or placement of such debts is unfair or incident involved unauthorized charges on an that have been settled in full, paid in unconscionable. Further, the sale, existing credit card or bank account. More than 60 full, or are the result of identity theft or transfer or placement of such debts is percent of victims learned of the identity theft when fraud.402 unfair under section 1031 of the Dodd- either a financial institution notified them of Frank Act because it is likely to cause suspicious activity in an account or the victim 396 noticed fraudulent charges on an account statement. In 2009, the FTC stated that the ‘‘most substantial injury to consumers that is Erika Harrell, Bureau of Justice Stats., Victims of significant change in the debt collection business in not reasonably avoidable by consumers Identity Theft, 2014, at 2, 5, U.S. Dep’t of Justice, recent years has been the advent and growth of debt buying.’’ FTC Modernization Report, supra note where the substantial injury is not (revised Nov. 13, 2017), https://www.bjs.gov/ 176, at 4. outweighed by countervailing benefits content/pub/pdf/vit14.pdf. 397 See, e.g., Bureau of Consumer Fin. Prot., 395 See, e.g., 15 U.S.C. 1692f(1) (prohibiting ‘‘[t]he to consumers or to competition. Supervisory Highlights, Issue No. 12, at 6–7 collection of any amount (including any interest, Prohibiting the sale, transfer, or (Summer 2016), https://www.consumerfinance.gov/ fee, charge, or expense incidental to the principal data-research/research-reports/supervisory- placement of such debts is reasonably obligation) unless such amount is expressly highlights-issue-no-12-summer-2016/ (discussing designed to prevent this unfair practice. authorized by the agreement creating the debt or examinations finding that debt sellers failed to code With respect to a debt collector who permitted by law’’); see also Jacobson v. Healthcare accounts to reflect that they were in bankruptcy, the Fin. Servs., Inc., 516 F.3d 85, 89 (2d Cir. 2008) is collecting a consumer financial product of fraud, or settled in full). (quoting S. Rept. No. 382, supra note 70, at 4); Fox product or service debt, as defined in 398 See generally Kristin Finklea, Identity Theft: v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1517 Trends and Issues, Cong. Research Serv., RL40599 proposed § 1006.2(f), the Bureau also (9th Cir. 1994) (reversing grant of summary (2014), https://fas.org/sgp/crs/misc/R40599.pdf. proposes § 1006.30(b)(1)(i) pursuant to judgment to debt collector in part because ‘‘a jury 399 could rationally find’’ that filing writ of See generally, e.g., FTC Debt Buying Report, its authority under section 1031(b) of garnishment was unfair or unconscionable under supra note 14. the Dodd-Frank Act to prescribe rules to section 808 when debt was not delinquent); Ferrell 400 FTC Modernization Report, supra note 176, at identify and prevent the commission of v. Midland Funding, LLC, No. 2:15–cv–00126–JHE, 64–65. unfair acts or practices by Dodd-Frank 2015 WL 2450615, at *3–4 (N.D. Ala. May 22, 2015) 401 See Off. of the Comptroller of the Currency, (denying debt collector’s motion to dismiss section Bulletin 2014–37, Description: Risk Management Act covered persons, and the Bureau 806 claim where debt collector allegedly initiated Guidance (Aug. 4, 2014), http://www.occ.gov/news- collection lawsuit even though it knew plaintiff did issuances/bulletins/2014/bulletin-2014-37.html. 20180119.pdf. A large debt buyer also indicated in not owe debt); Pittman v. J.J. Mac Intyre Co. of Nev., 402 See Receivables Mgmt. Ass’n Int’l, Receivables preproposal feedback that it has adopted policies to Inc., 969 F. Supp. 609, 612–13 (D. Nev. 1997) Management Certification Program, Certification exclude certain debts from debt sales transactions. (denying debt collector’s motion to dismiss claims Governance Document, at 43 (2018), https:// 403 Proposed § 1006.30(b) would define ‘‘identity under sections 807 and 808 where debt collector rmassociation.org/wp-content/uploads/2018/02/ theft report’’ as defined in the FCRA, 15 U.S.C. allegedly attempted to collect fully satisfied debt). Certification-Policy-version-6.0-FINAL- 1681a(q)(4).

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proposes § 1006.30(b)(1)(ii) to identify bona fide business purposes other than FCRA’s existing identity theft this unfair act or practice.404 As debt collection may not create a requirements. Further, the FCRA’s discussed in part IV.B, to declare an act significant risk of deceptive or unfair exceptions may provide debt collectors or practice unfair under Dodd-Frank Act collections activity. Proposed with sufficient flexibility to transfer section 1031(b), the Bureau must have a § 1006.30(b)(2) sets forth four narrow debts for bona fide non-debt collection reasonable basis to conclude that: (1) exceptions to proposed § 1006.30(b)(1) business purposes. The act or practice causes or is likely to to accommodate such circumstances. Proposed § 1006.30(b)(2)(ii) would cause substantial injury to consumers Proposed § 1006.30(b)(2)(i) would allow a debt collector to transfer a debt which is not reasonably avoidable by allow a debt collector to transfer a debt described in proposed § 1006.30(b)(1)(i) consumers; and (2) such substantial described in proposed § 1006.30(b)(1)(i) to a previous owner if transfer is injury is not outweighed by to the debt’s owner. This exception authorized by contract. Creditors may countervailing benefits to consumers or would permit a third-party debt include provisions in debt sales to competition. Selling, transferring, or collector who identifies such a debt contracts that authorize repurchase or placing for collection debts described in among its collection accounts to return transfer when certain issues, such as proposed § 1006.30(b)(1)(i) likely causes that debt to the debt’s owner. Allowing consumer disputes or identity theft, substantial injury to consumers because a debt collector to return a debt to the surface.410 Such agreements may benefit the collection of such debts likely debt’s owner likely would not raise the debt collectors by removing non- results in deceptive claims of risk of deceptive or unfair collections performing debts from collection indebtedness and the unfair collection activity. Debts frequently are returned to portfolios, which allows debt collectors of amounts not owed.405 Consumers a debt’s owner after unsuccessful to focus their efforts on accounts with cannot reasonably avoid this harm collections efforts.406 Moreover, unlike a higher recovery rates. These agreements because they have no control over debt debt collector, whose overriding also may benefit consumers because sales, transfers, or placements or economic incentive is to secure a debt’s interactions with creditors may be less collection activity arising subsequent to repayment, certain debt owners may adversarial and offer speedier and fuller those sales, transfers or placements. The have other priorities that make it less resolution than interactions with debt collection of debts that are either not likely that the owner will place the debt collectors.411 The Bureau proposes owed or likely not owed does not with another debt collector or try to § 1006.30(b)(2)(ii) to avoid impeding benefit consumers or competition. collect the debt itself.407 For creditors in these agreements in debt sales contracts. The Bureau requests comment on all particular, these moderating factors Proposed § 1006.30(b)(2)(iii) would aspects of proposed § 1006.30(b)(1). In include general reputational concerns permit a debt collector to securitize a particular, the Bureau requests comment and a desire to preserve the specific debt described in proposed on whether additional categories of customer relationship. Proposed § 1006.30(b)(1)(i), or to pledge a debt, such as debt currently subject to comment 30(b)(2)(i)–1 would clarify portfolio of such debt as collateral in litigation and debt lacking clear that a debt collector may not engage in connection with a borrowing. The evidence of ownership, should be an otherwise prohibited transfer with Bureau understands that, if a debt included in any prohibition adopted in any other entity on behalf of a debt’s collector securitizes or pledges a a final rule. The Bureau also requests owner unless another exception applies. portfolio of debt, the debt collector may comment on how frequently consumers The Bureau proposes three additional be unable to exclude the debts described identify a specific debt when filing an exceptions that parallel the exceptions in proposed § 1006.30(b)(1)(i) from the identity theft report, and on how in the FCRA to the prohibition on the portfolio. The Bureau proposes frequently debt collectors learn that an sale, transfer, or placement of debt § 1006.30(b)(2)(iii) to allow a debt identity theft report was filed in error caused by identity theft.408 Section collector to securitize or pledge and proceed to sell or transfer the debt. 615(f) of the FCRA prohibits a person portfolios in connection with its own The Bureau also requests comment on from selling, transferring for commercial borrowing without violating any potential disruptions that proposed consideration, or placing for collection Regulation F. § 1006.30(b)(1)(i) would cause for a debt after being notified that a Proposed § 1006.30(b)(2)(iv) would secured debts, such as by preventing consumer reporting agency identified allow a debt collector to transfer a debt servicing transfers or foreclosure that debt as having resulted from identity theft.409 Because proposed 410 Creditors may include such repurchase activity related to mortgage loans. provisions in debt sales agreements based on Finally, the Bureau requests comment § 1006.30(b)(1) also would prohibit the compliance and reputational concerns. For national on whether any of the currently sale, transfer, or placement of debts banks and Federal savings associations in proposed categories of debts should be subject to an identity theft report, the particular, regulatory guidance may incentivize this Bureau proposes to adopt the exceptions practice. See, e.g., Off. of the Comptroller of the clarified and, if so, how; and on whether Currency, Bulletin 2014–37, Description: Risk additional clarification is needed under FCRA section 615(f)(3) regarding Management Guidance (Aug. 4, 2014), http:// regarding the proposed ‘‘know or should the repurchase, securitization, or www.occ.gov/news-issuances/bulletins/2014/ know’’ standard. transfer of a debt as the result of a bulletin-2014-37.html. merger or acquisition, since these 411 See CFPB Debt Collection Consumer Survey, 30(b)(2) Exceptions supra note 18, at 46–47 (‘‘Consumers reported more exceptions would appear to be equally favorable experiences with creditors than debt Allowing the sale, transfer, or relevant and provide some consistency collectors along many of the dimensions surveyed. placement of the debts described in between proposed Regulation F and the About three-quarters (77 percent) of consumers who proposed § 1006.30(b)(1)(i) for certain reported being contacted by a creditor, for example, said that the creditor provided accurate information 406 CFPB Debt Collection Operations Study, supra compared with 49 percent of consumers contacted 404 See part IV.B for a discussion of the Bureau’s note 45, at 13. by a debt collector. Consumers contacted by framework for interpreting Dodd-Frank Act section 407 When passing the FDCPA, Congress creditors similarly were more likely to say that the 1031(b). determined that creditors ‘‘generally are restrained creditor provided options to pay the debt, 405 Cf. Fed. Trade Comm’n v. Neovi, Inc., 604 by their desire to protect their good will when addressed their questions, and was polite. Finally, F.3d 1150, 1157 (9th Cir. 2010) (holding that the collecting past due accounts,’’ unlike debt those contacted by creditors were less likely than defendant engaged in an unfair practice by creating collectors. S. Rept. No. 382, supra note 70, at 2. those contacted by debt collectors to agree with a website that fraudsters predictably used to injure 408 See 15 U.S.C. 1681m(f)(3). less-favorable characterization of interactions such consumers). 409 See 15 U.S.C. 1681m(f). as reporting that the creditor threatened them.’’).

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described in proposed § 1006.30(b)(1)(i) whether additional clarification is consumer has already paid.’’ 416 Despite as a result of a merger, acquisition, needed. the FDCPA’s requirement that debt purchase and assumption transaction, or collectors provide validation transfer of substantially all of the debt 30(e) Furnishing Certain Deceptive information, Congress provided the collector’s assets. Transfers in these Forms Bureau with rulemaking authority in circumstances are not likely to raise the FDCPA section 812(a) prohibits any 2010 apparently to address inadequacies risk of unlawful collections activities around validation and verification, person from knowingly designing, 417 because the transfers are for a bona fide compiling, and furnishing any form that among other things. In addition, debt non-debt collection business purpose. would be used to create the false belief collectors have sought clarification Further, excluding the categories of debt in a consumer that a person other than about how to provide additional information consistent with the statute. in proposed § 1006.30(b)(1)(i) from a the consumer’s creditor is participating For these reasons, and as discussed in business acquisition may be in the collection of, or in an attempt to more detail below, the Bureau proposes impracticable. collect, a debt the consumer allegedly § 1006.34 to require debt collectors to The Bureau requests comment on owes, if in fact the creditor is not 414 provide certain validation information proposed § 1006.30(b)(2), including on participating. Pursuant to its to consumers and to specify when and whether additional exceptions are authority under FDCPA section 814(d) how the information must be provided. necessary to allow for transfers of debts to prescribe rules with respect to the for non-debt collection business collection of debts by debt collectors, 34(a)(1) Validation Information purposes, and on whether the proposed the Bureau proposes § 1006.30(e) to Required exceptions should be more narrowly implement FDCPA section 812(a). FDCPA section 809(a) provides, in tailored or clarified. The Bureau also Because the Bureau’s rulemaking relevant part, that, within five days after requests comment on the costs and authority under FDCPA section 814(d) the initial communication with a benefits to consumers of allowing debts is limited to debt collectors, as that term consumer in connection with the to be transferred under the proposed is defined in the FDCPA, proposed collection of any debt, a debt collector exceptions. § 1006.30(e)’s coverage is more limited shall send the consumer a written notice than that of FDCPA section 812(a), containing certain information, unless 30(c) Multiple Debts which applies to any person. Proposed that information is contained in the FDCPA section 810 provides that, if § 1006.30(e) would not narrow coverage initial communication or the consumer 418 any consumer owes multiple debts and under the statute. Proposed § 1006.30(e) has paid the debt. Proposed makes any single payment to any debt otherwise generally mirrors the statute, § 1006.34(a)(1) would implement and 419 collector with respect to such debts, that except that minor changes have been interpret this general requirement. debt collector must not apply the made for organization and clarity. The Proposed § 1006.34(a)(1)(i) addresses situations in which the debt collector consumer’s payment to any debt which Bureau requests comment on proposed provides the validation information in is disputed by the consumer and must § 1006.30(e), including on whether writing or electronically.420 Proposed apply the payment in accordance with additional clarification is needed. § 1006.34(a)(1)(i) would clarify that, in the consumer’s directions, if any.412 Section 1006.34 Notice for Validation those situations, a debt collector may Pursuant to its authority under FDCPA of Debts provide the validation information by section 814(d) to prescribe rules with sending the consumer a validation respect to the collection of debts by debt FDCPA section 809(a) generally notice either in the initial collectors, the Bureau proposes requires a debt collector to provide communication or within five days of certain information to a consumer either § 1006.30(c) to implement FDCPA that communication.421 In either case, section 810. Proposed § 1006.30(c) at the time that, or shortly after, the debt mirrors the statute, except that minor collector first communicates with the 416 S. Rept. No. 382, supra note 70, at 4; see also changes have been made for consumer in connection with the Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d organization and clarity. The Bureau collection of a debt. The required 85, 95 (2d Cir. 2008) (validation notices ‘‘make the requests comment on proposed information—i.e., the validation rights and obligations of a potentially hapless debtor as pellucid as possible’’); Wilson v. § 1006.30(c), including on whether information—includes details about the Quadramed Corp., 225 F.3d 350, 354 (3d Cir. 2000); additional clarification is needed. debt and about consumer protections, Miller v. Payco-Gen. Am. Credits, Inc., 943 F.2d such as the consumer’s rights to dispute 482, 484 (4th Cir. 1991); Swanson v. S. Oregon 30(d) Legal Actions by Debt Collectors the debt and to request information Credit Serv., Inc., 869 F.2d 1222, 1225 (9th Cir. 1988). 415 FDCPA section 811 restricts the venue about the original creditor. 417 See S. Rept. No. 111–176, at 19 (‘‘In addition in which a debt collector may initiate The requirement to provide validation to concerns about debt collection tactics, the Committee is concerned that consumers have little legal action on a debt against a information is an important component ability to dispute the validity of a debt that is being consumer.413 Pursuant to its authority of the FDCPA and was intended to collected in error.’’). under FDCPA section 814(d) to improve the debt collection process by 418 See 15 U.S.C. 1692g(a). FDCPA section 809(a) prescribe rules with respect to the helping consumers to recognize debts provides that a debt collector need not send the written notice if the consumer pays the debt before collection of debts by debt collectors, that they owe and raise concerns about the time that the notice is required to be sent. the Bureau proposes § 1006.30(d) to debts that are unfamiliar. Congress in Proposed § 1006.34(a)(2) would implement that implement FDCPA section 811. 1977 considered the requirement a exception. Proposed § 1006.30(d) mirrors the ‘‘significant feature’’ of the statute, 419 Proposed § 1006.34(c) describes the validation information that proposed § 1006.34(a)(1) would statute, except that minor changes have explaining that it was designed to require debt collectors to provide. been made for organization and clarity. ‘‘eliminate the recurring problem of debt 420 Proposed § 1006.34(b)(4) would define a The Bureau requests comment on collectors dunning the wrong person or validation notice as any written or electronic notice proposed § 1006.30(d), including on attempting to collect debts which the that provides the validation information described in § 1006.34(c). 421 Proposed § 1006.34(b)(2) provides that, with 412 15 U.S.C. 1692h. 414 15 U.S.C. 1692j. limited exceptions, initial communication means 413 15 U.S.C. 1692i. 415 See 15 U.S.C. 1692g(a). Continued

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the debt collector would be required to when collecting debt from a deceased with whom the debt collector may provide the validation notice in a consumer if the debt collector has not generally discuss the debt. Therefore, manner that satisfies the delivery previously provided the consumer the according to the FTC, requirements in § 1006.42(a).422 validation information. In such ‘‘communication[s] addressed to the Proposed § 1006.34(a)(1)(ii) would circumstances, under proposed decedent’s estate, or an unnamed clarify that a debt collector could comment 34(a)(1)–1, the debt collector executor or administrator, [are] location provide the validation information must provide the validation information communication[s] and must not refer to orally in the initial communication.423 to an individual that the debt collector the decedent’s debts.’’ 426 The FTC also The Bureau requests comment on identifies by name who is authorized to noted that letters addressed to deceased whether clarification regarding content act on behalf of the deceased consumers raised similar concerns, and formatting requirements is needed consumer’s estate. If a debt collector although there may be circumstances for a debt collector who provides the knows or should know that the where a debt collector neither knows validation information orally. consumer is deceased, it may be unclear nor has reason to know that the Proposed comment 34(a)(1)–1 would whether the debt collector should consumer has died. The Bureau agrees clarify the provision of validation continue to address the validation with these concerns. The requirement in notices if the consumer is deceased. As notice to the deceased consumer, or proposed comment 34(a)(1)–1 to send described in the section-by-section whether the debt collector instead any required validation notice to a analysis of proposed § 1006.2(e), the should address the notice to the named person who is authorized to act failure to provide a validation notice to individual who is authorized to act on on behalf of the deceased consumer’s a person who is authorized to act on behalf of the deceased consumer’s estate would limit the practice of behalf of the deceased consumer’s estate. In light of this uncertainty, the addressing validation notices to estate, such as the executor, Bureau proposes to interpret sending deceased consumers or unnamed administrator, or personal the validation information to a deceased executors, administrators, or personal representative, may cause difficulty or consumer (i.e., the deceased consumer’s representatives because a debt collector delay in resolving the estate’s debts. estate) to mean providing the validation would be required to identify a person Proposed comment 34(a)(1)–1 explains information to an individual that the who is authorized to act on behalf of the that, if the debt collector knows or debt collector identifies by name who is deceased consumer’s estate in order to should know that the consumer is authorized to act on behalf of the properly direct any communication to deceased, and if the debt collector has deceased consumer’s estate. As that individual. The Bureau requests not previously provided the deceased explained below, this interpretation comment on the effects of any potential consumer the validation information, a may be preferable to addressing the inconsistency between proposed person who is authorized to act on validation information using the name comment 34(a)(1)–1 and the consumer behalf of the deceased consumer’s estate of the deceased consumer or using ‘‘the protections that the FTC sought to operates as the consumer for purposes estate of’’ with the name of the deceased achieve when it published its Policy of providing a validation notice under consumer. Statement on Decedent Debt. § 1006.34(a)(1).424 As explained in the Accordingly, just as a debt collector The Bureau proposes § 1006.34(a)(1) section-by-section analysis of proposed attempting to collect a debt from a living to implement and interpret FDCPA § 1006.2(e), the Bureau proposes to consumer generally would provide a section 809(a) and pursuant to its interpret the term consumer to include validation notice to the consumer authority under FDCPA section 814(d) deceased consumers. within five days after the initial to prescribe rules with respect to the The Bureau’s interpretation of FDCPA communication with such consumer collection of debts by debt collectors. section 809 in proposed § 1006.34(a)(1) (where the validation information was The Bureau requests comment on would require a debt collector to not contained in the initial proposed § 1006.34(a)(1) and its related provide the validation information communication), the proposal generally commentary. would require a debt collector 34(a)(2) Exception the first time that, in connection with the collection attempting to collect a debt from a of a debt, a debt collector conveys information, deceased consumer’s estate to provide FDCPA section 809(a) contains a directly or indirectly, to the consumer regarding the the validation notice to the named limited exception that provides that, if debt. required information is not contained in 422 As discussed in the section-by-section analysis person who is authorized to act on of proposed § 1006.42, the proposed rule would behalf of the deceased consumer’s the initial communication, a debt provide a general standard for the delivery of estate. The validation notice would have collector need not send the consumer a required disclosures, including the validation to be provided within five days after the written notice within five days of the notice, in writing or electronically, and would debt collector’s initial communication clarify, among other things, how debt collectors initial communication with such may provide required notices to consumers by person. with the consumer in connection with email or text message. In its Policy Statement on Decedent the collection of the debt if the 423 While FDCPA section 809(a) does not prohibit Debt, the FTC expressed concern about consumer has paid the debt prior to the a debt collector from providing validation debt collectors addressing substantive time that the notice is required to be information orally in the debt collector’s initial 427 communication, it may be impractical for debt written communications to the sent. Pursuant to its authority to collectors to do so given that proposed § 1006.34(c) decedent’s estate, or to an unnamed implement and interpret FDCPA section would require a significant amount of validation executor or administrator.425 In the 809(a) and its authority under FDCPA information that debt collectors may not currently FTC’s experience, individuals who lack section 814(d) to prescribe rules with provide. In addition, debt collectors providing the validation information orally would not be able to the authority to resolve the estate but respect to the collection of debts by debt use Model Form B–3 in appendix B to receive a safe who wish to be helpful are likely to collectors, the Bureau proposes harbor for compliance with § 1006.34(a). open these communications, which § 1006.34(a)(2) to implement this 424 This interpretation is supported by the makes such communications exception. Proposed § 1006.34(a)(2) proposed definition of consumer, which, as provides that a debt collector who discussed in the section-by-section analysis of insufficiently targeted to a consumer proposed § 1006.2(e), is defined to include ‘‘[a]ny natural person, whether living or deceased, who is 425 FTC Policy Statement on Decedent Debt, supra 426 Id. at 44920. obligated or allegedly obligated to pay any debt.’’ note 192. 427 See 15 U.S.C. 1692g(a).

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otherwise would be required to send a electronically or orally. The Bureau also requests comment on the scenario in validation notice pursuant to proposed requests comment on whether which a debt collector’s first attempt to § 1006.34(a)(1)(i)(B) is not required to do additional clarification about the communicate with a consumer is so if the consumer has paid the debt meaning of clear and conspicuous through an electronic communication prior to the time that proposed would be useful in the context of the method, such as an email or a text § 1006.34(a)(1)(i)(B) would require the specific information that proposed message, and the consumer provides no validation notice to be sent. Proposed § 1006.34(a)(1) would require. response. For example, as proposed, if § 1006.34(a)(2) generally restates the a debt collector sends a consumer an 34(b)(2) Initial Communication statute, except for minor changes for email notifying the consumer that a debt organization and clarity. As discussed above, FDCPA section has been placed with the debt collector 809(a) requires debt collectors to but includes no other information, the 34(b) Definitions provide consumers with certain debt collector would be required to send To facilitate compliance with validation information either in the debt the consumer a validation notice within § 1006.34, proposed § 1006.34(b) would collector’s initial communication with five days, even if the consumer did not define several terms that appear the consumer in connection with the reply to the debt collector’s email. The throughout the section. Except as collection of the debt, or within five Bureau requests comment about the discussed otherwise below, the Bureau days after that initial communication. risks, costs, and benefits to industry and proposes these definitions to implement FDCPA section 803(2) defines the term consumers of treating these types of and interpret FDCPA section 809(a) and communication broadly to mean the debt collection communications as pursuant to its authority under FDCPA conveying of information regarding a initial communications that would section 814(d) to prescribe rules with debt directly or indirectly to any person trigger § 1006.34(a)(1). respect to the collection of debts by debt through any medium.429 FDCPA section 34(b)(3) Itemization Date collectors. 809(d) and (e) identifies particular communications that are not initial FDCPA section 809(a)(1) requires debt 34(b)(1) Clear and Conspicuous communications with the consumer in collectors to disclose to consumers, To facilitate compliance with connection with the debt for purposes of either in the debt collector’s initial proposed § 1006.34(d)(1), which would FDCPA section 809(a) and that therefore communication in connection with the require that the validation information do not trigger the validation notice collection of the debt, or within five described in § 1006.34(c) be clear and requirement.430 Pursuant to FDCPA days after that communication, the conspicuous, proposed § 1006.34(b)(1) section 809(d), an initial amount of the debt.431 In proposed would define the term clear and communication excludes a § 1006.34(c)(2)(vii) through (ix), the conspicuous. The Bureau proposes to communication in the form of a formal Bureau would interpret the phrase define the term clear and conspicuous pleading in a civil action. Pursuant to ‘‘amount of the debt’’ to mean that debt for purposes of Regulation F consistent FDCPA section 809(e), an initial collectors must disclose information with the standards used in other communication also excludes the about the amount of the debt as of a consumer financial services laws and sending or delivery of any form or particular ‘‘itemization date.’’ 432 To their implementing regulations, notice that does not relate to the facilitate compliance with including Regulation E, subpart B collection of the debt and is expressly § 1006.34(c)(2)(vii) through (ix), (Remittance Transfers).428 Proposed required by the Internal Revenue Code proposed § 1006.34(b)(3) would define § 1006.34(b)(1) thus provides that of 1986, title V of the Gramm-Leach- the term itemization date. disclosures are clear and conspicuous if Bliley Act, or any provision of Federal Account information available to debt they are readily understandable and, in or State law relating to notice of a data collectors may vary by debt type the case of written and electronic security breach or privacy, or any because some account information is disclosures, the location and type size regulation prescribed under any such not universally tracked or used across are readily noticeable to consumers. provision of law. product markets. For example, the Oral disclosures are clear and Proposed § 1006.34(b)(2) would Bureau understands that charge off is conspicuous if they are given at a implement FDCPA section 809(a), (d), fundamental account information for volume and speed sufficient for a and (e) by defining the term initial credit card debt, but appears not to be consumer to hear and comprehend communication to mean the first time applicable for some other debt types. To them. The Bureau proposes to adopt this that, in connection with the collection ensure that debt collectors working in a standard to help ensure that required of a debt, a debt collector conveys variety of product markets can comply disclosures, including disclosures information, directly or indirectly, with proposed § 1006.34(c)(2)(vii) containing validation information, are regarding the debt to the consumer, through (ix), the Bureau proposes to readily understandable and noticeable other than a communication in the form define the term itemization date to mean to consumers. Disclosures that are not of a formal pleading in a civil action, or any one of four reference dates for clear and conspicuous will not be a communication in any form or notice which a debt collector can ascertain the effective, defeating the purpose of the that does not relate to the collection of amount of the debt: (1) The last disclosures. the debt and is expressly required by statement date, (2) the charge-off date, The Bureau requests comment on any of the laws referenced in FDCPA (3) the last payment date, or (4) the proposed § 1006.34(b)(1), including on section 809(e). 431 whether basing the clear and The Bureau requests comment on See 15 U.S.C. 1692g(a)(1). 432 Proposed § 1006.34(c)(2)(vii) and (viii) would conspicuous standard on existing proposed § 1006.34(b)(2) and on require debt collectors to disclose, respectively, the regulations, such as Regulation E, whether additional clarification about itemization date and the amount of the debt on the presents any consumer protection or the term initial communication would itemization date. Proposed § 1006.34(c)(2)(ix) compliance issues, including for be helpful. The Bureau specifically would require debt collectors to disclose an itemization of the debt reflecting interest, fees, validation information delivered payments, and credits since the itemization date. 429 See 15 U.S.C. 1692a(2). See also the section- For additional discussion of these provisions, see 428 See 12 CFR 1005.31(a)(1), comment 31(a)(1)– by-section analysis of proposed § 1006.2(d). the section-by-section analysis of proposed 1. 430 See 15 U.S.C. 1692g(d), (e). § 1006.34(c)(2)(vii) through (ix).

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transaction date.433 As discussed further suggested the charge-off date, last likely than other reference dates, such in the section-by-section analysis of payment date, or date of service as the charge-off date, to improve proposed § 1006.34(b)(3)(i) through (iv), instead.436 Based in part on this consumer understanding of the required the proposed definition is designed to feedback, the Bureau believes that it disclosures. The Bureau also requests allow the use of dates that debt may be difficult to identify a single comment on whether, for purposes of a collectors could identify with relative reference date that applies to all debt hierarchy, any particular reference date ease because they reflect routine and types across all relevant markets and, as would be more likely than others to recurring events and that correspond to a result, proposes to define itemization impose costs or burdens on debt notable events in the debt’s history that date as one of the four potential collectors. consumers may recall or be able to reference dates. The Bureau proposes § 1006.34(b)(3), verify with records. The proposed The Bureau requests comment on including the specific dates described in definition also is designed to include proposed § 1006.34(b)(3) and on proposed § 1006.34(b)(3)(i) through (iv), dates for which debt collectors typically comment 34(b)(3)–1, including on may receive account information from whether the itemization date definition pursuant to its authority under FDCPA debt owners and that, therefore, debt will facilitate compliance with the section 814(d) to prescribe rules with collectors should be able to use to requirement to disclose the validation respect to the collection of debts by debt provide the disclosures described in information in § 1006.34(c)(vii) through collectors. The Bureau also proposes § 1006.34(c)(vii) through (ix). (ix), and on whether additional § 1006.34(b)(3) pursuant to its authority Proposed comment 34(b)(3)–1 clarification regarding the itemization under section 1032(a) of the Dodd-Frank explains that a debt collector may select date definition is needed. The Bureau Act to prescribe rules to ensure that the any of the potential reference dates also requests comment on whether the features of consumer financial products listed in proposed § 1006.34(b)(3) as the proposed itemization date definition and services are disclosed to consumers itemization date to comply with would not capture certain debt types, fully, accurately, and effectively. § 1006.34. Once a debt collector uses such as mortgage debt where coupon 34(b)(3)(i) one of the reference dates for a specific books are provided instead of periodic debt in a communication with an statements, and on whether additional When placing a debt for collection, individual consumer, however, the debt or alternative reference dates should be creditors frequently may provide debt collector would be required to use that considered. The Bureau also requests collectors with the last periodic or reference date for that debt consistently comment on whether creditors’ data written account statements provided to when providing disclosures as proposed management systems capture consumers. Therefore, in many cases, by § 1006.34 to that consumer. If a debt information related to the reference last statement information should be collector provides the consumer with dates that the proposed itemization date readily available to debt collectors. In validation information based on definition would incorporate. Further, addition, many consumers may recall different reference dates for the same the Bureau requests comment on the amount of the debt on the last debt, the consumer may have difficulty whether the proposed definition should statement because this figure may be the recognizing the debt and be less likely mandate a single reference date, which most recent amount of the debt the to engage with the debt collector. Thus, would standardize validation notices consumer has seen, or the consumer a debt collector who used reference across all relevant markets, and if so, may be able to verify that amount with dates inconsistently for the same debt what reference date might be suitable their records. could undermine the purpose of for all types of debt. In addition, the proposed § 1006.34. Bureau requests comment on how the For these reasons, proposed The Bureau’s Small Business Review proposed definition should function § 1006.34(b)(3)(i) would permit debt Panel Outline described a proposal with respect to a debt that multiple debt collectors to use the last statement date under consideration that would have collectors have attempted to collect. For as the itemization date. Pursuant to required a debt collector to provide an example, the Bureau requests comment proposed § 1006.34(b)(3)(i), last itemization of the debt based on a single on whether a subsequent debt collector statement date would mean the date of reference date, the date of default.434 should be permitted to use a different the last periodic statement or written Multiple small entity representatives itemization date than a prior debt account statement or invoice provided expressed concern with that proposal, collector used for the same debt. to the consumer. Proposed comment noting both that default has no Finally, the Bureau requests comment 34(b)(3)(i)–1 explains that a statement established definition and that the on whether the proposed itemization provided by a creditor or a third party default concept may be inapplicable to date definition should be structured as acting on the creditor’s behalf, including some debt types, such as medical a prescriptive ordering of potential a creditor’s service provider, may debt.435 Small entity representatives reference dates, such as a hierarchy. For constitute the last statement provided to also noted that determining a date of example, this alternative approach the consumer for purposes of default can involve State law could require a debt collector to § 1006.34(b)(3)(i). The Bureau requests interpretations that impose significant determine the itemization date by comment on proposed § 1006.34(b)(3)(i) costs. Consistent with these concerns, identifying the first date in a hierarchy and on comment 34(b)(3)(i)–1, including the Small Business Review Panel Report of four reference dates set forth in on how often creditors provide periodic recommended that the Bureau consider proposed § 1006.34(b)(3)(i) through (iv) statements, written statements, and alternatives to the date of default and for which a debt collector could invoices to debt collectors, and on ascertain the amount of the debt using whether there are specific debt types for 433 The four reference dates are set forth in readily available information. With which creditors may not provide such proposed § 1006.34(b)(3)(i) through (iv). See the respect to this alternative approach, the statements. In addition, the Bureau section-by-section analysis of proposed Bureau requests comment on whether requests comment on whether a § 1006.34(b)(3)(i) through (iv). the use of any particular reference date, validation notice that a previous debt 434 See Small Business Review Panel Outline, supra note 56, at appendix F. such as the last statement date, is more collector provided to the consumer 435 See Small Business Review Panel Report, should constitute a last statement for supra note 57, at 18. 436 Id. purposes of proposed § 1006.34(b)(3)(i).

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34(b)(3)(ii) party payment might include a partial collectors do not currently send When placing credit card accounts for payment on a consumer’s medical debt validation notices electronically. As collection, creditors frequently may by an insurance provider. discussed in the section-by-section analysis of proposed § 1006.42, the provide debt collectors with account 34(b)(3)(iv) information at charge off, including the Bureau proposes to clarify how debt For some debt types, including for charge-off date. For this reason, some collectors may send validation notices medical debt, creditors may provide small entity representatives suggested electronically in compliance with debt collectors with account during the SBREFA process that, for applicable law. credit card debt, the Bureau should information related to the transaction To facilitate compliance with define the itemization date to mean the date (e.g., the date a service or good was proposed § 1006.34, as well as to charge-off date.437 Charge off is relevant provided to a consumer). Some small account for the possibility that more to debt types other than credit cards, as entity representatives thus suggested debt collectors may begin providing the well, and consumers may approximately during the SBREFA process that the validation information electronically, recognize the amount of a debt due at Bureau define the itemization date for proposed § 1006.34(b)(4) would define charge off because charge off often medical debt to mean the date of validation notice to mean a written or 440 occurs shortly after a last account service. In addition, consumers may electronic notice that provides the statement is provided. recognize the amount of a debt on the validation information described in For these reasons, proposed transaction date, which may be reflected proposed § 1006.34(c). The Bureau § 1006.34(b)(3)(ii) would permit debt in a copy of a contract or a bill provided requests comment on proposed collectors to use the charge-off date— by a creditor. For these reasons, § 1006.34(b)(4). i.e., the date that the debt was charged proposed § 1006.34(b)(3)(iv) would 34(b)(5) Validation Period off—as the itemization date. The Bureau permit debt collectors to use the FDCPA section 809(b) contains requests comment on proposed transaction date—i.e., the date of the certain requirements that a debt § 1006.34(b)(3)(ii). The Bureau generally transaction that gave rise to the debt— collector must satisfy if a consumer requests comment on how often as the itemization date. disputes a debt or requests the name creditors provide charge-off information Proposed comment 34(b)(3)(iv)–1 and address of the original creditor. If a to debt collectors and on whether there explains that the transaction date is the consumer disputes a debt in writing are specific debt types for which charge date that a creditor provided, or made within 30 days of receiving the off is not a relevant concept. In addition, available, a good or service to a validation information, a debt collector the Bureau requests comment on consumer and includes examples of must stop collection of the debt until whether creditors assess fees or transaction dates. The comment also the debt collector obtains verification of penalties at charge off, which would explains that, if a debt has more than the debt or a copy of a judgment against cause the amount the consumer owed at one potential transaction date, a debt the consumer and mails it to the charge off to differ significantly from the collector may use any such date as the consumer.442 Similarly, if a consumer amount that appeared on the last transaction date but must use whichever requests the name and address of the periodic statement, invoice, or other transaction date it selects consistently, original creditor in writing within 30 written statement that the consumer as described in comment 34(b)(3)–1. days of receiving the validation received. The Bureau requests comment on proposed § 1006.34(b)(3)(iv) and on information, FDCPA section 809(b) 34(b)(3)(iii) comment 34(b)(3)(iv)–1, including on requires the debt collector to cease In some cases, creditors may provide how often creditors provide transaction collection of the debt until it obtains debt collectors with account date information to debt collectors and and mails such information to the 443 information related to a consumer’s last on whether the transaction date concept consumer. FDCPA section 809(b) also payment. For this reason, some small is inapplicable to certain debt types. prohibits a debt collector, during the 30- entity representatives suggested during day period consumers have to dispute a the SBREFA process that the Bureau 34(b)(4) Validation Notice debt or request information about the define the itemization date to mean the As already discussed, FDCPA section original creditor, from engaging in last payment date.438 Consumers also 809(a) provides, in relevant part, that, collection activities and may recognize the amount of a debt that within five days after the initial communications that overshadow, or reflects the balance after the consumer’s communication with a consumer in are inconsistent with, the disclosure of last payment.439 Proposed connection with the collection of any the consumer’s rights to dispute the § 1006.34(b)(3)(iii) thus would permit debt, a debt collector shall send the debt and request original-creditor consumer a written notice containing information, which are sometimes debt collectors to use the last payment 444 date—i.e., the date the last payment was certain information, unless that referred to as ‘‘verification rights.’’ As described in the section-by-section applied to the debt—as the itemization information is contained in the initial analysis of § 1006.34(c)(3)(i) through date. The Bureau requests comment on communication or the consumer has (iii), the proposed rule would require proposed § 1006.34(b)(3)(iii), including paid the debt.441 If debt collectors have debt collectors to disclose to a consumer on how often creditors provide debt provided the validation information in the date certain on which the collectors with last payment date writing, whether in the initial communication or within five days after consumer’s FDCPA section 809(b) information. The Bureau also requests verification rights expire. Without that communication, debt collectors and comment on how proposed additional clarification, debt collectors others commonly have referred to the § 1006.34(b)(3)(iii) should be applied if may be uncertain how to calculate this a third party made the last payment on document containing the information as a ‘‘validation notice,’’ or ‘‘g notice.’’ The the debt. For example, such a third- 442 15 U.S.C. 1692g(b). Bureau understands that most debt 443 See id. The Bureau refers to the consumer’s 437 Id. rights to dispute the validity of the debt and to 438 Id. 440 Small Business Review Panel Report, supra request original-creditor information collectively as 439 See FMG Focus Group Report, supra note 38, note 57, at 18. the consumer’s ‘‘verification rights.’’ at 20–21. 441 See 15 U.S.C. 1692g(a). 444 Id.

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date certain. First, debt collectors may if a debt collector sends an initial in a debt collection communication and be unsure how to reliably determine validation notice that was not received must make an appropriate FDCPA when a consumer has received the and then sends a subsequent validation section 807(11) disclosure.446 The validation information (i.e., the event notice, the validation period ends 30 Bureau proposes § 1006.34(c)(1) to that triggers the running of the 30-day days after the consumer receives or is provide that the § 1006.18(e) disclosure period). In addition, some debt assumed to receive the subsequent is validation information that must be collectors may honor disputes and validation notice. provided to the consumer pursuant to original-creditor information requests The Bureau requests comment on § 1006.34(a)(1). The Bureau requests that a consumer provides after the 30- proposed § 1006.34(b)(5) and on comment on proposed § 1006.34(c)(1). day period to dispute a debt or request comment 34(b)(5)–1. In particular, the 34(c)(2) Information About the Debt information about the original creditor Bureau requests comment on debt set forth in the FDCPA expires and may collectors’ current practices for While validation notices in use today benefit from clarification about how to determining the end of the validation typically contain the specific specify a longer period. period. The Bureau also requests information required under FDCPA To facilitate compliance with the comment on whether the length of the section 809(a), the Bureau understands proposed requirement to provide the five-day timing presumption should be that debt collectors often do not include date certain on which the consumer’s modified and on whether different any other information to help verification rights expire, proposed timing presumptions should apply consumers identify debts.447 As a result, § 1006.34(b)(5) would define the term depending on whether a validation validation notices in use today may lack validation period to mean the period notice is delivered by mail or sufficient information to enable some starting on the date that a debt collector electronically, for example by email or consumers to exercise their FDCPA provides the validation information text message. Finally, the Bureau section 809 rights. For example, the described in § 1006.34(c) and ending 30 requests comment on whether a Bureau’s qualitative consumer research days after the consumer receives or is different timing presumption should indicates that certain information that assumed to receive the validation apply if validation information is appears to help consumers to recognize information. To clarify how to calculate provided orally. a debt—including a debt’s original the end of the validation period— account number or an itemization of including how debt collectors may 34(c) Validation Information interest and fees—may not consistently disclose a period that provides Proposed § 1006.34(c) sets forth the appear on validation notices.448 consumers additional time to exercise validation information that debt Complaints about insufficient their validation rights—proposed collectors would be required to disclose information to verify debts consistently § 1006.34(b)(5) also would provide that under § 1006.34(a)(1). As described rank among the most frequent types of a debt collector may assume that a below, the validation information that consumer debt collection complaints consumer receives validation proposed § 1006.34(c) would require received by the Bureau.449 Further, information on any day that is at least consists of four general categories: validation notices in use today may not five days (excluding legal public Information to help consumers identify be written in plain language that holidays, Saturdays, and Sundays) after debts (including the information promotes consumer understanding. the debt collector provides it. Proposed specifically referenced in FDCPA Thus, in some cases, consumers may not § 1006.34(b)(5) is designed to provide a section 809(a)); information about understand information about the debt debt collector with a straightforward yet consumers’ protections in debt that appears on the validation notice. flexible way to determine the last date collection; information to facilitate The Bureau’s understanding is of the validation period referenced in consumers’ ability to exercise their consistent with FTC findings, as well as § 1006.34(c)(3)(i) through (iii). The rights with respect to debt collection; with consumer advocate and industry Bureau proposes § 1006.34(b)(5) on the and certain other statutorily required feedback. According to the FTC, debt basis that consumers will typically information. collectors do not provide sufficient receive a validation notice no more than information to allow consumers to five days (excluding legal public 34(c)(1) Debt Collector Communication determine whether they owe a debt in holidays, Saturdays, and Sundays) after Disclosure question or to exercise their FDCPA the debt collector provides it. Further, FDCPA section 807(11) requires a rights.450 Observing that validation proposed § 1006.34 would not prohibit debt collector to disclose in its initial notices lack sufficient detail for a debt collector from honoring a written communication with a consumers to recognize whether a debt consumer’s request to exercise consumer—and if the initial belongs to them, the FTC has suggested verification rights after the date certain communication is oral, in that oral that more information about the debt that appears in the validation notice communication as well—that the debt pursuant to § 1006.34(c)(3)(i) through collector is attempting to collect a debt 446 See, e.g., Dorsey v. Morgan, 760 F. Supp. 509 (iii). and that any information obtained will (D. Md. 1991). 447 See Small Business Review Panel Outline, Proposed comment 34(b)(5)–1 would be used for that purpose. FDCPA section supra note 56, at 15. clarify that, if a debt collector sends a 807(11) also requires a debt collector to 448 See FMG Cognitive Report, supra note 40, at subsequent validation notice to a disclose in each subsequent 8–11. consumer because the consumer did not communication that the communication 449 In its 2019 FDCPA Annual Report, the Bureau receive the original validation notice, is from a debt collector.445 As discussed noted that 72 percent of consumers who complain and the consumer has not otherwise about written notifications about debt stated that above, the Bureau proposes the they did not receive enough information to verify received the validation information, the § 1006.18(e) disclosure to implement the debt. 2019 FDCPA Annual Report, supra note debt collector must calculate the end of FDCPA section 807(11). If a debt 11, at 17. Consumers have consistently complained the validation period based on the date collector provides validation to the Bureau about receiving insufficient the consumer receives or is assumed to information to verify debts. See 2018 FDCPA information, the debt collector engages Annual Report, supra note 16, at 15–16; 2017 receive the subsequent validation FDCPA Annual Report, supra note 21, at 16. notice. In other words, proposed 445 See the section-by-section analysis of 450 FTC Modernization Report, supra note 176, at comment 34(b)(5)–1 would clarify that, proposed § 1006.18(e). 21.

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should appear in validation notices.451 under § 1006.34(a)(1).454 The section- verification rights. To notify a debt In response to the Bureau’s ANPRM, by-section analysis of proposed collector in writing that the consumer is consumer advocates stated that many § 1006.34(c)(2)(i) through (x) discusses exercising the consumer’s verification validation notices contain insufficient the specific items of information, which rights, the consumer must have the debt information for consumers to evaluate would include existing statutory collector’s name and address.455 For this whether they owe a debt. Industry disclosures, designed to help consumers reason, and pursuant to its authority to commenters also identified additional recognize debts. Except where noted— interpret FDCPA section 809(a)(3) information for validation notices that for example, in the case of merchant through (5) and (b), as well as its would help consumers recognize debts, brand information for credit card debt authority under Dodd-Frank Act section such as the date of the consumer’s last under proposed § 1006.34(c)(2)(iii)—the 1032(a), the Bureau proposes payment and itemization information. information described in proposed § 1006.34(c)(2)(i) to provide that the § 1006.34(c) is not conditioned on debt collector’s name and mailing The lack of information about the debt availability. Thus, if a debt collector address is validation information that currently provided in validation does not have a piece of information for must be provided to the consumer notices—combined with limited a debt, the debt collector would be under § 1006.34(a)(1). The Bureau disclosure of consumers’ rights with unable able to comply with proposed requests comment on proposed respect to debt collection, which is § 1006.34(a)(1) for that debt. § 1006.34(c)(2)(i) and on whether discussed in the section-by-section The Bureau requests comment on additional clarification would be useful. analysis of proposed § 1006.34(c)(3)— proposed § 1006.34(c)(2), including on 34(c)(2)(ii) may disadvantage both consumers and whether any of the proposed items debt collectors. If a consumer receives a should be excluded or any additional FDCPA section 809(a) requires debt validation notice for an unfamiliar debt, items should be added. The Bureau also collectors to disclose information about the consumer may experience requests comments on whether the debt itself that helps consumers uncertainty, which may lead to the proposed § 1006.34(c)(2)’s content identify the debt and facilitate consumer disputing a debt that is owed. requirements risk overwhelming resolution of the debt. Like the If a consumer disputes a debt the consumers and decreasing their information specifically referenced in consumer owes but does not recognize, understanding, thereby making the FDCPA section 809(a), the consumer’s the debt collector must spend time and proposed disclosures less effective. name and address is essential resources responding to a dispute that Except with respect to information about the debt that may could have been avoided had the § 1006.34(c)(2)(iv), the Bureau proposes help a consumer determine whether the consumer initially received more § 1006.34(c)(2) pursuant to its authority consumer owes a debt and is the complete information. Participants in under FDCPA section 814(d) to intended recipient of a validation the Bureau’s consumer testing also prescribe rules with respect to the notice. For this reason, and pursuant to reported that the inability to recognize collection of debts by debt collectors its authority to interpret FDCPA section a debt is a major concern because of the and, as described more fully below, its 809(a), as well as its authority under risk of potential fraud or identity authority to implement and interpret Dodd-Frank Act section 1032(a), the Bureau proposes § 1006.34(c)(2)(ii) to theft.452 In addition, a consumer may, in FDCPA section 809. Except with respect provide that the consumer’s name and some instances, pay an unfamiliar debt to § 1006.34(c)(2)(vi) and (x), the Bureau mailing address is validation that the consumer did not owe.453 also proposes § 1006.34(c)(2) pursuant to its authority under section 1032(a) of information that must be provided to In light of these concerns, proposed 456 the Dodd-Frank Act, on the basis that the consumer under § 1006.34(a)(1). § 1006.34(c)(2) would describe the To avoid confusing or misleading the validation information describes the information about the debt and the consumers, the consumer’s name and debt, which is a feature of debt parties related to the debt that debt mailing address used by the debt collection. Requiring disclosure of collectors must provide to the consumer collector in a validation notice would be validation information may help to the most complete information that the ensure that the features of debt 451 debt collector obtained from the creditor Id. at 29. collection are fully, accurately, and 452 FMG Focus Group Report, supra note 38, at or another source. For example, a 13. effectively disclosed to consumers, such consumer advocate has noted that 453 Academic research and agency experience that consumers may better understand including the consumer’s complete offer insight into why some consumers may pay whether they owe particular debts and, debts that they do not owe in response to debt name in the validation notice would consequently, the costs, benefits, and help senior consumers who may be collection efforts. In one study of how consumers risks associated with paying or not would react to a validation notice concerning a debt contacted about a debt owed by a that they did not owe, 3 percent of respondents paying those debts. spouse or an adult child. Because a stated that they would pay the debt rather than dispute it. The study’s authors hypothesized that 34(c)(2)(i) consumer may share the same last name fear of negative credit reporting may explain this FDCPA section 809(b) provides that a as a spouse or an adult child, the behavior. See Jeff Sovern et al., Validation and consumer may notify a debt collector in consumer may need complete name Verification Vignettes: More Results from an information—for example, a name suffix writing, within 30 days after receipt of Empirical Study of Consumer Understanding of such as ‘‘Junior’’ or ‘‘Senior’’—to Debt Collection Validation Notices, Rutgers L. Rev. the information required by FDCPA (forthcoming) (manuscript at 46–47), https:// determine whether the consumer is the _ section 809(a), that the consumer is papers.ssrn.com/sol3/papers.cfm?abstract exercising certain verification rights, id=3219171. In a settlement agreement with a debt 455 Participants in the Bureau’s consumer testing collector, the FTC alleged that many consumers including the right to dispute the debt. reported that contact information for debt paid purported debts that they did not owe because FDCPA section 809(a)(3) through (5), in collectors, including the debt collector’s mailing they believed that the debts were real, or because turn, requires debt collectors to disclose address, is important. FMG Focus Group Report, they wanted to stop harassing debt collection how consumers may exercise their supra note 38, at 15–16. efforts. See Complaint at ¶ 22, Fed. Trade Comm’n 456 As discussed in part VI, debt collectors may v. Lombardo Daniels & Moss, LLC. No. 3:17–CV– already include the consumer’s complete name 503–RJC (W.D.N.C. Aug. 21, 2017), https:// 454 Proposed § 1006.34(c)(5) would establish a information available on validation notices, so www.ftc.gov/system/files/documents/cases/ special rule for information about the debt for proposed § 1006.34(c)(2)(ii) may not pose lombardo_complaint_8-29-17.pdf. certain residential mortgage debt. significant operational challenges.

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validation notice’s intended recipient, use merchant brands to recognize credit For these reasons, and pursuant to its or whether the consumer received the card debts.459 authority under Dodd-Frank Act section validation notice in error. Proposed For this reason, and pursuant to its 1032(a), the Bureau proposes comment 34(c)(2)(ii)–1 therefore would authority to interpret FDCPA section § 1006.34(c)(2)(iv) to provide that, if a clarify that the consumer’s name should 809(a), as well as its authority under debt collector is collecting a consumer reflect what the debt collector Dodd-Frank Act section 1032(a), the financial product or service debt, as that reasonably determines is the most Bureau proposes § 1006.34(c)(2)(iii) to term is defined in § 1006.2(f), the name complete version of the name provide that the merchant brand, if any, of the creditor to whom the debt was information about which the debt associated with a credit card debt, to the owed on the itemization date is collector has knowledge, whether extent available to the debt collector, is validation information that the debt obtained from the creditor or another validation information that must be collector must provide to the consumer source. Proposed comment 34(c)(2)(ii)– provided to the consumer under under § 1006.34(a)(1). The Bureau 1 further explains that a debt collector § 1006.34(a)(1). Proposed comment requests comment on proposed would not be able to omit name 34(c)(2)(iii)–1 provides an example of § 1006.34(c)(2)(iv). information in a manner that would merchant brand information that the 34(c)(2)(v) create a false, misleading, or confusing Bureau believes would be available to a debt collector and must be included on The purpose of FDCPA section 809 is impression about the consumer’s to ‘‘eliminate the recurring problem of identity. a validation notice. The Bureau requests comment on proposed debt collectors dunning the wrong The Bureau requests comment on § 1006.34(c)(2)(iii) and on comment person or attempting to collect debts proposed § 1006.34(c)(2)(ii) and on 34(c)(2)(iii)–1. In particular, the Bureau which the consumer has already comment 34(c)(2)(ii)–1, including on requests comment on whether merchant paid.’’ 461 The Bureau believes that the whether additional clarification would brand or similar information should be problem of debt collectors attempting to be useful. The Bureau specifically required for debts other than credit card collect debts from consumers who do requests comment on how debt debts. not owe the debts continues today. For collectors currently determine the example, ‘‘attempts to collect debt not complete version of a consumer’s name 34(c)(2)(iv) owed’’ is consistently the most common if creditors or third parties, such as a FDCPA section 809(a)(2), which type of debt collection complaint 462 skip tracing vendors, provide conflicting requires debt collectors to disclose to consumers provide to the Bureau. name information. The Bureau also consumers the name of the creditor to Consistent with the FDCPA’s purpose, requests comment on what a debt whom the debt is owed, typically is FDCPA section 809(a) requires debt collector should be required to do to understood to refer to the current collectors to disclose to consumers reasonably determine the consumer’s creditor.460 When the original creditor certain information, such as the amount complete name information. (or the creditor as of the itemization of the debt itself, to help consumers date) and the current creditor are the identify debts. An account number 34(c)(2)(iii) same, a consumer is more likely to associated with a debt on the recognize the creditor’s name. If they are itemization date may be integral The purpose of FDCPA section 809 is information that a consumer uses to to ‘‘eliminate the recurring problem of different, however, a consumer may be less likely to recognize the current identify the debt itself. For example, the debt collectors dunning the wrong Bureau’s consumer testing suggests that person or attempting to collect debts creditor. For example, after the itemization date, a creditor may have a validation notice that includes an which the consumer has already sold a debt to a debt buyer, or may have account number appears to ease paid.’’ 457 Consistent with this purpose, changed its corporate identity following concerns that a debt is fraudulent FDCPA section 809(a) requires debt a merger or acquisition, and the because the consumer may recognize collectors to disclose to consumers consumer may not have had any contact the number or be able to verify the debt 463 certain information, including the name with the new entity before collections with their records. In addition, in of the creditor, to help consumers began. In these cases, the consumer may response to the Bureau’s ANPRM, State identify debts and determine whether be more likely to recognize the name of attorneys general, consumer advocates, they owe them. For credit card debts, the creditor as of the itemization date and industry stakeholders all provided the merchant brand appears to be an than the name of the current creditor. feedback that the account number integral part of the name of the creditor This is because (as discussed in the associated with a debt may help a that helps consumers identify debts and section-by-section analysis of proposed consumer recognize the debt. For these determine whether they owe them. § 1006.34(b)(3)) the itemization date is reasons, and pursuant to its authority to Merchant brands appear to be salient intended to reflect a notable event in a interpret FDCPA section 809(a), as well information for debts arising from use of debt’s history that the consumer may as its authority under Dodd-Frank Act co-branded or private-label credit cards recall, or for which the consumer may section 1032(a), the Bureau proposes because consumers may associate such have records. A consumer may be more § 1006.34(c)(2)(v) to provide that the debts more closely with merchant likely to recognize the creditor as of that account number, if any, associated with brands than with credit card issuers.458 date than the current creditor, with the debt on the itemization date, or a For example, the Bureau’s consumer whom the consumer may have no prior 461 focus group findings indicate consumers relationship. S. Rept. No. 382, supra note 70, at 4. 462 See 2019 FDCPA Annual Report, supra note 11, at 16 (40 percent of consumer complaints about 457 S. Rept. No. 382, supra note 70, at 4. 459 FMG Focus Group Report, supra note 38, at debt collection involve attempts to collect debt not 458 The Bureau believes that merchant brand 13–14; FMG Usability Report, supra note 41, at 43– owed); 2018 FDCPA Annual Report, supra note 16, information is unique to credit card debt. Other 44. at 15 (39 percent of consumer complaints about types of debt do not typically involve an entity like 460 See the section-by-section analysis of debt collection involve attempts to collect debt not a merchant, whom the consumer may associate proposed § 1006.34(c)(2)(vi) regarding FDCPA owed). with the debt but who did not provide the credit, section 809(a)(2)’s requirement to disclose the name 463 FMG Focus Group Report, supra note 38, at product, or service that gave rise to the debt. of the creditor to whom the debt is owed. 19.

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truncated version of that number, is section analysis thereof—the Bureau this amount includes any fees, interest, validation information that the debt proposes § 1006.34(c)(2)(vii) to provide or other charges owed as of the collector must provide to the consumer that the itemization date, as defined in itemization date. The Bureau requests under § 1006.34(a)(1). § 1006.34(b)(3), also is validation comment on proposed Debt collectors may wish to truncate information that must be provided to § 1006.34(c)(2)(viii) and on comment account numbers to prevent disclosure the consumer under § 1006.34(a)(1).466 34(c)(2)(viii)–1. of consumer account information, or to The itemization date would indicate the comply with applicable privacy rules, beginning of the time period that the 34(c)(2)(ix) such as the FTC Safeguards Rule.464 itemization of the debt in proposed FDCPA section 809(a)(1) requires a Proposed comment 34(c)(2)(v)–1 § 1006.34(c)(2)(ix) is intended to debt collector to disclose to consumers explains that debt collectors may do so capture. The Bureau requests comment the amount of the debt. This disclosure provided that the account number on proposed § 1006.34(c)(2)(vii). is intended to help consumers recognize remains recognizable. For example, in 34(c)(2)(viii) debts that they owe and raise concerns lieu of disclosing a complete account about debts that are unfamiliar or FDCPA section 809(a)(1) requires debt number, debt collectors may disclose inaccurate. For the reasons discussed in collectors to disclose to consumers the only the last four digits of the number. the section-by-section analysis of amount of the debt. The phrase ‘‘the The Bureau requests comment on proposed § 1006.34(c)(2)(viii) and (x), amount of the debt’’ is ambiguous; it proposed § 1006.34(c)(2)(v) and on the Bureau proposes to implement and does not specify which debt amount is comment 34(c)(2)(v)–1, including on interpret FDCPA section 809(a)(1) to being referred to, even though the debt whether the Bureau should mandate provide that debt collectors must amount may change over time. For truncation of account numbers rather disclose to consumers both the amount example, because of accrued interest or than making truncation optional. of the debt on the itemization date and fees, the current amount of the debt (i.e., Further, the Bureau requests comment the current amount of the debt (i.e., the the amount on the date that the on whether additional clarification amount of the debt on the date that the validation information is provided) may about truncation would be helpful. For validation information is provided). example, such clarification might be more than the amount of the debt at In conjunction with the amount of the explain when a truncated account origination. Because of applied debt on the itemization date and the number is recognizable, or how debt payments or credits, the current amount current amount of the debt, an collectors may indicate that digits have of the debt also may be less than the itemization of how the amount of the been omitted from a truncated account amount of the debt the consumer debt changed between those dates may number. originally incurred. If the amount of the debt has changed over time, consumers be an integral part of the amount of the 34(c)(2)(vi) may not recognize the debt or the debt. Specifically, consumers may be FDCPA section 809(a)(2) requires debt current amount of the debt. By contrast, better positioned to recognize whether collectors to disclose to consumers the consumers may recognize the amount of they owe a debt and to evaluate whether name of the creditor to whom the debt the debt as of the itemization date. As the current amount alleged due is is owed. By using the present tense ‘‘is discussed in the section-by-section accurate if they understand how the owed,’’ the statute appears to refer to the analysis of proposed § 1006.34(b)(3), the amount changed over time due, for creditor to whom the debt is owed when itemization date reflects a notable event example, to interest, fees, payments, and the debt collector makes the disclosure. in a debt’s history that a consumer may credits that have been assessed or For this reason, and pursuant to its recall or be able to verify with records, applied to the debt. authority to implement and interpret particularly if that amount is itemized The Bureau’s qualitative consumer FDCPA section 809(a)(2), the Bureau as described in § 1006.34(c)(ix). testing indicates that an itemization proposes § 1006.34(c)(2)(vi) to provide Because the amount of the debt on the appears to improve consumer that the name of the current creditor is itemization date may help a consumer understanding about and recognition of validation information that the debt recognize a debt and determine whether the debt.468 In particular, some testing collector must provide to the consumer the amount of a debt is accurate, the participants emphasized that an under § 1006.34(a)(1). Bureau proposes to interpret FDCPA itemization in a tabular format helped section 809(a)(1), and to use its them understand specific fees and 34(c)(2)(vii) authority under Dodd-Frank Act section charges.469 The FTC has also suggested FDCPA section 809(a)(1) requires debt 1032(a), to provide in that the validation notice should collectors to disclose to consumers the § 1006.34(c)(2)(viii) that the amount of contain an itemization that includes amount of the debt. In the debt on the itemization date is principal, interest, and fees.470 Some § 1006.34(c)(2)(viii), the Bureau validation information that the debt State debt collection laws also require proposes to interpret FDCPA section collector must provide to the consumer that the validation notice include an 809(a)(1), and to use its authority under under § 1006.34(a)(1).467 Proposed itemization.471 Dodd-Frank Act section 1032(a), to comment 34(c)(2)(viii)–1 explains that Courts have also observed that an provide that the amount of the debt on itemization may enhance consumer the itemization date is validation 466 As discussed in the section-by-section analysis understanding. Some courts have information that the debt collector must of proposed § 1006.34(b)(3) and (c)(2)(viii) and (ix), opined that an itemized accounting disclose under § 1006.34(a)(1).465 the itemization date is the reference date for, among other things, the itemization of the debt, which the helps a consumer assess the validity of Consistent with proposed Bureau believes may help a consumer identify an § 1006.34(c)(2)(viii)—and for the same alleged debt. For additional discussion of these 468 reasons and pursuant to the same provisions, see the section-by-section analysis of FMG Usability Report, supra note 41, at 16– proposed § 1006.34(c)(2)(iv) and (v). 19. authority discussed in the section-by- 469 467 Proposed § 1006.34(c)(2)(x) separately FMG Cognitive Report, supra note 40, at 10. provides that the current amount of the debt also 470 FTC Modernization Report, supra note 176, at 464 See 16 CFR part 314. is validation information that must be disclosed v. 465 See the section-by-section analysis of under § 1006.34(a)(1). See the section-by-section 471 See Cal. Civ. Code sec. 1788.52(a)(2); NYCRR proposed § 1006.34(c)(2)(viii). analysis of proposed § 1006.34(c)(2)(x). § 1.2(b)(2).

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an alleged debt.472 Further, some courts whether the itemization proposal is attempt. The Bureau understands, have held that a debt collector’s failure practicable across all categories of debt however, that debt collectors typically to properly disclose interest and fees— or conflicts with disclosure may disclose only the information that or to disclose that a debt may increase requirements established by other FDCPA section 809(a) specifically in the future due to interest and fees— applicable law, such as State case law, references and may provide the FDCPA may violate the FDCPA.473 statutory law, and regulatory law, as section 809 information using statutory An itemization also may discourage well as disclosures required by judicial language, rather than plain language debt collectors from engaging in unfair, opinions or orders. that consumers can more easily deceptive, or abusive practices by comprehend. ensuring that consumers have, as a 34(c)(2)(x) Consumer advocates, State agencies, matter of course, sufficient information FDCPA section 809(a)(1) requires debt and State attorneys general provided to evaluate claims of indebtedness collectors to disclose to consumers the ANPRM feedback that validation notices presented in validation notices. For amount of the debt. As noted, however, do not contain enough information example, requiring a debt collector to the phrase ‘‘the amount of the debt’’ is about a consumer’s rights with respect disclose an itemization of the debt may ambiguous; it does not specify which to debt collection.475 The FTC similarly help a consumer identify erroneous or debt amount is being referred to, even has asserted that debt collectors fabricated fees that a creditor or debt though the debt amount may change generally do not provide enough collector may have added that inflated over time. One reasonable interpretation information about the actions the amount of an alleged debt. An of FDCPA section 809(a)(1) is that consumers may take under the FDCPA, itemization requirement also may help ‘‘amount of the debt’’ refers to the which makes it difficult for some debt collectors disclose interest and fees current amount of the debt, which is the consumers to exercise those rights.476 in a manner that provides essential amount of the debt on the date that the The Bureau’s consumer focus group information to consumers and reduces validation information is provided. For findings also indicate that consumers debt collectors’ legal risk when this reason, and pursuant to its often are unfamiliar with or have providing validation notices. authority to implement and interpret erroneous beliefs about their FDCPA For these reasons, and pursuant to its FDCPA section 809(a)(1), proposed rights.477 Many testing participants authority to interpret FDCPA section § 1006.34(c)(2)(x) provides that the responded favorably to sample 809(a)(1), as well as its authority under current amount of the debt is validation validation notices that disclosed Dodd-Frank Act section 1032(a), the information that the debt collector must additional rights and protections.478 Bureau proposes § 1006.34(c)(2)(ix) to provide to the consumer under Consumer testing also suggests that provide that an itemization of the § 1006.34(a)(1). consumers generally prefer disclosures current amount of the debt, in a tabular Proposed comment 34(c)(2)(x)–1 written in plain language, as opposed to format reflecting interest, fees, explains that, for residential mortgage statutory language.479 payments, and credits since the debt subject to § 1006.34(c)(5), a debt To address these concerns, proposed itemization date, is validation collector may comply with § 1006.34(c)(3) would deem certain information that must be provided to § 1006.34(c)(2)(x) by including in the information about a consumer’s rights the consumer under § 1006.34(a)(1). validation notice the total balance of the with respect to debt collection to be Proposed comment 34(c)(2)(ix)–1 would outstanding mortgage, including validation information that must be clarify how debt collectors can disclose principal, interest, fees, and other provided to the consumer under that no interest, fees, payments, or charges. The Bureau proposes this to § 1006.34(a)(1). This information, which credits were assessed or applied to a accommodate debt collectors collecting is discussed in the section-by-section debt. mortgage debt, who sometimes disclose analysis of proposed § 1006.34(c)(3)(i) The Bureau requests comment on to consumers the total balance of the through (vi), would include disclosures proposed § 1006.34(c)(2)(ix) and on outstanding mortgage, rather than the specifically referenced in FDCPA comment 34(c)(2)(ix)–1. In particular, current amount due on a given date the Bureau requests comment on 475 Consumer complaints received by the Bureau when providing the amount of the debt tend to corroborate this feedback. In its 2019 whether the itemization should be more 474 pursuant to FDCPA section 809(a)(1). FDCPA Annual Report, the Bureau noted that 25 detailed—for example, by reflecting The Bureau requests comment on percent of consumers who complained about each fee charged and each payment proposed § 1006.34(c)(2)(x) and on written notifications about debt stated that they did received—or whether certain comment 34(c)(2)(x)–1. not receive a notice of their right to dispute. See itemization categories, such as credits 2019 FDCPA Annual Report, supra note 11, at 17. 34(c)(3) Information About Consumer 476 FTC Modernization Report, supra note 176, at and payments, should be combined. The v. The notion that some consumers may have Bureau also requests comment on Protections difficulty exercising FDCPA verification rights is The disclosures in FDCPA section supported by one academic study that found a 472 See, e.g., Haddad v. Alexander, Zelmanski, 809(a) help consumers determine if a substantial proportion of survey respondents did not understand they would need to dispute a debt Danner & Fioritto, PLLC, 758 F. 3d 777, 785 (6th particular debt is theirs and facilitate Cir. 2015). in writing to trigger certain FDCPA protections. 473 See Avila v. Riexinger & Associates, LLC, 817 action in response to a collection According to the study, 75 percent of consumers F.3d 72, 76 (2d Cir. 2016) (holding that 15 U.S.C. who were shown a court-approved validation notice 1692e requires debt collectors to disclose when the 474 Under Regulation Z, 12 CFR 1026.41(d)(3), believed that they could orally exercise their amount of a debt may increase due to interest and certain mortgage servicers are required to provide verification rights, even though the notice expressly fees); Miller v. McCalla, Raymer, Padrick, Cobb, a past-payment breakdown that may be functionally stated that disputes must be in writing. See Jeff Nichols, and Clark, LLC, 214 F.3d 872, 875–76 (7th equivalent to, and as useful for the consumer, as the Sovern & Kate E. Walton, ‘‘Are Validation Notices Cir. 2000) (finding that a validation notice’s disclosures that would be required by proposed Valid? An Empirical Evaluation of Consumer omission of accrued interest and fees violated 15 § 1006.34(c)(2)(vii) through (ix). As discussed in the Understanding of Debt Collection Validation U.S.C. 1692g(a)(1)’s requirement to disclose the section-by-section analysis of proposed Notices,’’ 70 SMU L. Rev. 63, at 94–98 (2017). amount of the debt); Wood v. Allied Interstate, LLC § 1006.34(c)(5), the Bureau proposes a special rule 477 FMG Focus Group Report, supra note 38, at 6– (17 C 4921), 2018 WL 2967061, at *2–3 (N.D. Ill. that would allow servicers of certain residential 8. June 13, 2018) (holding that an itemization that mortgage debt to satisfy the requirements of 478 FMG Cognitive Report, supra note 40, at 27– listed ‘‘$0.00’’ due in interest and fees, when proposed § 1006.34(c)(2)(vii) through (ix) by 33. interest and fees were not allowed, could violate 15 providing disclosures required by Regulation Z, 12 479 Id. at 26–27; FMG Summary Report, supra U.S.C. 1692e and 1692f). CFR 1026.41(d)(3). note 42, at 25–26.

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section 809(a)(4) and (5), as well as validity.481 This is consistent with the about the time period during which they additional disclosures intended to help FTC’s observation that consumers are are entitled to request original-creditor consumers understand their debt generally unaware of the collections information under FDCPA section collection rights.480 The Bureau requests pause, even though it may benefit 809(b). comment on proposed § 1006.34(c)(3) them.482 For these reasons, and pursuant to its generally, including on whether any of The validation period end date authority to interpret FDCPA section the proposed items should be excluded similarly is an integral feature of a 809(a)(5) and (b), as well as its authority or any additional items should be consumer’s dispute right. Unless debt under Dodd-Frank Act section 1032(a), added. collectors disclose the end date of the the Bureau proposes § 1006.34(c)(3)(ii) The Bureau proposes validation period, consumers may be to provide that validation information § 1006.34(c)(3)(i) through (iii) and (v) uncertain about the time period during includes a statement that specifies the pursuant to its authority under FDCPA which they are entitled to dispute the end date of the validation period and section 814(d) to prescribe rules with debt under FDCPA section 809(b). states that, if the consumer requests in respect to the collection of debts by debt For these reasons, and pursuant to its writing before the end of the validation collectors and, as described more fully authority to interpret FDCPA section period the name and address of the below, its authority to implement and 809(a)(4) and (b), as well as its authority original creditor, the debt collector must interpret FDCPA section 809. The under Dodd-Frank Act section 1032(a), cease collection of the debt until the Bureau also proposes § 1006.34(c)(3) the Bureau proposes § 1006.34(c)(3)(i) to debt collector sends the consumer the pursuant to its authority under section provide that validation information name and address of the original 1032(a) of the Dodd-Frank Act, on the includes a statement that specifies the creditor, if different from the current basis that a consumer’s rights are a end date of the validation period and creditor. The Bureau requests comment feature of debt collection. Requiring states that, if the consumer notifies the on proposed § 1006.34(c)(3)(ii). In disclosure of information about these debt collector in writing before the end particular, the Bureau notes that the rights may help to ensure that the of the validation period that the debt, or proposed § 1006.34(c)(3)(ii) disclosure features of debt collection are fully, any portion of the debt, is disputed, the language that appears on proposed debt collector must cease collection of accurately, and effectively disclosed to Model Form B–3 omits the statutory the debt until the debt collector sends consumers, such that consumers may phrase, ‘‘if different from the current the consumer either the verification of better understand the costs, benefits, creditor.’’ The Bureau intentionally the debt or a copy of a judgment. The and risks associated with debt omitted this phrase to achieve a plain Bureau requests comment on proposed collection. language disclosure that enhances § 1006.34(c)(3)(i). consumer understanding. The Bureau 34(c)(3)(i) 34(c)(3)(ii) requests comment on whether omitting FDCPA section 809(a)(4) requires debt this phrase on proposed Model Form B– FDCPA section 809(a)(5) requires debt 3 would enhance consumer collectors to disclose to consumers their collectors to disclose to consumers their right under FDCPA section 809(b) to understanding by simplifying the right under FDCPA section 809(b) to statutory language, or whether it might dispute the validity of the debt within request, within 30 days after receipt of lead consumers incorrectly to conclude 30 days after receipt of the validation the validation information, the name that a debt collector always would need information (i.e., during the validation and address of the original creditor, if to cease collection upon request for period). As discussed in the section-by- different than the current creditor. original-creditor information, even if the section analysis of proposed § 1006.38, FDCPA section 809(a)(5) does not original creditor and the current creditor if a consumer disputes a debt in expressly indicate that a debt collector were the same. accordance with FDCPA section 809(b), must disclose to consumers that an a debt collector must cease collecting original-creditor information request 34(c)(3)(iii) the debt until the debt collector invokes FDCPA section 809(b)’s FDCPA section 809(a)(3) requires a provides verification to the consumer; collections pause, or whether a debt debt collector to disclose to a consumer this is sometimes referred to as the collector must disclose the end date of that, unless the consumer disputes the collections pause. FDCPA section the validation period. validity of the debt within 30 days of 809(a)(4) does not expressly indicate FDCPA section 809(b)’s collections receipt of the validation information, that a debt collector must disclose to pause is an integral feature of the the debt collector will assume the debt consumers that a dispute triggers consumer’s right to request original- to be valid. The Bureau is aware that FDCPA section 809(b)’s collections creditor information under FDCPA courts in various jurisdictions have pause, or whether a debt collector must section 809(a)(5). Unless debt collectors reached different conclusions about disclose the end date of the validation disclose the collections pause, whether FDCPA section 809(a)(3) period. consumers may not fully appreciate requires debt collectors to recognize oral FDCPA section 809(b)’s collections their right to request original-creditor disputes, received within 30 days of a pause is an integral feature of the information under FDCPA section consumer’s receipt of the validation dispute right disclosure required by 809(b). information, about the validity of the FDCPA section 809(a)(4). Unless debt The validation period end date debt.483 These differing decisions collectors disclose the collections pause, similarly is an integral feature of a consumers may not fully appreciate consumer’s right to request original- 483 Compare Clark v. Absolute Collection Serv., their FDCPA dispute right. Participants creditor information. Unless debt Inc., 741 F.3d 487, 490 (4th Cir. 2014) (holding that in the Bureau’s consumer testing collectors disclose the validation period oral disputes trigger certain FDCPA protections, end date, consumers may be uncertain including under FDCPA section 809(a)(3)), Hooks v. reported that knowing about the Forman, Holt, Eliades & Ravin, LLC, 717 F.3d 282, collections pause was important and 286 (2d Cir. 2013) (same), and Camacho v. would encourage them to exercise their 481 FMG Cognitive Report, supra note 40, at 30; Bridgeport Fin. Inc., 430 F.3d 1078, 1082 (9th Cir. dispute right if they question a debt’s see also FMG Summary Report, supra note 42, at 2005) (same), with Graziano v. Harrison, 950 F.2d 25. 107, 112 (3d Cir. 1991) (‘‘[A] dispute, to be effective, 482 FTC Modernization Report, supra note 176, at must be in writing’’), and Durnell v. Stoneleigh 480 See 15 U.S.C. 1692g(a)(4) and (5). 26–27. Continued

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principally arise from the fact that, during the validation period. While defined in § 1006.2(f), then validation whereas FDCPA section 809(a)(4) and Model Form B–3 would alert consumers information includes a statement that (5) explicitly require a consumer to to an oral dispute option, the form informs the consumer that additional submit a written dispute to invoke the would clarify that only a written dispute information regarding consumer rights FDCPA’s verification rights, FDCPA would invoke verification rights in debt collection is available on the section 809(a)(3) specifies no writing pursuant to FDCPA sections 809(a)(4) Bureau’s website at https:// requirement. In the absence of an and (5).486 As discussed in the section- www.consumerfinance.gov.489 The express writing requirement in FDCPA by-section analysis of proposed Bureau proposes this requirement on section 809(a)(3), the majority of circuit § 1006.34(d)(2), the use of Model Form the basis that this information informs courts that have considered this issue B–3 would provide debt collectors with consumers how to exercise their FDCPA have determined that a consumer’s oral a safe harbor for compliance with rights and protections and therefore is a dispute triggers certain FDCPA FDCPA section 809(a)’s disclosure feature of debt collection. The Bureau protections, including, for example, requirements.487 The Bureau requests requests comment on proposed FDCPA section 810’s payment comment on whether debt collectors § 1006.34(c)(3)(iv). application requirement.484 These require additional clarification about 34(c)(3)(v) decisions have created uncertainty for how to comply with FDCPA section debt collectors in some jurisdictions 809(a)(3). As discussed below, proposed when seeking to comply with FDCPA § 1006.34(c)(4) would provide that 34(c)(3)(iv) section 809(a)’s disclosure validation information includes requirements.485 As discussed in the section-by-section information that a consumer can use to Consistent with the position analysis of proposed § 1006.34(c)(3), take certain actions, which generally articulated by the majority of circuit consumers may not receive sufficient include disputing a debt or requesting courts, and pursuant to its authority to information about their rights and original-creditor information.490 As implement and interpret FDCPA section protections in debt collection. While discussed in the section-by-section 809(a)(3) as well as its authority under validation information helps consumers analysis of proposed § 1006.34(c)(3)(i) Dodd-Frank Act section 1032(a), the determine if a particular debt is theirs and (ii), FDCPA section 809(b) provides Bureau proposes to interpret FDCPA and facilitates action in response to a that consumers must notify a debt 809(a)(3) to allow oral disputes. The collection attempt, consumers could collector ‘‘in writing’’ to dispute a debt Bureau believes that this may be the benefit if validation information or request original-creditor information. most persuasive interpretation of included additional information about As discussed in the section-by-section Congressional intent, given the lack of consumer protections in debt collection. analysis of proposed § 1006.38, the the words ‘‘in writing’’ in FDCPA The Bureau makes such information Bureau would interpret FDCPA section 809(a)(3), as compared to the presence available on its website and intends to 809(b)’s writing requirement as being of those words throughout FDCPA develop additional resources to enhance satisfied when a consumer submits a 809(a)’s other provisions. Accordingly, consumer understanding of these dispute or request for original-creditor the Bureau proposes § 1006.34(c)(3)(iii) protections and the debt collection information to the debt collector via a to provide that validation information process in general. The Bureau is medium of electronic communication includes a statement that specifies the developing a reference document that through which a debt collector accepts end date of the validation period and would describe certain legal protections electronic communications from states that, unless the consumer contacts relevant to debt collection. This consumers, such as email or a website the debt collector to dispute the validity reference document was initially portal. Thus, debt collectors only would of the debt, or any portion of the debt, conceived as a mandatory disclosure be required to give legal effect to before the end of the validation period, that debt collectors would be required to consumer disputes or requests for the debt collector will assume that the provide to consumers along with the original-creditor information submitted debt is valid. Model Form B–3 would validation notice. Although the Bureau electronically where a debt collector inform consumers that they have the does not propose to require debt chooses to accept electronic option to ‘‘call’’ or ‘‘write’’ a debt collectors to provide the reference communications from consumers. This collector to dispute the validity of a debt document to consumers, if the Bureau would apply regardless of whether the finalizes proposed § 1006.34(c)(3)(iv), validation notice itself is delivered Recovery Assocs., LLC, (No. 18–2335), 2019 WL the Bureau would publish a version of electronically. 121197, at *3–4 (E.D. Pa. Jan. 7, 2019) (holding that the document as a consumer resource Further, FDCPA section 809(b) a validation notice that ‘‘mirror[ed] the language’’ on the Bureau’s website before the final prohibits debt collector communications of the FDCPA section 809 still violated the FDCPA rule’s effective date.488 during the validation period that are because disputes must be in writing). inconsistent with the disclosure of a 484 See 15 U.S.C. 1692i; Camacho, 430 F.3d at To enhance consumer understanding 1081–82 (holding that oral disputes trigger certain of protections available during the debt consumer’s verification rights. If debt FDCPA protections, including under FDCPA collection process, and pursuant to its collectors refuse to accept consumers’ sections 807(8) and 810). authority under Dodd-Frank Act section disputes or requests for original-creditor 485 See, e.g., Caprio v. Healthcare Revenue 1032(a), the Bureau proposes information through a medium of Recovery Grp., 709 F.3d 142, 151–52 (3d Cir. 2013) electronic communication after (holding that a collection letter encouraging a § 1006.34(c)(3)(iv) to provide that, if a consumer to ‘‘please call’’ the debt collector debt collector is collecting a consumer violated FDCPA section 809(a)); Riggs v. Prober & financial product or service debt, as 489 To the extent that the Bureau develops a more Raphael, 681 F.3d 1097, 1103–04 (9th Cir. 2012) specific landing page for information about (holding that a validation notice that implied a consumer protections during the debt collection written dispute requirement—but that did not 486 See the section-by-section analysis of process, the Bureau would include the website expressly require a written dispute—did not violate proposed § 1006.34(c)(3)(i) and (ii). address for that landing page in a final rule. FDCPA section 809(a)(3)); Homer v. Law Offices of 487 See the section-by-section analysis of 490 Proposed § 1006.34(c)(4) would set forth Frederic I. Weinberg & Assocs., P.C., 292 F. Supp. proposed § 1006.34(d)(2). required consumer response information. Proposed 3d 629, 633–34 (E.D. Pa. 2017) (holding that a 488 For additional detail about information that § 1006.34(d)(3)(iii)(B) and (vi)(B) would permit validation notice that used ‘‘hears from you’’ may appear on the reference document, refer to certain other consumer response information language was deceptive because it suggested that appendix G of the Small Business Review Panel related to payment requests and requests for disputes could be made orally). Outline, supra note 56. Spanish-language validation notices.

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providing an electronic validation with this feedback, the Small Business communications. The Bureau requests notice through that same medium, Review Panel Report recommended that comment on proposed consumers may become confused about the Bureau consider whether the debt § 1006.34(c)(3)(vi) and on comment how to exercise their verification rights. collection rule should promote newer 34(c)(3)(vi)–1. While the FDCPA does not directly communication technologies, and, if so, 34(c)(4) Consumer Response address electronic debt collection establish guidelines for the appropriate Information communications, a reasonable consumer use of such technologies.492 Proposed could expect to be able to respond to a § 1006.34(c)(3)(v) is responsive to this The FTC has noted that some debt collector through the same medium feedback. The Bureau requests comment consumers do not receive sufficient of electronic communication that the on proposed § 1006.34(c)(3)(v) and on information explaining how they may debt collector used to contact the comment 34(c)(3)(v)–1. exercise their FDCPA rights.493 This consumer. Because of the potential for observation is consistent with at least 34(c)(3)(vi) confusion, a debt collector’s refusal to one academic study, which found that accept a dispute or request for original- As discussed elsewhere in this many consumers did not understand creditor information electronically after proposed rule—for example, in the how to properly exercise their FDCPA providing a validation notice section-by-section analysis of proposed verification rights even after reviewing a electronically may be inconsistent with § 1006.42—the use of electronic media typical validation notice.494 the effective disclosure of the such as email and text messages for debt During the development of this consumer’s verification rights. collection communications may further proposal, the Bureau tested validation For these reasons, and pursuant to its the interests of both consumers and debt notices that included information about authority to interpret FDCPA section collectors, but communications sent by how consumers could exercise their 809(a) and (b), as well as its authority such media may require tailored FDCPA verification rights using a under Dodd-Frank Act section 1032(a), protections for consumers. One such separate section of the notice, which the Bureau proposes § 1006.34(c)(3)(v) protection, as proposed in § 1006.6(e), consumers could detach and return to to provide that validation information would require a debt collector who the debt collector. For purposes of this includes a statement explaining how a communicates or attempts to section-by-section analysis, the Bureau consumer can take the actions described communicate with a consumer refers to this information as consumer in § 1006.34(c)(4) electronically, if the electronically in connection with the response information. The Bureau’s debt collector sends the validation collection of a debt using a specific usability testing indicated that notice electronically. Proposed email address, telephone number for a consumers understood that they could comment 34(c)(3)(v)–1 explains that a text message, or other electronic- use the consumer response information debt collector may provide the medium address to include in such to dispute a debt, or to communicate information described in proposed communication or attempt to that information about the debt in the § 1006.34(c)(3)(v) by including the communicate a clear and conspicuous validation notice was incorrect.495 The statements, ‘‘We accept disputes statement describing one or more ways usability testing findings thus indicated electronically,’’ using that phrase or a the consumer can opt out of further that the consumer response information substantially similar phrase, followed electronic communications or attempts enhanced consumers’ comprehension of by an email address or website portal to communicate by the debt collector to their dispute rights.496 that a consumer can use to take the that address or telephone number. The Bureau’s testing suggests that action described in § 1006.34(c)(4)(i), Consistent with proposed § 1006.6(e), requiring debt collectors to disclose and ‘‘We accept original creditor and pursuant to the legal authorities consumer response information, information requests electronically,’’ discussed in the section-by-section segregated from other validation using that phrase or a substantially analysis thereof, the Bureau proposes information, appears to help consumers similar phrase, followed by an email § 1006.34(c)(3)(vi) to provide that, for a exercise their FDCPA section 809(b) address or website portal that a validation notice delivered in the body rights to dispute the validity of a debt consumer can use to take the action of an email pursuant to § 1006.42(b)(1) and to request original-creditor described in § 1006.34(c)(4)(ii). or (c)(2)(i), validation information information. Further, the consumer Proposed comment 34(c)(3)(v)–1 also includes the opt-out statement required response information may facilitate a would clarify that, if a debt collector by § 1006.6(e). Proposed comment debt collector’s ability to process and accepts electronic communications from 34(c)(3)(vi)–1 explains that, if a understand a consumer’s response to a consumers through more than one validation notice is delivered on a validation notice. For example, by medium, such as by email and through website pursuant to § 1006.42(c)(2)(ii), requiring the consumer response a website portal, the debt collector is the validation notice need not contain information section to include only required to provide information the opt-out statement because the statements describing specific reasons regarding one of these media but may statement will be required in any email for disputes, proposed § 1006.34(c)(4) provide information about additional or text message that provides a could reduce the burden of responding media. hyperlink to the website where the to generic or ambiguous disputes. While During the SBREFA process, small notice is placed. Proposed comment the proposal would not require entity representatives supported the 34(c)(3)(vi)–1 further explains that consumers to indicate a specific dispute Bureau’s proposal to clarify how debt delivery of a validation notice that a collectors could use newer debt collector previously provided 493 See FTC Modernization Report, supra note communication technologies, such as pursuant to § 1006.42(b)(1) or (c)(2)(i) or 176, at v. (ii) is not rendered ineffective because a 494 See Jeff Sovern & Kate E. Walton, Are email and text messages, which some Validation Notices Valid? An Empirical Evaluation consumers may prefer.491 Consistent consumer opts out of future electronic of Consumer Understanding of Debt Collection Validation Notices, 70 SMU L. Rev. 63, 94–98 491 See Small Business Review Panel Report, method for 11 percent of consumers contacted (2017). supra note 57, at 16–17; see also CFPB Debt about a debt in collection). 495 See FMG Usability Report, supra note 41, at Collection Consumer Survey, supra note 18, at 37 492 Small Business Review Panel Report, supra 59–60. (finding that email was the most preferred contact note 57, at 38. 496 See id.

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description listed in the consumer specifically requests comment on information includes the following four response information, consumers may whether validation information should statements, listed in the following order, be likely to do so, thereby lessening the include consumer response information, using the following phrasing or number of generic disputes (e.g., a and, if so, on whether any of the substantially similar phrasing,499 each communication that only contains the proposed items should be excluded or next to a prompt: ‘‘I want to dispute the statement ‘‘I dispute’’ with no further any additional items should be added. debt because I think:’’; ‘‘This is not my detail) sent to debt collectors.497 The Bureau proposes § 1006.34(c)(4) debt’’; ‘‘The amount is wrong’’; and For these reasons, the Bureau pursuant to its authority under FDCPA ‘‘Other: (please describe on reverse or proposes requiring a consumer response section 814(d) to prescribe rules with attach additional information).’’ The information section on the validation respect to the collection of debts by debt first three proposed dispute categories notice. Specifically, proposed collectors and, as described more fully appear to capture the vast majority of § 1006.34(c)(4) provides that the below, its authority to implement and consumer disputes about the validity of validation information that must be interpret FDCPA section 809. The a debt. disclosed under § 1006.34(a)(1) includes Bureau also proposes § 1006.34(c)(4) During the SBREFA process, small certain consumer response information pursuant to its authority under section entity representatives suggested that situated next to prompts that the 1032(a) of the Dodd-Frank Act, on the including dispute prompts in the consumer could use to indicate that basis that the information in proposed validation notice could increase dispute action or request. The information, § 1006.34(c)(4)(i) through (iii) informs volume and frequency, which could which is discussed in the section-by- consumers how to exercise their rights cause debt collectors to incur more costs section analysis of proposed under FDCPA section 809(b) and investigating and responding to § 1006.34(c)(4)(i) through (iii), would therefore is a feature of debt collection. disputes. Some small entity include statements describing certain Requiring disclosure of the information representatives particularly were actions that a consumer could take, may help to ensure that the features of concerned that the consumer response including submitting a dispute, debt collection are fully, accurately, and information might increase the number identifying the reason for the dispute, effectively disclosed to consumers, such of generic disputes that lack enough providing additional detail about the that consumers may better understand detail for debt collectors to provide dispute, and requesting original-creditor the costs, benefits and risks associated responsive information to consumers. information.498 with debt collection. Several small entity representatives also Proposed § 1006.34(c)(4) provides that 34(c)(4)(i) Dispute Prompts objected to a potential dispute prompt the consumer response information that would state, ‘‘You are not the right FDCPA section 809(a)(4) requires a section must be segregated from the person to pay,’’ noting that this debt collector to disclose to consumers validation information described in statement would not provide debt their right under FDCPA section 809(b) § 1006.34(c)(1) through (3) and from any collectors enough information to to dispute the validity of the debt within optional information included pursuant respond effectively to the dispute and 30 days after receipt of the validation to § 1006.34(d)(3)(i), (ii), (iv), or (v) and, would require the debt collector to re- notice. As discussed in the section-by- if the validation information is provided contact the consumer, imposing costs on section analysis of proposed in writing or electronically, located at both debt collectors and consumers. The § 1006.34(c)(3)(i), which would the bottom of the notice and under the Small Business Review Panel Report implement and interpret FDCPA section headings, ‘‘How do you want to recommended that the Bureau consider 809(a)(4), some consumers may not respond?’’ and ‘‘Check all that apply:’’. further its proposed consumer response Requiring the consumer response adequately understand this FDCPA information, including soliciting more information section to be presented in dispute right or may face challenges when attempting to exercise it. specific disputes. this manner may help consumers In response to this feedback, the Providing consumers with prepared respond to the disclosures required proposed rule omits the dispute prompt, dispute statements may assist under § 1006.34(a)(1). Specifically, ‘‘You are not the right person to pay.’’ consumers by helping them articulate requiring the information to be located However, the proposed rule retains the the nature of their disputes. Enabling at the bottom of a validation notice may consumer response information enable consumers to use the bottom consumers to communicate specific concept. Proposed § 1006.34(c)(4)(i) may section of the notice to reply to the debt information about their disputes also facilitate consumers’ ability to exercise collector while retaining the required may reduce the number of burdensome, their dispute right, which is an disclosures located in the validation generic disputes received by debt important FDCPA protection. In notice’s upper section. Proposed collectors and may allow debt collectors addition, proposed § 1006.34(c)(2), by comment 34(c)(4)–1 would clarify that, to provide more relevant information in requiring more information about the if the validation information is provided response. debt, may help consumers recognize in writing or electronically, a prompt For this reason, and pursuant to its debts that they owe, reducing the described in § 1006.34(c)(4) may be authority to implement and interpret number of disputes arising from lack of formatted as a checkbox, as in Model FDCPA section 809(a)(4), as well as its Form B–3. authority under Dodd-Frank Act section consumer recognition and, thereby, The Bureau requests comment on 1032(a), the Bureau proposes limiting overall dispute volume. proposed § 1006.34(c)(4). The Bureau § 1006.34(c)(4)(i) to provide that Further, any information that consumers consumer response information provide in response to the free-form 497 Usability testing findings suggested that includes statements, situated next to dispute prompt in proposed consumers generally understood how to use the prompts, that the consumer can use to § 1006.34(c)(4)(i)(D) could help debt consumer response information section to indicate dispute the validity of a debt and to collectors better understand the nature a specific reason for a dispute. See id. at 59–61. of a consumer’s dispute and respond 498 As discussed in the section-by-section analysis specify a reason for that dispute. of proposed § 1006.34(d)(3)(iii)(B) and (vi)(B), a Proposed § 1006.34(c)(4)(i), which is 499 debt collector also could choose to include a designed to work in tandem with To provide debt collectors with greater payment disclosure and Spanish-language flexibility, the Bureau does not propose to require validation notice request disclosure as consumer proposed § 1006.34(c)(3)(i), would a debt collector to use the exact phrasing set forth response information. provide that consumer response in proposed § 1006.34(c)(4)(i).

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more efficiently than if consumers had section-by-section analysis of proposed collectors use letter vendors to mail provided generic disputes. § 1006.34(c)(3)(ii), which would validation notices and that, in some The Bureau requests comment on implement and interpret FDCPA section cases, the letter vendor’s mailing proposed § 1006.34(c)(4)(i), including 809(a)(5), some consumers may not address may appear on validation on whether any dispute prompts should adequately understand their right to notices in lieu of the debt collector’s be added, revised, or removed. In request original-creditor information or mailing address. The Bureau requests addition, the Bureau requests comment how to exercise it. Providing consumers comment on whether proposed on the potential risks, costs, and with a prepared statement that they § 1006.34(c)(4)(iii) would be consistent benefits of the dispute prompts for both could use to request original-creditor with current practices related to debt consumers and industry, including on information could help to address this collectors’ use of letter vendors to mail whether proposed § 1006.34(c)(4)(i) will concern. validation notices. impact dispute volumes or affect the For this reason, and pursuant to its proportion of specific disputes that debt authority to interpret FDCPA section 34(c)(5) Special Rule for Certain collectors receive as compared to 809(a)(5), as well as its authority under Residential Mortgage Debt generic disputes. Dodd-Frank Act section 1032(a), the FDCPA section 809(a)(1) requires a As discussed in the section-by-section Bureau proposes § 1006.34(c)(4)(ii) to debt collector to disclose to consumers analysis of proposed § 1006.38, the provide that consumer response the amount of the debt. As discussed in Bureau would interpret FDCPA section information includes the statement, ‘‘I the section-by-section analysis of 809(b) to require a debt collector to want you to send me the name and proposed § 1006.34(c)(2)(vii) through honor disputes that a consumer address of the original creditor,’’ using (ix), the Bureau interprets FDCPA provides via a medium of written that phrase or a substantially similar section 809(a)(1) to require debt electronic communication 500 accepted phrase, next to a prompt the consumer collectors to disclose three pieces of by the debt collector, such as a dispute could use to request original-creditor itemization-related information: The portal accessed on or through a information. Proposed § 1006.34(c)(4)(ii) itemization date; the amount of the debt hyperlink in an electronic is intended to work in tandem with on the itemization date; and an communication. The Bureau declines to proposed § 1006.34(c)(3)(ii). The Bureau itemization of the debt reflecting propose requirements related to debt requests comment on proposed interest, fees, payments, and credits collector website communications, § 1006.34(c)(4)(ii). since the itemization date.503 The including the content or formatting of 34(c)(4)(iii) Mailing Addresses Bureau proposes to establish a special dispute information accessible via rule that would replace these disclosure website or hyperlink.501 The Bureau FDCPA section 809(b) assumes that a requirements for debt collectors requests comment on whether the consumer has the ability to write to a collecting certain residential mortgage Bureau should propose rules concerning debt collector to exercise the consumer’s debt. website communications. In particular, verification rights. Requiring a debt For certain residential mortgage debt the Bureau requests comment about the collector to include mailing addresses subject to 12 CFR 1026.41, 12 CFR risks, costs, and benefits to consumers for the consumer and the debt collector, 1026.41(b) generally requires that a and industry related to prescribing which would include the consumer’s periodic statement be delivered or requirements for the content and and the debt collector’s names, along placed in the mail within a reasonably formatting of debt collector website with the consumer response information prompt time after the payment due date communications. described in proposed § 1006.34(c)(4)(i) or the end of any courtesy period and (ii), may facilitate consumers’ use of provided for the previous billing cycle. 34(c)(4)(ii) Original-Creditor that address information to exercise Information Prompt The Bureau believes that most their debt collection rights. For residential mortgage debt is subject to FDCPA section 809(a)(5) requires a example, for mailed validation notices, this requirement, although exceptions debt collector to disclose to consumers a debt collector may choose to format exist.504 The Bureau understands that a their right under FDCPA section 809(b) the addresses to appear in a return consumer is provided with such a to request the name and address of the envelope’s glassine window, which the periodic statement every billing cycle, original creditor, if different from the Bureau understands is industry practice. even when a loan is transferred between current creditor.502 As discussed in the Alternatively, the mailing address may be useful in the event the consumer 503 Proposed § 1006.34(c)(2)(x) would require 500 For ease of reference, the Bureau uses the loses the upper portion of the validation phrase ‘‘written electronic communications’’ to debt collectors also to disclose the current amount refer to emails, text messages, and other electronic notice containing the debt collector’s of the debt. communications that are readable. The Bureau’s use contact information. In this scenario, the 504 The periodic statement requirement pursuant of this phrase has no bearing on the Bureau’s consumer also could review the mailing to 12 CFR 1026.41(b) does not apply to open-end interpretation of the terms ‘‘written’’ or ‘‘in writing’’ address in the consumer response consumer credit transactions, such as a home equity under any law or regulation, including the FDCPA line of credit. See 12 CFR 1026.41(a)(1). Pursuant or the E–SIGN Act. information section to confirm that the to 12 CFR 1026.41(e), certain types of transactions 501 While the Bureau does not propose rules consumer was the intended recipient of are exempt from § 1026.41(b)’s periodic statement specifically addressing debt collector website the validation notice. For these reasons, requirement, including reverse mortgages, communications, such communications are subject and pursuant to its authority to timeshare plans, certain charged-off mortgage loans, to existing legal requirements, including those mortgage loans with certain consumers in under the FDCPA and the Dodd-Frank Act. For implement FDCPA section 809(a), as bankruptcy, and fixed-rate mortgage loans where a example, debt collectors may be liable for website well as its authority under Dodd-Frank servicer provides the consumer with a coupon book communications that violate the Dodd-Frank Act’s Act section 1032(a), the Bureau for payment. Further, small servicers as defined by prohibition on unfair, deceptive, or abusive 12 CFR 1026.41(e)(4)(ii) are entirely exempt from practices, or the overshadowing prohibition under proposes § 1006.34(c)(4)(iii) to provide the periodic statement requirement. Where the FDCPA section 809(b). that consumer response information § 1026.41(b) periodic statement was not provided, 502 Proposed § 1006.34(c)(2)(iv) also would includes mailing addresses for the a debt collector collecting debts related thereto require that the validation notice include the name consumer and the debt collector. would not be able to satisfy proposed of the creditor to whom the debt was owed on the The Bureau requests comment on § 1006.34(c)(2)(vii) through (ix) by providing a itemization date, if the debt collector is collecting consumer, at the same time as the validation notice, a consumer financial product or service debt, as proposed § 1006.34(c)(4)(iii). The a copy of the most recent periodic statement defined in proposed § 1006.2(f). Bureau understands that some debt provided to the consumer under § 1026.41(b).

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servicers. Pursuant to Regulation Z, 12 and services are disclosed fully, 34(d) Form of Validation Information CFR 1026.41(d)(3), such a periodic accurately, and effectively. The Bureau 34(d)(1) In General statement must include a past payment proposes this requirement on the basis breakdown, which shows the total of all that the information otherwise required 34(d)(1)(i) payments received since the last to be disclosed under FDCPA section 809(a)’s required statement, including a breakdown § 1006.34(c)(2)(vii) through (ix) is a disclosures will be ineffective unless a showing the amount, if any, that was feature of debt collection and the debt collector discloses them in a applied to principal, interest, escrow, alternative information that proposed manner that is readily understandable to fees, and charges, and the amount, if § 1006.34(c)(5) would permit is equally consumers. For this reason, the Bureau any, sent to any suspense or unapplied effective and accurate for the collection proposes § 1006.34(d)(1) to require that funds account. the validation information described in The Bureau believes that these of debts subject to 12 CFR 1026.41. For the reasons described above, the Bureau § 1006.34(c) be conveyed in a clear and periodic statement disclosures may be conspicuous manner. As discussed in proposes § 1006.34(c)(5) to ensure that functionally equivalent to, and as useful the section-by-section analysis of the debt, which is a feature of debt for the consumer as, the information § 1006.34(b)(1), the Bureau proposed to described in proposed collection, is fully, accurately, and define the term clear and conspicuous § 1006.34(c)(2)(vii) through (ix). For effectively disclosed in a manner that consistent with the standards used in example, 12 CFR 1026.41(d)(3) requires permits the consumer to understand the other consumer financial services laws that the past payment breakdown reflect costs, benefits, and risks associated with and their implementing regulations. The payments, interest, and other charges debt collection. clear and conspicuous standard would since the last periodic statement. This The Bureau requests comment on apply to written, electronic, and oral requirement is consistent with the proposed § 1006.34(c)(5) and on disclosures. proposed rule: Pursuant to proposed comment 34(c)(5)–1. In particular, the The Bureau proposes § 1006.34(b)(3)’s itemization date Bureau requests comment on the § 1006.34(d)(1)(i) to implement and definition, a debt collector may use the application of proposed § 1006.34(c)(5) interpret FDCPA section 809(a), and date of the last periodic statement as the to mortgage debt for which consumers pursuant to its authority under FDCPA reference date for the itemization- section 814(d) to prescribe rules with were provided coupon books. For related information required by respect to the collection of debts by debt instance, the Bureau believes that for proposed § 1006.34(c)(2)(vii) through collectors. The Bureau also proposes (ix). Further, the periodic statement mortgage debt for which consumers § 1006.34(d)(1)(i) pursuant to its required by 12 CFR 1026.41(b) is were provided coupon books, debt authority under section 1032(a) of the tailored to disclose mortgage collectors could comply with proposed Dodd-Frank Act to prescribe rules to information effectively. For example, § 1006.34(c)(5) because servicers ensure that the features of consumer the periodic statement under 12 CFR generally have a practice of providing financial products and services are 1026.41(d) specifically addresses periodic statements to delinquent disclosed fully, accurately, and disclosure of escrow and suspense consumers, even if coupon books were effectively. The Bureau proposes this account information. Proposed previously provided. The Bureau also requirement on the basis that validation § 1006.34(c)(2)(vii) through (ix), which requests comment on the extent to information is a feature of debt applies to debts more generally, is silent which creditors, assignees, and servicers collection and this information must be with respect to these mortgage-specific for transaction types that are exempt readily understandable to be effectively concepts. from 12 CFR 1026.41(b)’s periodic and accurately disclosed. The Bureau For these reasons, proposed statement requirement pursuant to requests comment on proposed § 1006.34(c)(5) would establish that, for § 1026.41(e) nevertheless provide § 1006.34(d)(1)(i). debts subject to Regulation Z, 12 CFR periodic statements voluntarily and, if 1026.41, a debt collector need not 34(d)(1)(ii) so, whether the Bureau should clarify provide the validation information As discussed in the section-by-section described in § 1006.34(c)(2)(vii) through how proposed § 1006.34(c)(5) would analysis of proposed § 1006.34(d)(2), the (ix) if the debt collector provides the apply in those circumstances. The Bureau proposes Model Form B–3 in consumer, at the same time as the Bureau also requests comment on the appendix B as a model validation notice validation notice, a copy of the most application of proposed § 1006.34(c)(5) form that debt collectors could use to recent periodic statement provided to to servicers exempt from 12 CFR comply with the disclosure the consumer under 12 CFR 1026.41(b), 1026.41(b)’s periodic statement requirements of proposed and refers to that periodic statement in requirement pursuant to § 1026.41(e), § 1006.34(a)(1) and (d)(1). Model Form the validation notice. Proposed such as small servicers or servicers B–3 was developed over multiple comment 34(c)(5)–1 provides examples servicing mortgage loans that have been rounds of consumer testing and through clarifying how debt collectors may charged off, and servicers who provide additional feedback and consideration, comply with § 1006.34(c)(5). modified periodic statements pursuant as described in part III.B above. The The Bureau proposes § 1006.34(c)(5) to 12 CFR 1026.41(f) where a consumer Bureau believes that this form to implement and interpret the FDCPA on the mortgage loan is a debtor in effectively discloses the information section 809(a)(1) requirement that the bankruptcy. Finally, the Bureau also described in proposed § 1006.34(c). For validation notice include the amount of requests comment on whether there are the same reasons and pursuant to the the debt, and pursuant to its FDCPA other debt types, such as student loan same authority discussed in the section- section 814(d) authority to prescribe debt, for which the information by-section analysis of proposed rules with respect to the collection of described in proposed § 1006.34(c)(vii) § 1006.34(d)(1)(i), proposed debts by debt collectors. The Bureau § 1006.34(d)(1)(ii) would require that, if through (ix) may duplicate existing also proposes this requirement under provided in a validation notice, the disclosure requirements. section 1032(a) of the Dodd-Frank Act to content, format, and placement of the prescribe rules to ensure that the information described in proposed features of consumer financial products § 1006.34(c) and the optional

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disclosures permitted by proposed reducing any possible confusion or explains that a debt collector who § 1006.34(d)(3) must be substantially deception. includes on Model Form B–3 the similar to proposed Model Form B–3 in optional disclosures described in 34(d)(2) Safe Harbor appendix B. proposed § 1006.34(d)(3) continues to be Proposed comment 34(d)(1)(ii)–1 A model validation notice form that in compliance as long as those explains that a debt collector may make provides a safe harbor may benefit both disclosures are made consistent with the certain changes to the content, format, consumers and debt collectors. A model instructions in § 1006.34(d)(3). Further, and placement of the validation validation notice form may effectively proposed comment 34(d)(2)–1 explains information described in § 1006.34(c) as disclose validation information required that a debt collector may embed long as the resulting disclosures are by § 1006.34(a)(1) in a manner that hyperlinks in Model Form B–3 if substantially similar to Model Form B– permits consumers to understand the delivering the form electronically and 3 in appendix B of the regulation. costs, benefits, and risks associated with continue to be in compliance as long as Proposed comment 34(d)(1)(ii)–1 also debt collection. Further, a model form the hyperlinks are included consistent provides an example of a change that may afford debt collectors protection with § 1006.34(d)(4)(ii). from liability that could arise if they debt collectors may make to the The Bureau requests comment on developed and used their own forms. validation notice if the consumer is proposed § 1006.34(d)(2) and on During the SBREFA process, small deceased. As described in the section- proposed comment 34(d)(2)–1. In entity representatives asserted that a by-section analyses of §§ 1006.2(e) and particular, the Bureau requests comment model form that provided protection 1006.6(a)(4), the proposal includes on whether the Bureau should provide from liability would promote efficiency interpretations of the term consumer additional clarification about how to and predictability for debt collectors by designed to clarify communications deliver Model Form B–3 electronically reducing legal risk.506 Because of these between debt collectors and individuals in a manner that affords protection from potential benefits, the Bureau has attempting to resolve the debts of a liability pursuant to proposed developed a model validation notice— deceased consumer, including provision § 1006.34(d)(2). For example, the Bureau of the validation notice to such Model Form B–3 in appendix B. requests comment on whether to individuals. Although the validation Model Form B–3 was evaluated over prescribe or define additional formatting notice will contain the name of the multiple rounds of consumer testing, as requirements (e.g., type size) or delivery deceased consumer, some persons who described in part III.B above, as well as standards for validation notices are authorized to act on behalf of the through additional feedback and delivered electronically. The Bureau deceased consumer’s estate may be consideration.507 Based on this testing, also requests comment on the risks, misled by the use of second person the Bureau believes that Model Form B– costs, and benefits to consumers and pronouns such as ‘‘you’’ in the 3 effectively discloses the validation industry of extending the protection validation notice. For example, the information required by § 1006.34(a)(1). from liability pursuant to proposed model validation notice states that ‘‘you Because of Model Form B–3’s owe’’ the debt collector. effectiveness, and pursuant to its § 1006.34(d)(2) to validation notices While nothing in the proposed rule authority under section 1032(b) of the delivered electronically. would prohibit a debt collector from Dodd-Frank Act, the Bureau proposes 34(d)(3) Optional Disclosures including a cover letter to explain the § 1006.34(d)(2) to permit a debt collector nature of the validation notice, to comply with § 1006.34(a)(1)(i) and Proposed § 1006.34(d)(3) provides proposed comment 34(d)(1)(ii)–1 also (d)(1) by using Model Form B–3 in that a debt collector may include the would clarify that a debt collector may appendix B. optional information described in modify inapplicable language in the Proposed comment 34(d)(2)–1 proposed § 1006.34(d)(3)(i) through (vi) validation notice that could suggest that explains that, although the use of Model if providing the validation information the recipient of the notice is liable for Form B–3 in appendix B is not required, required by § 1006.34(a)(1). These the debt. For example, if a debt collector a debt collector who uses the model optional disclosures may assist debt sends a validation notice to a person form, including a debt collector who collectors and consumers by providing who is authorized to act on behalf of the delivers the model form electronically, additional information about the debt deceased consumer’s estate, and if that will be in compliance with the and consumers’ rights with respect to person is not liable for the debt, the debt disclosure requirements of debt collection in a manner that does collector may use the deceased § 1006.34(a)(1)(i) and (d)(1) and the not violate FDCPA section 809(b)’s consumer’s name instead of ‘‘you.’’ In requirements of FDCPA section 809(a). overshadowing prohibition, a other contexts, such as mortgage Proposed comment 34(d)(2)–1 also prohibition implemented by servicing, the Bureau has allowed § 1006.38(b). Under the proposal, servicers to include an explanatory 506 Small Business Review Panel Report, supra providing the disclosures in proposed note 57, at 22; see also Johnson v. Revenue Mgmt. § 1006.34(d)(3) would not be regarded as notice and acknowledgement form, add Corp., 169 F.3d 1057, 1059–60 (7th Cir. 1999) an affirmative disclosure, or adjust (holding that where a validation notice included overshadowing or inconsistent with the language in required notices to reduce demands for ‘‘prompt payment’’ and that the disclosure about the consumer’s right to the risk of confusion to successors in consumer call the debt collector ‘‘immediately,’’ dispute the debt or request the name 505 such statements may confuse a consumer or and address of the original creditor. The interest. The Bureau proposes a overshadow their verification rights); Adams v. Law similar approach in § 1006.34 and Offices of Stuckert & Yates, 926 F.Supp. 521, 527 Bureau proposes § 1006.34(d)(3) to comment 34(d)(1)(ii)–1. The Bureau (E.D. Pa. 1996) (holding that a validation notice implement and interpret FDCPA section requests comment on proposed threatening a lawsuit violated the FDCPA); Vaughn 809(a) and (b) and pursuant to its v. CSC Credit Servs., Inc. (No. 93–4151), 1995 WL comment 34(d)(1)(ii)–1, on the risk of 51402, at *3 (N.D. Ill. Feb. 3, 1995) (holding that FDCPA section 814(d) authority to confusion or deception caused by the a statement on a validation notice about a debt’s prescribe rules with respect to the second-person framing of the model potential negative impact on consumer’s credit collection of debts by debt collectors validation notice in the deceased- score violated FDCPA section 809(b) because it and pursuant to its authority under overshadowed the verification rights disclosures). section 1032(a) of the Dodd-Frank Act to consumer context, and on options for 507 See generally FMG Cognitive Report, supra note 40; FMG Usability Report, supra note 41; FMG prescribe rules to ensure that the 505 81 FR 72160, 72182 (Oct. 19, 2016). Summary Report, supra note 42. features of consumer financial products

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and services are disclosed fully, notice.510 The Bureau also received Bureau requests comment on proposed accurately, and effectively. feedback from debt collectors requesting § 1006.34(d)(3)(iii), including on the ability to request payment from whether the payment disclosures should 34(d)(3)(i) Telephone Contact consumers when providing validation be permitted and, if so, whether the Information information. For example, during the payment disclosures should be Telephone communications may SBREFA process, small entity modified. representatives requested the ability to benefit both debt collectors and 34(d)(3)(iv) Disclosures Required by include payment options in the consumers by providing a low-cost and Applicable Law convenient communication method. consumer response information that 511 Some States require specific Debt collectors routinely contact § 1006.34(c)(4) would require. disclosures to appear on the validation consumers by telephone and currently Consumer advocates recommended notice. The Small Business Review include their telephone numbers in that the Bureau prohibit debt collectors Panel Report recommended that the validation notices. Also, some from including payment disclosures Bureau consider how to reconcile the consumers may prefer to engage with along with validation information. Bureau’s model validation notice and debt collectors by telephone rather than Consumer advocates expressed concerns such required State law disclosures.514 by other communication methods.508 that a consumer who desires to dispute The Bureau also understands that some For these reasons, proposed a debt might misconstrue the disclosure courts have prescribed additional § 1006.34(d)(3)(i) would permit a debt to require the consumer to submit a validation notice disclosure collector to include the debt collector’s payment in order to exercise the FDCPA dispute right. The Bureau’s proposal requirements, or have fashioned telephone contact information, does not treat these concerns as optional disclosures that offer a safe including telephone number and the persuasive. While some formulations of harbor to debt collectors providing times that the debt collector accepts a payment disclosure could create a information required by the FDCPA. For consumer telephone calls, along with false sense of urgency or exaggerate the example, several courts have crafted the validation information. The Bureau consequences of non-payment,512 the language that debt collectors may use to requests comment on proposed Bureau believes that payment comply with FDCPA section 809(a)(1) § 1006.34(d)(3)(i). disclosures can be designed to articulate by disclosing that the amount of a debt 34(d)(3)(ii) Reference Code payment requests in a neutral, non- may vary because of accruing interest threatening manner. Moreover, the and fees.515 In response to these judicial Many debt collectors currently Bureau’s consumer testing indicates that opinions, industry commenters have include reference codes on validation consumers who encounter a payment requested that the Bureau address how notices for administrative purposes. disclosure on a validation notice debt collectors may disclose that the Proposed § 1006.34(d)(3)(ii) would understand that a payment is not amount of a debt may vary because of accommodate this practice by required to dispute a debt.513 accruing interest and fees. permitting a debt collector to include, For these reasons, the Bureau To enable debt collectors to comply along with the validation information, a proposes to allow debt collectors to both with § 1006.34(a)(1) and with other number or code that the debt collector include certain payment disclosures applicable disclosure requirements, the uses to identify the debt or the along with the validation information. Bureau proposes § 1006.34(d)(3)(iv) to consumer. The Bureau requests Proposed § 1006.34(d)(3)(iii) would permit a debt collector to include, on comment on proposed permit a debt collector to include the front of the validation notice, a § 1006.34(d)(3)(ii). certain payment disclosures in the statement that other disclosures required by applicable law appear on 34(d)(3)(iii) Payment Disclosures validation notice. Proposed § 1006.34(d)(3)(iii) would require that the reverse of the form and, on the Payment disclosures that provide a these optional payment disclosures be reverse of the validation notice, any method to easily send payment to a debt no more prominent than any of the such legally required disclosures. collector may benefit both consumers validation information described in Proposed comment 34(d)(3)(iv)–1 and debt collectors. For consumers who proposed § 1006.34(c). Proposed provides examples of disclosure recognize and choose to repay all or part § 1006.34(d)(3)(iii)(A) would allow the requirements that proposed of a debt, payment disclosures may debt collector to include in the § 1006.34(d)(3)(iv) would cover, make the transaction more efficient and validation notice the statement ‘‘Contact including disclosures required by State convenient. For consumers who us about your payment options,’’ using statutes or regulations and disclosures determine that they owe a debt but may that phrase or a substantially similar required by judicial opinions or orders. not be ready to repay all of it at that phrase. Proposed § 1006.34(d)(3)(iii)(B) The Bureau requests comment on time, payment disclosures may facilitate would allow the debt collector to proposed § 1006.34(d)(3)(iv) and on a discussion that can lead to repayment, include in the consumer response comment 34(d)(3)(iv)–1. The Bureau requests comment on conflicts that settlement, or a payment plan.509 information section that would be might arise between the Bureau’s model Consumer testing suggests that required by proposed § 1006.34(c)(4) the validation notice and other disclosures consumers believe that a payment statement, ‘‘I enclosed this amount,’’ required by applicable law. In option is an important disclosure that using that phrase or a substantially particular, the Bureau requests comment should appear in the validation similar phrase, payment instructions after that statement, and a prompt. The on whether proposed § 1006.34(d)(3)(iv) would allow debt collectors to comply 508 A Bureau survey found that 30 percent of consumers who had been contacted about a debt in 510 FMG Cognitive Report, supra note 40, at 17– with applicable law, including on the prior year would most prefer to be contacted 19. about a debt in collection at a non-work telephone 511 Small Business Review Panel Report, supra 514 Small Business Review Panel Report, supra number, as compared to a work telephone number, note 57, at 22–23. note 57, at 34. postal mail, email, or in-person visits. See CFPB 512 FMG Focus Group Report, supra note 38, at 515 See, e.g., Avila v. Riexinger & Associates, LLC, Debt Collection Consumer Survey, supra note 18, at 11–12. 817 F.3d 72, 77 (2d Cir. 2016); Miller v. McCalla, 36–37. 513 FMG Usability Report, supra note 41, at 59– Raymer, Padrick, Cobb, Nichols, and Clark, LLC, 509 FMG Focus Group Report, supra note 38, at 9. 61. 214 F.3d 872, 876 (7th Cir. 2000).

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whether any disclosures required by to debt collection. Consumers with costs, or risks posed for consumers and applicable law must be included on the limited English proficiency may benefit industry by the disclosure described in front of the validation notice. The from translations of the validation proposed § 1006.34(d)(3)(vi)(A); (3) Bureau also requests comment on notice in some circumstances, and examples of supplemental Spanish- whether proposed § 1006.34(d)(3)(iv) Spanish speakers represent the second- language instructions for requesting a should cover a debt collector who largest language group in the United translated validation notice that debt includes on the reverse of the model States after English speakers.518 collectors may wish to provide pursuant form disclosures that are permitted, but Spanish-speaking consumers with to proposed § 1006.34(d)(3)(vi)(A); and not required, by applicable law. limited English proficiency may benefit (4) the benefits or risks this from a Spanish-language disclosure supplemental language disclosure may 34(d)(3)(v) Information About Electronic informing them of their ability to present, including whether such Communications request a Spanish-language translation, supplementary information would make Despite the advent of new if a debt collector chooses to make such the proposed § 1006.34(d)(3)(vi)(A) technologies, the bulk of debt collection a translation available. Further, debt disclosure less effective. communication continues to occur by collectors may wish to provide 34(d)(3)(vi)(B) telephone and mail. Promoting newer validation information in Spanish, as technologies may be beneficial both to doing so may facilitate their Proposed § 1006.34(d)(3)(vi)(B) would consumers and debt collectors. During communications with consumers. For permit debt collectors to provide a the SBREFA process, small entity these reasons, proposed statement in Spanish in the consumer representatives supported the Bureau’s § 1006.34(d)(3)(vi) would allow debt response information section that a proposal to clarify how debt collectors collectors to include along with the consumer can use to request a Spanish- could use newer communication validation information optional language validation notice. Proposed technologies, such as email and text Spanish-language disclosures that § 1006.34(d)(3)(vi)(B) would permit the messages, and some consumers may consumers may use to request a consumer response information section prefer electronic communications to Spanish-language validation notice. required by § 1006.34(c)(4) to include traditional communication methods.516 the statement, ‘‘Quiero esta forma en Consistent with this feedback, the Small 34(d)(3)(vi)(A) espan˜ ol,’’ using that phrase or a Business Review Panel Report Proposed § 1006.34(d)(3)(vi)(A) would substantially similar phrase in Spanish. recommended that the Bureau consider permit a debt collector to provide a In English, this phrase means ‘‘I want whether the debt collection rule should statement in Spanish informing a this form in Spanish.’’ Proposed promote newer communication consumer that the consumer can request § 1006.34(d)(3)(vi)(B) would require this technologies, and, if so, establish a Spanish-language validation notice. statement to be next to a prompt, which guidelines for their appropriate use.517 Specifically, proposed the consumer could use to request a For these reasons, proposed § 1006.34(d)(3)(vi)(A) would allow the Spanish-language validation notice. The § 1006.34(d)(3)(v) would permit certain statement, ‘‘Po´ngase en contacto con Bureau requests comment on proposed information about electronic nosotros para solicitar una copia de este § 1006.34(d)(3)(vi)(B). ˜ communications to appear along with formulario en espanol,’’ using that 34(d)(4) Validation Notices Delivered the validation information. First, phrase or a substantially similar phrase Electronically proposed § 1006.34(d)(3)(v)(A) would in Spanish. In English, this phrase permit debt collectors to provide the means, ‘‘You may contact us to request As discussed in the section-by-section debt collector’s website and email a copy of this form in Spanish.’’ If analysis of proposed § 1006.42, address. Second, as discussed above, providing this optional disclosure, a promoting electronic communications proposed § 1006.34(c)(3)(v) provides debt collector may include may benefit consumers and debt that, if a debt collector sends a supplemental information in Spanish collectors. Allowing debt collectors to validation notice electronically, the debt that specifies how a consumer may make certain formatting modifications collector must include a statement request a Spanish-language validation to validation notices delivered explaining how a consumer can take the notice. Proposed comment electronically may help consumers actions described in proposed 34(d)(3)(vi)(A)–1 explains that, for exercise their verification rights under § 1006.34(c)(4) electronically. Proposed example, a debt collector may provide a FDCPA section 809. Certain formatting § 1006.34(d)(3)(v)(B) would permit a statement in Spanish that a consumer modifications also may facilitate a debt debt collector to include the statement can request a Spanish-language collector’s ability to process and described in proposed § 1006.34(c)(3)(v) validation notice by telephone or email. understand a consumer’s response to a for validation notices not provided The Bureau requests comment on validation notice delivered electronically. The Bureau requests proposed § 1006.34(d)(3)(vi)(A) and on electronically. Accordingly, the Bureau comment on proposed comment 34(d)(3)(vi)(A)–1. The Bureau proposes § 1006.34(d)(4) to permit a § 1006.34(d)(3)(v). specifically requests comment on: (1) debt collector to, at its option, format a Debt collectors’ current collections validation notice delivered 34(d)(3)(vi) Spanish-Language activities conducted in Spanish, as well electronically in the manner described Translation Disclosures as other non-English languages, in proposed § 1006.34(d)(4)(i) and 519 Validation information includes including whether debt collectors (ii). The Bureau proposes § 1006.34(d)(4) important information about the debt provide validation notices in non- to implement and interpret FDCPA and the consumer’s rights with respect English languages; (2) any benefits, section 809(a) by establishing formatting requirements that facilitate the 516 Small Business Review Panel Report, supra 518 As of 2016, 40 million residents in the United note 57, at 16–17; CFPB Debt Collection Consumer States aged five and older spoke Spanish at home. consumer’s right to dispute a debt and Survey, supra note 18, at 37 (finding that email was See U.S. Census Bureau, Profile America for Facts the most preferred contact method for 11 percent for Features CB17–FF.17: Hispanic Heritage Month 519 As described in proposed § 1006.42(b)(4), the of consumers contacted about a debt in collection). 2017, at 4 (Oct. 17, 2017), https://www.census.gov/ Bureau proposes additional formatting 517 Small Business Review Panel Report, supra newsroom/facts-for-features/2017/hispanic- requirements applicable to validation notices note 57, at 38. heritage.html. delivered electronically.

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request original-creditor information, collector’s individual debt collection consistent with the debt collector’s and pursuant to its FDCPA section practices and preferences. At the same individual debt collection practices and 814(d) authority to prescribe rules with time, some consumers who receive preferences in a manner that does not respect to the collection of debts by debt translated disclosures may also desire to impose undue burden. collectors. The Bureau also proposes receive English-language disclosures, The Bureau requests comment on these requirements under section either because they are fluent in proposed § 1006.34(e) and on comment 1032(a) of the Dodd-Frank Act to English, or because they wish to share 34(e)–1. The Bureau also requests prescribe rules to ensure that the the disclosures with an English- comment on whether debt collectors features of consumer financial products speaking spouse or assistance provider. should be required to provide a and services are disclosed fully, English-language disclosures may also validation notice translated into a non- accurately, and effectively. The Bureau allow consumers to confirm the English language at a consumer’s requests comment on proposed accuracy of the translation. request. § 1006.34(d)(4). For these reasons, the Bureau The Bureau proposes § 1006.34(e) proposes § 1006.34(e) to provide that a pursuant to its authority under section 34(d)(4)(i) Prompts debt collector may send a consumer the 1032(a) of the Dodd-Frank Act to Proposed § 1006.34(d)(4)(i) would validation notice completely and prescribe rules to ensure that the permit a debt collector delivering a accurately translated into any language, features of consumer financial products validation notice electronically if the debt collector also sends an and services are disclosed fully, pursuant to § 1006.42 to display any English-language validation notice in accurately, and effectively. The Bureau prompt required by § 1006.34(c)(4)(i) or the same communication that satisfies proposes § 1006.34(e) to ensure that the (ii) or (d)(3)(iii)(B) or (vi)(B) as a fillable proposed § 1006.34(a)(1). If a debt features of debt collection are fully, field. Allowing a debt collector to collector already has provided a accurately, and effectively disclosed. design a validation notice delivered consumer an English-language Section 1006.38 Disputes and Requests electronically so that a consumer can validation notice that satisfies proposed for Original-Creditor Information take the actions described in proposed § 1006.34(a)(1) and subsequently § 1006.34(c)(4) by clicking a prompt provides the consumer a validation FDCPA section 809(b) requires debt would benefit consumers and industry. notice translated into any other collectors both to refrain from taking The Bureau believes that this design language, the debt collector need not certain actions during the 30 days after modification would help consumers provide an additional copy of the the consumer receives the validation exercise their FDCPA verification rights. English-language notice. Proposed information or notice described in Further, the Bureau believes this design comment 34(e)–1 would clarify that the FDCPA section 809(a) (i.e., during the modification would improve consumer language of a validation notice obtained validation period) and to take certain engagement and facilitate a debt from the Bureau’s website is considered actions if a consumer either disputes the collector’s ability to process and a complete and accurate translation, debt in writing, or requests the name understand a consumer’s response to although debt collectors are permitted to and address of the original creditor in the validation notice. The Bureau use other validation notice translations writing, during the validation period.521 requests comment on proposed so long as they are accurate and FDCPA section 809(c) states that a § 1006.34(d)(4)(i). complete. consumer’s failure to dispute a debt Consumer advocacy groups have under FDCPA section 809(b) may not be 34(d)(4)(ii) Hyperlinks commented that debt collectors should construed by any court as an admission Proposed § 1006.34(d)(4)(ii) would be required to provide validation of liability.522 Proposed § 1006.38 permit a debt collector delivering a notices translated into other languages, would implement and interpret FDCPA validation notice electronically to in particular Spanish, at a consumer’s section 809(b) and (c) as discussed embed hyperlinks into the validation request. For example, some consumer below. Except as otherwise noted, the notice that, when clicked, connect advocacy groups suggested that debt Bureau proposes § 1006.38 pursuant to consumers to the debt collector’s collectors should be required to provide its authority under FDCPA section website or permit consumers to take the a Spanish-language translation on the 814(d) to prescribe rules with respect to actions described in proposed reverse of every English-language the collection of debts by debt § 1006.34(c)(4). This formatting validation notice.520 The Bureau collectors. modification may help consumers declines to propose a mandatory Proposed comment 38–1 would exercise their FDCPA verification rights requirement that debt collectors provide clarify the applicability of § 1006.38 in when they are already engaging with the translated validation notices to the decedent debt context. As described validation notice in an online setting. consumers. Requiring debt collectors to in the section-by-section analysis of This modification also may improve provide a translation on a separate page § 1006.2(e), the Bureau proposes to consumer engagement and facilitate a with each validation notice could result interpret the term consumer in FDCPA debt collector’s ability to process and in significant cost on a cumulative, section 803(3) to include deceased understand a consumer’s response to industry-wide basis, especially for consumers.523 This interpretation would the validation notice. The Bureau smaller debt collectors and for apply to FDCPA section 809(b), as requests comment on proposed languages whose use is not prevalent in implemented by § 1006.38, so that a § 1006.34(d)(4)(ii). the United States. Proposed § 1006.34(e) deceased consumer (i.e., that may strike an appropriate balance by consumer’s estate) would have the same 34(e) Translations Into Other Languages allowing a debt collector to provide rights under FDCPA section 809(b) as Consumers with limited English translated validation notices if they are proficiency may benefit from translated complete and accurate and doing so is 521 15 U.S.C. 1692g(b). disclosures, and some debt collectors 522 15 U.S.C. 1692g(c). may want to respond to the needs of 520 The Bureau raised such an alternative 523 The Bureau proposes to define the term consumers with limited English approach as a proposal under consideration in the consumer to include ‘‘any natural person, whether Small Business Review Panel Outline. See Small living or deceased, obligated or allegedly obligated proficiency using translated disclosures, Business Review Panel Outline, supra note 56, at to pay any debt.’’ See the section-by-section if doing so is consistent with the debt appendix F. analysis of proposed § 1006.2(e).

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any living consumer. Accordingly, rulemaking authority under a statute to not include new and material proposed comment 38–1 would clarify interpret by regulation the application supporting information. that, if the debt collector knows or of E-SIGN Act section 101 to that Proposed comment 38(a)(1)–1 would should know that the consumer is statute.528 clarify that, for purposes of § 1006.38(a)(1), a later dispute can be deceased, and if the debt collector has The Bureau proposes to interpret the substantially the same as an earlier not previously sent the deceased applicability of the E-SIGN Act as it consumer a written validation notice, dispute even if the later dispute does relates to FDCPA section 809(b)’s then a person who is authorized to act not repeat verbatim the language of the writing requirement for consumer on behalf of the deceased consumer’s earlier dispute. Proposed comment disputes or requests for original-creditor estate 524 operates as the consumer for 38(a)(1)–2 would clarify that, for purposes of § 1006.38. Proposed information. Specifically, the Bureau purposes of § 1006.38(a)(1), information comment 38–1 provides that, if such a would interpret FDCPA section 809(b)’s is new if the consumer did not provide person submits either a written request writing requirement as being satisfied the information when submitting an for original-creditor information or a when a consumer submits a dispute or earlier dispute, and information is written dispute to the debt collector request for original-creditor information material if it is reasonably likely to during the validation period, then using a medium of electronic change the verification the debt § 1006.38(c) or (d)(2)(i), respectively, communication through which a debt collector provided or would have would require the debt collector to collector accepts electronic provided in response to the earlier respond to that request or dispute. In communications from consumers, such dispute. Proposed comment 38(a)(1)–2 addition, just as with living consumers, as email or a website portal.529 Thus, also provides an example of new and the proposal would require a debt debt collectors would be required to material information. collector attempting to collect a debt give legal effect to consumer disputes or The Bureau requests comment on from a deceased consumer’s estate to requests for original-creditor proposed § 1006.38(a)(1) and its related cease collection of the debt until, where information submitted electronically commentary. In particular, the Bureau appropriate, the debt collector has only if a debt collector chooses to accept requests comment on whether to specify mailed the name and address of the electronic communications from criteria for determining whether one original creditor or provided verification consumers. The Bureau proposes to dispute is substantially similar to of the debt. codify this interpretation of the E-SIGN another dispute, and, if so, what those Proposed comment 38–2 also applies Act in comment 38–3. The Bureau criteria should be. In addition, the generally to proposed § 1006.38. requests comment on proposed Bureau requests comment on the Proposed comment 38–2 notes that comments 38–1 through 3. estimated percentage of current repeat proposed § 1006.38 contains disputes that would qualify as requirements related to a dispute or 38(a) Definitions duplicative disputes under the request for original-creditor information 38(a)(1) Duplicative Dispute definition in proposed § 1006.38(a)(1), timely submitted in writing by the including whether and how that figure consumer. Proposed comment 38–2 lists The Bureau proposes to define the is likely to vary by debt type. three examples of forms of term duplicative dispute in 38(a)(2) Validation Period communication that the consumer can § 1006.38(a)(1). The Bureau proposes To facilitate compliance in use for these purposes. The second § 1006.38(a)(1) as an interpretation of responding to disputes or requests for example is a medium of electronic FDCPA section 809(b) and to facilitate original-creditor information, proposed communication; the Bureau proposes compliance with proposed § 1006.38(a)(2) provides that the term this example in light of section 101 of § 1006.38(d)(2)(ii), which would validation period as used in § 1006.38 the E-SIGN Act.525 establish an alternative to proposed has the same meaning given to it in The E-SIGN Act could affect whether § 1006.38(d)(2)(i) 530 applicable if a debt § 1006.34(b)(5). a consumer satisfies the ‘‘in writing’’ collector reasonably has determined that requirement of FDCPA section 809(b) by a dispute is a duplicative dispute. 38(b) Overshadowing of Rights To submitting a dispute or request for Proposed § 1006.38(a)(1) would define Dispute or Request Original-Creditor original-creditor information the term duplicative dispute to mean a Information electronically. Section 101(a)(1) of the dispute submitted by the consumer in FDCPA section 809(b) provides that, E-SIGN Act generally provides that a writing within the validation period that for 30 days after the consumer receives record relating to a transaction in or satisfies two criteria. The first criterion the validation information or notice affecting interstate or foreign commerce is that the dispute is substantially the described in FDCPA section 809(a), a may not be denied legal effect, validity, same as a dispute previously submitted debt collector must not engage in or enforceability solely because it is in by the consumer in writing within the collection activities or communications 526 electronic form. However, section validation period for which the debt that overshadow or are inconsistent 101(b)(2) of the E-SIGN Act does not collector already has satisfied the with the disclosure of the consumer’s require any person to agree to use or requirements of § 1006.38(d)(2)(i). The right to dispute the debt or request accept electronic records or electronic second criterion is that the dispute does information about the original signatures, other than a governmental creditor.531 Proposed § 1006.38(b) agency with respect to a record other 528 15 U.S.C. 7004(b)(1)(A). 527 than a contract to which it is a party. 529 This interpretation is responsive to consumer 531 15 U.S.C. 1692g(b). This language was added Section 104(b)(1)(A) of the E-SIGN Act advocates’ feedback recommending that, if a debt to the FDCPA by the Financial Services Regulatory permits a Federal agency with collector makes an electronic means of Relief Act of 2006, Public Law 109–351, section communication available to consumers, electronic 802(c), 120 Stat. 2006 (2006), after an FTC advisory communications received from consumers through opinion on the same subject. See Fed. Trade 524 See the section-by-section analysis of that channel should satisfy FDCPA section 809(b). Comm’n, Advisory Opinion to American Collector’s proposed § 1006.6(a)(4) and comment 6(a)(4)–1. 530 Proposed § 1006.38(d)(2)(i) would implement Ass’n (Mar. 31, 2000) (opining that the 30-day 525 15 U.S.C. 7001(a). the requirements in FDCPA section 809(b) regarding period set forth in FDCPA section 809(a) ‘‘is a 526 15 U.S.C. 7001(a)(1). disputes and verification. See the section-by-section dispute period within which the consumer may 527 15 U.S.C. 7001(b)(2). analysis of proposed § 1006.38(d)(2)(i). Continued

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would implement this prohibition and debt, until the debt collector obtains responded.536 An industry commenter generally restates the statute, with only verification of the debt or a copy of a also estimated that, for medical debts, minor changes for style and clarity. judgment and mails it to the the percentage of repeat disputes may be consumer.534 Proposed § 1006.38(d) as high as 50 or 60 percent of all 38(c) Requests for Original-Creditor disputes. Members of the debt collection Information would implement and interpret this requirement as follows. industry have also expressed FDCPA section 809(b) provides that, if uncertainty about how FDCPA section a consumer requests the name and 38(d)(2)(i) 809(b)—which, as discussed above, address of the original creditor in Proposed § 1006.38(d)(2)(i) would requires a debt collector who receives a writing within 30 days of receiving the implement FDCPA section 809(b)’s written dispute within the validation validation information or notice general requirements regarding disputes period to cease collecting the debt, or described in FDCPA section 809(a), the and verification. Proposed any disputed portion of the debt, until debt collector must cease collection of § 1006.38(d)(2)(i) generally mirrors the it provides the consumer with a copy the debt until the debt collector obtains statute, with minor changes for style either of verification of the debt or of a and mails that information to the and clarity. However, to accommodate judgment—applies to repeat disputes. consumer.532 Proposed § 1006.38(c) various electronic media through which This uncertainty may drive up costs for would implement and interpret this a debt collector could send a copy of debt collectors and harm consumers. requirement. verification or a judgment under Some debt collectors, for example, may In general, proposed § 1006.38(c) proposed § 1006.42, proposed spend time and resources re- mirrors the statute, with minor changes § 1006.38(d)(2)(i) would interpret investigating identical disputes and for style and clarity. However, to FDCPA section 809(b) to require debt resending identical verification before accommodate various electronic media collectors to ‘‘provide,’’ rather than to continuing with collections. This may through which a debt collector could ‘‘mail,’’ such information to consumers leave debt collectors with fewer send original-creditor information under in a manner consistent with the delivery resources to investigate and respond to proposed § 1006.42, proposed provisions in proposed § 1006.42. As non-repeat disputes. It may also impede § 1006.38(c) would interpret FDCPA described above, the Bureau proposes the collection of legitimate debts.537 section 809(b) to require debt collectors this interpretation to harmonize FDCPA The challenges that repeat disputes to ‘‘provide,’’ rather than to ‘‘mail,’’ section 809(b)’s writing requirement can pose to industry and consumers are original-creditor information to with the E-SIGN Act. The Bureau not unique to the debt collection consumers in a manner consistent with requests comment on proposed market, and the Bureau has clarified the the delivery provisions in proposed § 1006.38(d)(2)(i) and on whether to treatment of repeat disputes in other § 1006.42. As described above, the clarify further how to interpret proposed contexts. Under Regulation X, 12 CFR Bureau proposes this interpretation to §§ 1006.38(d)(2)(i) and 1006.42 together. 1024.35(g)(1)(i), for example, a mortgage harmonize FDCPA section 809(b)’s The Bureau also requests comment on servicer is not required to comply with writing requirement with the E-SIGN whether to clarify that a debt collector certain error resolution requirements Act. The Bureau requests comment on who ceases collection of a debt in when the asserted error is substantially proposed § 1006.38(c) and on whether response to a consumer’s written the same as an error previously asserted to clarify further how to interpret dispute may communicate with the by the borrower for which the servicer proposed §§ 1006.38(c) and 1006.42 consumer one additional time to inform has previously complied with its together. the consumer that the debt collector is obligations under the rule, unless the ceasing collection of the debt.535 borrower provides new and material 38(d) Disputes information to support the notice of 38(d)(1) Failure To Dispute 38(d)(2)(ii) error. Similarly, under Regulation V, 12 FDCPA section 809(c) provides that a Proposed § 1006.38(d)(2)(ii) would CFR 1022.43(f)(1)(ii), a furnisher of consumer’s failure to dispute a debt may establish an alternative way for debt information to a consumer reporting not be construed by any court as an collectors to respond to disputes that admission of liability by the they reasonably conclude are 536 These figures appear to include both repeat disputes filed within the 30-day validation period 533 consumer. Proposed § 1006.38(d)(1) duplicative disputes, as that term is and repeat disputes filed outside of the 30-day would implement FDCPA section 809(c) defined in proposed § 1006.38(a)(1). validation period. As noted in the section-by- and generally restates the statute, with Some members of the debt collection section analysis of proposed § 1006.38(a)(1), the only minor changes for style. industry have described being definition of duplicative disputes would include only disputes filed within the validation period. As overwhelmed by the number of repeat 38(d)(2) Response to Disputes also noted in that section-by-section analysis, the disputes they receive. In response to the Bureau requests comment on the percentage of FDCPA section 809(b) provides that, if Bureau’s ANPRM, some industry repeat disputes that would qualify as duplicative a consumer disputes a debt in writing commenters estimated that between 10 disputes under the proposed definition of within 30 days of receiving the duplicative dispute. and 20 percent of consumer disputes 537 See, e.g., Hawkins-El v. First Am. Funding, validation information or notice reiterate, without providing any new LLC, 891 F. Supp. 2d 402, 410 (E.D.N.Y. 2012) described in section 809(a), the debt supporting information, earlier disputes (‘‘Plaintiff cannot forestall collection efforts by collector must cease collection of the to which debt collectors have already repeating the same unsubstantiated assertions and debt, or any disputed portion of the thereby contend that the debt is ‘disputed.’ If Plaintiff were permitted to do so, debtors would be 534 15 U.S.C. 1692g(b). able to prevent collection permanently by sending insist that the collector verify the debt, and not a 535 Such a clarification would be consistent with letters, regardless of their merit, stating that the debt grace period within which collection efforts are the FTC’s position in its October 5, 2007 advisory is in dispute. Such a result is untenable, as it would prohibited’’ but that ‘‘[t]he collection agency must opinion regarding the same topic. See Fed. Trade make debts effectively uncollectable.’’); Derisme v. ensure, however, that its collection activity does not Comm’n, Advisory Opinion to ACA International Hunt Leibert Jacobson P.C., 880 F. Supp. 2d 339, overshadow and is not inconsistent with the (Oct. 5, 2007), https://www.ftc.gov/sites/default/ 370–71 (D. Conn. 2012) (‘‘To allow a consumer to disclosure of the consumer’s right to dispute the files/documents/public_statements/debt-collector- [repeatedly dispute a debt and repeatedly receive debt specified by [s]ection 809(a).’’). informing-consumer-who-has-disputed-debt-its- verification] would lead to the illogical result that 532 Id. collection-efforts-have-ceased-would-not./ a consumer could avoid paying its debt by 533 15 U.S.C. 1692g(c). p064803fairdebt.pdf. repeatedly disputing the debt.’’).

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agency is not required to investigate a electronically in a manner permitted by In circumstances where a consumer direct dispute if the dispute is § 1006.42 that the dispute is duplicative, submits a timely written dispute that is substantially the same as a previous provides a brief statement of the reasons duplicative of an earlier dispute for dispute with respect to which the for the determination, and refers the which the debt collector already furnisher has already satisfied the consumer to the debt collector’s obtained and mailed to the consumer a applicable reinvestigation requirements, response to the earlier dispute; or copy of verification of the debt or a unless the dispute includes certain satisfies § 1006.38(d)(2)(i). The Bureau judgment, the Bureau interprets FDCPA information not previously provided to proposes § 1006.38(d)(2)(ii) to clarify section 809(b)’s requirement to provide the furnisher. Just as the Bureau’s that debt collectors are not required to a ‘‘copy of such verification or regulations outline a process for expend resources conducting repetitive judgment’’ to the consumer to mean that responding to repeat disputes in the dispute investigations unless there is a a debt collector must provide the mortgage servicing and credit reporting reasonable basis for re-opening a prior consumer either with another copy of context, the Bureau proposes to outline investigation because of new and the materials the debt collector provided a process pursuant to which debt material information. in response to the earlier dispute, or collectors may respond to duplicative Proposed comment 38(d)(2)(ii)–1 with a notice explaining the reasons for disputes in a less burdensome way. explains that a debt collector complies the debt collector’s determination that Consumers may submit repeat with the requirement to provide a brief the dispute is duplicative and referring disputes for various reasons. Some may statement of the reasons for its the consumer to the materials the debt do so to avoid paying debts they owe or determination that the dispute is collector provided in response to the because they disagree with the outcome duplicative if the notice states that the earlier dispute. of the earlier dispute. Others may do so dispute is substantially the same as an The Bureau also proposes the notice because they are unfamiliar with the earlier dispute submitted by the requirement of proposed dispute process. For example, some consumer and the consumer has not § 1006.38(d)(2)(ii) pursuant to its consumers who submit repeat disputes included any new and material authority under Dodd-Frank section may not know that they can include information in support of the earlier 1032(a). As discussed above, Dodd- supporting documentation with their dispute. Proposed comment 38(d)(2)(ii)– Frank Act section 1032(a) provides that disputes. Knowing if and why debt 1 also explains that a debt collector the Bureau ‘‘may prescribe rules to collectors might regard a dispute as complies with the requirement to refer ensure that the features of any consumer duplicative may help consumers the consumer to the debt collector’s financial product or service, both prepare clearer, more specific disputes. response to the earlier dispute if the initially and over the term of the Those disputes, in turn, could improve notice states that the debt collector product or service, are fully, accurately, the accuracy of the information in the responded to the earlier dispute and and effectively disclosed to consumers debt collection system and help to provides the date of that response. in a manner that permits consumers to ensure that debt collectors collect the The Bureau requests comment on understand the costs, benefits, and risks right amounts from the right consumers. proposed § 1006.38(d)(2)(ii) and associated with the product or service, This could be achieved, for example, proposed comment 38(d)(2)(ii)–1, in light of the facts and circumstances.’’ through a consumer notice requirement. including on whether any additional The Bureau proposes Other Bureau rules that address repeat clarification is needed. In particular, the § 1006.38(d)(2)(ii)’s notice requirement disputes contain consumer notice Bureau requests comment on how debt on the basis that a debt collector’s provisions. Under Regulation X, 12 CFR collectors currently handle repeat decision to treat a dispute as a 1024.35(g)(2), for example, a mortgage disputes and the costs to debt collectors duplicative dispute under proposed servicer who determines that a notice of of doing so, distinguishing, to the extent § 1006.38(d)(2)(ii) is a feature of debt error is substantially the same as an possible, between repeat disputes filed collection. Knowing that a debt collector error previously asserted by the during the validation period and repeat has determined that a dispute is a borrower for which the servicer has disputes filed after the validation duplicative dispute, and the reasons for previously complied with its error period. The Bureau also requests that determination, may help a resolution obligations under the rule comment on whether, in responding to consumer understand the costs, must notify the borrower of its disputes that would qualify as benefits, and risks associated with filing determination and provide the basis for duplicative disputes under the proposed additional disputes and deciding that determination. Similarly, under rule, debt collectors expect to use the whether to pay a debt. Regulation V, 12 CFR 1022.43(f)(2), a method in proposed § 1006.38(d)(2)(i) or furnisher who determines that a direct the method in proposed Section 1006.42 Providing Required dispute is substantially the same as a § 1006.38(d)(2)(ii), as well as the Disclosures previous dispute for which the furnisher expected costs and benefits of using 42(a) Providing Required Disclosures has already satisfied the applicable each method. In addition, the Bureau reinvestigation requirements must requests comment on the risks to 42(a)(1) In General notify the consumer of its consumers, if any, posed by proposed The proposed rule would require debt determination, provide the reasons for § 1006.38(d)(2)(ii). collectors to provide certain disclosures that determination, and identify any The Bureau proposes to consumers. Proposed § 1006.42(a)(1) information required to investigate the § 1006.38(d)(2)(ii) to implement and would require a debt collector who disputed information. interpret FDCPA section 809(b). In provides such required disclosures in For these reasons, proposed particular, proposed § 1006.38(d)(2)(ii) writing or electronically to do so: (1) In § 1006.38(d)(2)(ii) would provide that, interprets what it means for a debt a manner that is reasonably expected to upon receipt of a duplicative dispute, as collector to ‘‘obtain[ ] verification of the provide actual notice to the consumer, defined in § 1006.38(a)(1), a debt debt or any copy of a judgment’’ and to and (2) in a form that the consumer may collector must cease collection of the provide a ‘‘copy of such verification or keep and access later. The first prong of debt, or any disputed portion of the judgment’’ to the consumer when the proposed § 1006.42(a)(1) would not debt, until the debt collector either: debt collector reasonably determines require a debt collector to ensure a Notifies the consumer in writing or that a dispute is a duplicative dispute. consumer’s actual receipt of required

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disclosures; it would require instead a including on whether the Bureau should proposes to require a form of delivery reasonable expectation of actual notice. address oral delivery of required that the consumer may keep and access The second prong would require a debt disclosures and, if so, what standards later on the basis that such a collector, when providing a required should apply, including how an oral requirement is also implicit in the disclosure in writing or electronically, disclosure could be provided in a form concepts of ‘‘send[ing] the consumer a to provide it, for example, in a form that that the consumer may keep and access written notice,’’ information being the consumer could print or, in the case later. The Bureau also requests comment ‘‘contained in’’ the initial of disclosures provided by hyperlink to on the frequency with which debt communication, and ‘‘mail[ing]’’ a website, in a form that consumers collectors provide required disclosures information to the consumer— could access for a reasonable period of orally today and the frequency with requirements traditionally satisfied time.538 which debt collectors would expect to through sending a paper document but Proposed comment 42–1 explains provide disclosures orally under the that the Bureau is now adapting to how a debt collector could comply with proposed rule. electronic communications. the general delivery standard in the Proposed § 1006.42(a)(1) also would The Bureau also proposes decedent debt context. The proposed not apply to any non-required debt § 1006.42(a)(1) as an interpretation of comment provides that, if a debt collection communications, such as FDCPA section 808’s prohibition on collector knows or should know that a emails that contain only a request for using unfair or unconscionable means to consumer is deceased, a person who is payment. The Bureau requests comment collect a debt. It may be unfair or authorized to act on behalf of the on proposed § 1006.42(a)(1) and on unconscionable under FDCPA section deceased consumer’s estate operates as proposed comments 42–1 and 42(a)(1)– 808 for a debt collector to deliver a the consumer for purposes of 1, including on whether any additional disclosure using a method that is not § 1006.42.539 clarification is needed as to this general reasonably expected to provide actual Proposed comment 42(a)(1)–1 would standard and on its costs to debt notice to the consumer or that does not clarify that a debt collector who collectors and benefits to consumers. In allow the consumer to retain the provides a required disclosure in particular, the Bureau requests comment disclosure and access it later. If debt writing or electronically and who on the current practices of debt collectors deliver disclosures in a receives a notice that the disclosure was collectors upon learning that a manner that does not meet these not delivered has not provided the consumer has not received a required standards, consumers may not receive disclosure in a manner that is disclosure—for example, because the required information or have it available reasonably expected to provide actual disclosure has been returned as for future reference, potentially leading notice under § 1006.42(a)(1). undeliverable—as well as the risks, them to take different actions with Proposed § 1006.42(a)(1) would apply costs, and benefits that these practices respect to debts than they otherwise only if a debt collector provides pose to consumers and industry. The would have. A debt collector’s decision required disclosures in writing or Bureau also requests comment on to provide a required disclosure in a electronically; it would not apply if a whether a delivery method that does not manner not reasonably expected to debt collector provides required satisfy proposed § 1006.42(a)(1)’s notice provide actual notice or in a form that disclosures orally. Apart from requirement should be permitted as long the consumer cannot keep and access disclosures that a communication is as the debt collector confirms that the later is outside of a consumer’s control; from a debt collector or is for a debt consumer received actual notice. therefore, a consumer cannot reasonably collection purpose—which proposed The Bureau proposes § 1006.42(a)(1) avoid the injury caused by a debt § 1006.42(a)(2) would exclude from the to implement and interpret FDCPA collector who provides a required general delivery standard 540—the section 809(a) and (b) and pursuant to disclosure in such a manner or form. In Bureau has not identified widespread its authority under FDCPA section addition, as noted, providing required instances of debt collectors providing 814(d) to prescribe rules with respect to disclosures in a manner not reasonably required disclosures, such as the expected to provide actual notice or in validation information, orally. In the collection of debts by debt a form that the consumer cannot keep addition, the Bureau’s proposal would collectors. Under FDCPA section 809(a), and access later could effectively thwart require debt collectors to include more a debt collector must ‘‘send the FDCPA section 809’s validation notice, information in validation notices than consumer’’ a written validation notice original-creditor, and dispute- they may currently provide, which may unless the information is ‘‘contained in further decrease the likelihood that debt the initial communication’’ with the verification provisions. Thus, whatever collectors would deliver such consumer, and under FDCPA section benefits debt collectors may receive disclosures orally. For these reasons, the 809(b), a debt collector must ‘‘mail[ ] to from such conduct do not appear to be Bureau’s proposal focuses on clarifying the consumer’’ any original-creditor or outweighed by the costs to consumers. general delivery requirements only for verification information the debt 42(a)(2) Exceptions required disclosures delivered collector provides. The Bureau proposes to require a form of delivery that is Although proposed § 1006.42(a)(1) electronically or in writing. The Bureau generally requires that debt collectors requests comment on this approach, reasonably expected to provide actual notice on the basis that such a requirement is implicit in the concepts (‘‘[I]f notice is not sent in a manner in which receipt 538 See the section-by-section analysis of should be presumed as a matter of logic and proposed § 1006.42(c)(2)(ii). For ease of reference, of ‘‘send[ing] the consumer a written common experience, then it cannot be considered throughout the section-by-section analysis of notice,’’ information being ‘‘contained to have been ‘sent’.’’); Johnson v. Midland Credit proposed § 1006.42, the Bureau uses the shorthand in’’ the initial communication, and Mgmt. Inc., No. 1:05 CV 1094, 2006 WL 2473004, term ‘‘retainability’’ to refer to the consumer’s at *12 (N.D. Ohio Aug. 24, 2006) (‘‘[W]hen a written ability to keep and access a disclosure later. ‘‘mail[ing]’’ information to the 541 notice is returned as undeliverable, it has not 539 Proposed comment 42–1 is consistent with consumer. Similarly, the Bureau actually been sent to the consumer. Rather, it has proposed comments 34(a)(1)–1 and 38–1, which been sent to an improper address for the also would clarify delivery standards in the 541 There is support for this interpretation in consumer.... If the debt collector knows the decedent debt context. court decisions. See, e.g., Lavallee v. Med-1 validation notice was sent to the wrong address, the 540 See the section-by-section analysis of Solutions, LLC, No. 1:15–cv–01922–DML–WTL, debt collector has not complied with the plain proposed § 1006.42(a)(2). 2017 WL 4340342, at *4 (S.D. Ind. Sept. 29, 2017) language of the statute.’’).

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provide required disclosures in a proposed §§ 1006.6(e) and 1006.18(e) do law that the disclosure be provided or manner reasonably expected to provide not arise under FDCPA section 809, and made available to a consumer in actual notice and in a form consumers because they may not implicate FDCPA writing.544 Proposed § 1006.42(b) lists can keep and access later, proposed section 808’s prohibition on using the requirements that debt collectors § 1006.42(a)(2) identifies two unfair or unconscionable means to would need to follow to satisfy circumstances in which a debt collector collect or attempt to collect any debt, proposed § 1006.42(a)(1) and, relatedly, would not need not to comply with the Bureau proposes generally to except the E-SIGN Act, when providing these proposed § 1006.42(a)(1) in providing them from the requirements of disclosures electronically. As discussed required disclosures. The first § 1006.42(a)(1). For this reason, below, each requirement described in circumstance involves the disclosure proposed § 1006.42(a)(2) provides that a proposed § 1006.42(b) addresses either required by proposed § 1006.6(e); the debt collector need not comply with the actual notice or retainability aspect second circumstance involves the § 1006.42(a)(1) when providing the of proposed § 1006.42(a), or both. disclosure required by proposed disclosure required by § 1006.6(e) or Unless otherwise noted, the Bureau § 1006.18(e). § 1006.18(e) in writing or electronically, proposes § 1006.42(b) for the same Proposed § 1006.6(e) would require a unless the disclosure is included on a reasons and pursuant to the same debt collector who communicates or notice required by § 1006.34(a)(1)(i) or authority discussed in the section-by- attempts to communicate with a § 1006.38(c) or (d)(2), or in an electronic section analysis of proposed consumer electronically using a communication containing a hyperlink § 1006.42(a)(1). particular email address, telephone to such a notice. Any disclosure The Bureau requests comment on number for text messages, or other provided pursuant to proposed proposed § 1006.42(b), including on the electronic-medium address to include in § 1006.6(e) or § 1006.18(e), however, frequency with which debt collectors each such communication or attempt to would need to be provided clearly and currently provide required disclosures communicate a clear and conspicuous conspicuously. This clear-and- electronically, and the proportion of statement describing how the consumer conspicuous requirement would apply such disclosures provided by email, text can opt out of further electronic even where proposed § 1006.42(a)(1) message, and other electronic means. To communications or attempts to would not. The Bureau requests the extent debt collectors do not communicate to that address or comment on proposed § 1006.42(a)(2), currently provide required disclosures telephone number. Proposed including whether the exceptions electronically, the Bureau requests § 1006.18(e) would require a debt identified in proposed § 1006.42(a)(2) comment on why that is so. The Bureau collector to disclose in its initial are underinclusive or overinclusive. also requests comment on whether to communication with a consumer that require that debt collectors who provide the debt collector is attempting to 42(b) Requirements for Certain required disclosures electronically collect a debt and that any information Disclosures Provided Electronically maintain reasonable written policies obtained with be used for that purpose, The FDCPA requires three disclosures and procedures designed to ensure that and to disclose in each subsequent to be provided in writing. As the Bureau debt collectors comply with the communication that the communication proposes to implement them in requirements of proposed is from a debt collector. Regulation F, these disclosures are: (1) § 1006.42(b).545 Several Bureau rules The disclosures that would be The validation notice described in include similar policies-and-procedures required by proposed §§ 1006.6(e) and proposed § 1006.34(a)(1)(i)(B); (2) the requirements.546 Requiring such 1006.18(e) would accompany all original-creditor disclosure described in policies and procedures may facilitate electronic debt collection proposed § 1006.38(c); and (3) the compliance with proposed § 1006.42(b) communications. Thus, absent an validation-information disclosure by debt collectors who provide required exception for these provisions, proposed described in proposed disclosures electronically, and may § 1006.42(a)(1) would apply to all § 1006.38(d)(2).542 The Bureau promote effective and efficient electronic debt collection interprets the FDCPA’s writing enforcement and supervision by the communications. This, in turn, would requirement to permit these disclosures Bureau and other Federal agencies. mean that all electronic debt collection to be provided electronically.543 If However, requiring such policies and communications effectively would have provided electronically, however, they to meet the notice and retainability are subject to the E-SIGN Act, the 544 See 15 U.S.C. 7001–7006. requirements of § 1006.42(a)(1)— Federal statute that provides standards 545 Such a requirement could be based on the including even relatively routine Bureau’s authority under Dodd-Frank Act sections for when delivery of a disclosure by 1022(b)(1) or 1024(b)(7) or both. communications, such as ones that electronic record satisfies a requirement 546 See, e.g., Regulation E, 12 CFR 1005.33(g) convey settlement offers, payment in a statute, regulation, or other rule of (requiring remittance transfer providers to ‘‘develop requests, scheduling messages, and and maintain written policies and procedures that are designed to ensure compliance with the error other information not required by the 542 For ease of reference, throughout the section- resolution requirements applicable to remittance FDCPA or Regulation F. The Bureau by-section analysis of proposed § 1006.42, the transfers under this section’’); Regulation X, 12 CFR believes that requiring all such Bureau refers to these three disclosures as the 1024.38(a) (requiring mortgage servicers to communications to be provided in a ‘‘required disclosures.’’ The disclosure required by ‘‘maintain policies and procedures that are FDCPA section 807(11) must be in writing only if manner reasonably expected to provide reasonably designed to achieve’’ certain objectives); the debt collector otherwise is communicating with Regulation Z, 12 CFR 1026.36(j) (requiring actual notice and in a form consumers the consumer in writing. As discussed in the depository institutions to ‘‘establish and maintain can keep and access later is likely to section-by-section analysis of proposed written policies and procedures reasonably impose an unnecessary burden on debt § 1006.42(a)(2), the Bureau proposes to exclude designed to ensure and monitor the compliance of FDCPA section 807(11) written disclosures from the depository institution, its employees, its collectors with little corresponding meeting the delivery requirements in proposed subsidiaries, and its subsidiaries’ employees’’ with benefit to consumers. § 1006.42(a)(1) unless the disclosures are included certain requirements of the rule); id. 1026.51 As discussed above, the Bureau on a notice required by §§ 1006.34(a)(1)(i) or (requiring card issuers to ‘‘establish and maintain proposes § 1006.42(a)(1) as an 1006.38(c) or (d)(2), or in an electronic reasonable written policies and procedures to communication containing a hyperlink to such a interpretation of certain terms in FDCPA consider the consumer’s ability to make the notice. required minimum payments under the terms of the section 809 and pursuant to FDCPA 543 See the section-by-section analyses of account based on a consumer’s income or assets section 808. Because the disclosures in proposed §§ 1006.34 and 1006.38. and a consumer’s current obligations’’).

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procedures could impose costs on debt consumer’s consent electronically, in a typically have no relationship at the collectors, which, if passed on to manner that reasonably demonstrates time the consumer provides E-SIGN Act creditors, could ultimately reduce that the consumer can access consent to the creditor. Indeed, the consumers’ access to credit. The Bureau information in the electronic form that consumer likely does not know the therefore requests comment on the will be used to provide the information identity of the debt collector the creditor expected costs and benefits of requiring that is the subject of the consent.550 In may hire, and the creditor may not debt collectors who provide required light of these requirements, a debt know either. In the debt collection disclosures electronically to maintain collector who delivers required context, the Bureau also interprets ‘‘only reasonable written policies and disclosures electronically in accordance the particular transaction which gave procedures designed to comply with the with E-SIGN Act section 101(c) (and rise to the obligation to provide the requirements of proposed § 1006.42(b). who satisfies § 1006.42(b)(2) through record’’ to exclude interactions between (4)) may reasonably expect to have 42(b)(1) the consumer and the debt collector provided the consumer with actual with whom the creditor may eventually The proposed rule would provide notice in a form that the consumer may place the account. The statute uses the debt collectors with a choice between keep and access later. word ‘‘only’’ before referring to ‘‘the two general options for providing the The proposed rule would clarify that, particular transaction,’’ suggesting that required disclosures electronically. The to deliver disclosures electronically in the relevant transaction is limited and first option would be to comply with the accordance with E-SIGN Act section occurs within the confines of the E-SIGN Act after the consumer provides 101(c), a debt collector must obtain ‘‘parties’ relationship.’’ Accordingly, the affirmative consent directly to the debt affirmative consent directly from the Bureau does not propose to interpret a consumer. The Bureau proposes this collector. The second option would be consumer’s affirmative consent to requirement as an interpretation of E- to comply with the alternative receive electronic disclosures from a SIGN Act section 101(c), pursuant to its procedures described in proposed creditor under the E-SIGN Act as authority under E-SIGN Act section § 1006.42(c). As explained in this affirmative consent to receive electronic 104(b)(1)(A) to interpret the E-SIGN Act section-by-section analysis (discussing disclosures from a debt collector under the proposed E-SIGN Act option) and through regulations.551 E-SIGN Act section 101(c) permits electronic the E-SIGN Act. Instead, the Bureau the section-by-section analysis of proposes to interpret E-SIGN Act section proposed § 1006.42(c) (discussing the delivery of required disclosures if, among other things, the consumer ‘‘has 101(c) to require that a consumer’s proposed alternative procedures), a debt consent be given directly to the debt collector who satisfies the requirements affirmatively consented to such use and has not withdrawn such consent.’’ The collector. The Bureau’s proposed of either option has taken necessary but interpretation is consistent with several not sufficient actions to support a E-SIGN Act does not state that, in the debt collection context, a debt collector FDCPA provisions pertaining to finding that the debt collector has consumer consent for certain debt provided the electronic disclosure in a may rely on E-SIGN Act consent provided by the consumer to the collection communications,553 as well manner that is reasonably expected to as the ANPRM comments of several provide actual notice and in a form that original creditor or person to whom the industry participants and consumer the consumer may keep and access debt is owed. Rather, the E-SIGN Act advocates. later.547 generally limits the consumer’s consent Regarding the E-SIGN Act option, E- to ‘‘records provided or made available For these reasons, proposed SIGN Act section 101(c) sets forth a during the course of the parties’ § 1006.42(b)(1) would, except as detailed process for ensuring the relationship’’ or ‘‘only to the particular provided in § 1006.42(c), require a debt consumer’s informed, affirmative transaction which gave rise to the collector to provide the required 552 consent before delivering disclosures obligation to provide the record.’’ disclosures in accordance with section In the debt collection context, the electronically.548 Before a consumer 101(c) of the E-SIGN Act after the Bureau interprets ‘‘the parties’ may consent to electronic delivery, the consumer provides affirmative consent relationship’’ to exclude a debt collector consumer must receive a clear and directly to the debt collector. The with whom the creditor may eventually conspicuous statement of: (1) The Bureau proposes to codify this place the account, because the consumer’s right not to consent and to interpretation of the E-SIGN Act in consumer and the debt collector withdraw consent; (2) the scope of the comment 42(b)(1)–1. The Bureau consumer’s consent, including whether requests comment on proposed 550 Id. Further, after providing consent, if a § 1006.42(b)(1) and on proposed it applies only to the particular change in the hardware or software requirements transaction which gave rise to the needed to access or retain electronic records creates comment 42(b)(1)–1, including on the obligation to provide the disclosure or a material risk that the consumer will not be able extent to which debt collectors currently to identified disclosures that may be to access or retain a subsequent electronic record obtain E-SIGN Act consent directly from that was the subject of the consent, the person the consumer. If debt collectors provided or made available during the providing the electronic record must provide the course of the parties’ relationship; (3) consumer with new disclosures and the consumer currently do not obtain such consent, the procedures for withdrawing consent; must provide new consent. Id. the Bureau requests comment on the (4) how the consumer may obtain paper 551 See 15 U.S.C. 7004(b)(1). The Bureau’s reasons why not and on any specific proposed interpretation of E-SIGN Act section circumstances in which debt collectors copies of electronic records; and (5) any 101(c) is ‘‘with respect to’’ the FDCPA within the hardware and software requirements for meaning of E-SIGN Act section 104(b). The rely instead upon consent the consumer access to and retention of electronic proposed interpretation is therefore limited to originally provided to the creditor under records.549 The consumer must consent disclosures required under Regulation F, which the E-SIGN Act. The Bureau also must be provided in the name of and on behalf of requests comment on whether to permit electronically, or confirm the the FDCPA-covered debt collector. The Bureau does not propose to issue an interpretation applicable to such reliance, or transfer of consent, in 547 The debt collector still would need to satisfy disclosures required by other statutes or the requirements in proposed § 1006.42(b)(2) regulations, including where third parties may 553 See 15 U.S.C. 1692c(a) (permitting certain through (4). provide disclosures in the name of or on behalf of communications with ‘‘the prior consent of the 548 15 U.S.C. 7001(c). the creditor. consumer given directly to the debt collector’’); 15 549 Id. 552 15 U.S.C. 7001(c)(1)(B)(ii). U.S.C. 1692c(b) (same).

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certain specific circumstances and, if so, communication as spam. Using a subject line of an email are likely to what those circumstances should be. specific, informative subject line may cause a spam filter to identify a decrease that risk.559 legitimate debt collection 42(b)(2) For these reasons, proposed communication as spam and on whether Proposed § 1006.42(b)(2) provides § 1006.42(b)(2) would require a debt debt collectors should be required to that, to comply with § 1006.42(a)(1) collector to identify the purpose of the take any other steps to decrease the when providing the required disclosures communication by including, in the likelihood that an email will be filtered electronically, a debt collector also must subject line of an email or in the first as spam. The Bureau also requests identify the purpose of the line of a text message transmitting the comment on whether any particular communication. Proposed required disclosure, the name of the words or phrases in the subject line of § 1006.42(b)(2) seeks to increase the creditor to whom the debt currently is an email or in the first line of a text likelihood that a consumer who receives owed or allegedly is owed and one message are likely to help consumers an electronic debt collection disclosure additional piece of information distinguish between spam and debt can distinguish the communication identifying the debt, other than the collection communications. In addition, from junk mail or ‘‘spam.’’ 554 Reports amount. Including limited but relevant the Bureau requests comment on the estimate that over 200 billion emails are information about the creditor and the risks to consumers, if any, of including sent and received worldwide each debt in the subject line of an email, or the name of the creditor to whom the day 555 and that spam accounts for over in the first line of a text message, may debt is owed, a truncated account half of all email traffic.556 Given the improve a consumer’s ability to number, the date of sale of a product or volume of information, including spam, distinguish the communication from service giving rise to the debt, the transmitted by email, the likelihood that spam or junk, and therefore may physical address of service, the billing consumers will receive actual notice of increase the likelihood that the address, or any other particular item of emailed debt collection disclosures may consumer will receive actual notice information in the subject line of an depend, in part, on their ability to within the meaning of proposed email or in the first line of a text distinguish between the debt collector’s § 1006.42(a)(1).560 message. The Bureau also requests communication transmitting the Because the amount of the debt may comment on how consumers handle disclosure and spam. change over time as interest and fees emails marked as spam, including on According to one recent study, the accrue, including the current amount of the frequency with which consumers two most important factors in a the debt in the subject line of an email review their spam folders to identify consumer’s decision to open an email or the first line of a text message, emails they should read, and the extent are whether the consumer recognizes without further itemization, may not to which major email providers delete the sender and whether the email help the consumer recognize a debt that unread emails in spam folders. includes a relevant subject line.557 At belongs to the consumer or that the 42(b)(3) the outset of collections, a consumer communication pertains to debt may not recognize the name of a debt collection. Proposed comment 42(b)(2)– Proposed § 1006.42(b)(3) describes a collector who sends an email or text 1 provides examples of information third requirement that a debt collector message. The subject line of an email, or identifying the debt, other than the would need to satisfy to comply with the first line of a text message, may amount, that a debt collector could use proposed § 1006.42(a)(1) when therefore be an especially important to comply with proposed providing the required disclosures means of alerting consumers to § 1006.42(b)(2). These include a electronically. Just as a debt collector important debt collection truncated account number, the name of who sends a paper letter by postal mail communications. To address the spam the original creditor, the name of any may receive notice that the letter was problem, many email providers and store brand associated with the debt, the undeliverable, a debt collector who third parties have developed date of sale of a product or service sends an email or a text message may sophisticated filters to help consumers giving rise to the debt, the physical receive notice from a communications identify and segregate potential spam carrier that the email or text message address of service, and the billing messages.558 There may be a risk that was undeliverable. This notice often address on the account. such filters will erroneously identify a The Bureau requests comment on takes the form of an automated message. legitimate debt collection proposed § 1006.42(b)(2) and on Proposed § 1006.42(b)(3) would require proposed comment 42(b)(2)–1. In a debt collector to permit receipt of 554 The term ‘‘spam’’ generally refers to particular, the Bureau requests comment notifications of undeliverability from unsolicited commercial email. See, e.g., 15 U.S.C. communications providers, monitor for 7701(a)(2) (finding, in connection with CAN–SPAM on the risk that an email provider’s Act of 2003, that ‘‘[t]he convenience and efficiency spam filter may prevent a debt any such notifications, and treat any of electronic mail are threatened by the extremely collector’s email from reaching a such notifications as precluding a rapid growth in the volume of unsolicited reasonable expectation of actual notice consumer’s inbox, including on whether commercial electronic mail.’’). for that delivery attempt. 555 any particular words or phrases in the Radicati Grp., Inc., Email Statistics Report, The Bureau proposes this requirement 2015–19, Executive Summary, at 3–4 (Mar. 2015), because it appears unreasonable for a https://www.radicati.com/wp/wp-content/uploads/ 559 See, e.g., IBM, Which keywords or characters 2015/02/Email-Statistics-Report-2015-2019- can trigger spam filters?, IBM Knowledge Ctr., debt collector to expect that a consumer Executive-Summary.pdf. https://www.ibm.com/support/knowledgecenter/en/ has actual notice of an electronic 556 Symantec, internet Security Threat Report, at SSWU4L/Email/imc_Email/List_of_Keywords- disclosure if that disclosure has been 24 (Apr. 2017), https://www.symantec.com/content/ Characters_Which_Can_Tr190.html (last visited returned as undelivered. There is dam/symantec/docs/reports/istr-22-2017-en.pdf. May 6, 2019). 557 Direct Mktg. Ass’n, Consumer Email Tracker 560 As explained in the section-by-section support for this interpretation in court 2017, at 18 (2017),https://dma.org.uk/uploads/ analysis of proposed § 1006.42(b)(1), (c)(1), and decisions. For example, in a similar misc/5a1583ff3301a-consumer-email-tracking- (e)(2), the email or text message can only be sent context, courts have held that a paper report-2017-(2)_5a1583ff32f65.pdf. to an email address or telephone number that validation notice sent to the consumer 558 See, e.g., Todd Jackson, How Our Spam Filter satisfies certain criteria. Those criteria are designed Works, Official Gmail Blog (Oct. 31, 2007), https:// to ensure that the email address or telephone by postal mail but returned to the debt gmail.googleblog.com/2007/10/how-our-spam-filter- number is one the consumer actually used, thereby collector as undeliverable was not works.html. limiting privacy concerns. actually sent to the consumer within the

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meaning of FDCPA section 809(a).561 considerations, the Bureau’s 2016 final readers.567 Proposed § 1006.42(b)(4) The Bureau requests comment on rule concerning prepaid accounts under would apply only to the validation proposed § 1006.42(b)(3), including on Regulations E and Z (2016 Prepaid Final notice described in proposed how a debt collector who attempts to Rule) requires financial institutions to § 1006.34(a)(1)(i)(B). It would not apply deliver a required disclosure provide electronic disclosures required to the original-creditor disclosure electronically may become aware that by that rule in a form that is responsive described in proposed § 1006.38(c) the disclosure has not been delivered. to different screen sizes.565 because that disclosure typically is brief The Bureau also requests comment on Given the prevalence of mobile and does not feature standardized whether debt collectors should be technology, it may be unreasonable for information or formatting. It also would required to take any steps in addition to a debt collector to expect that a not apply to the verification disclosures those described in proposed consumer has actual notice of an described in proposed § 1006.38(d)(2). § 1006.42(b)(3). electronic disclosure that does not Those disclosures may include images adjust to the screen size of the of original paper documents, and it does 42(b)(4) consumer’s mobile device. On smaller not appear that commercially available Proposed § 1006.42(b)(4) describes an screens, such a disclosure may be file formats for delivering images additional step that a debt collector illegible if viewed in its entirety. As a electronically could comply with must take to comply with proposed result, some information may be lost to proposed § 1006.42(b)(4). It may § 1006.42(a)(1). Proposed § 1006.42(b)(4) consumers. This may be especially true therefore be impractical to require debt would apply only when a debt collector as to disclosures, such as the validation collectors to provide the verification provides electronically the validation notice described in proposed disclosures in accordance with notice described in proposed § 1006.34(a)(1)(i)(B), with formatting proposed § 1006.42(b)(4). § 1006.34(a)(1)(i)(B). Proposed elements meant to draw a consumer’s Proposed comment 42(b)(4)–1 § 1006.42(b)(4) seeks to ensure that debt attention to particularly important provides examples of how to satisfy collectors provide the validation notice information when the entirety of the proposed § 1006.42(b)(4). The comment in a format that is compatible with the disclosure is in view. For example, the explains that a debt collector provides range of commercially available validation notice’s presentation of the validation notice in a responsive electronic devices a consumer may use information in a tabular format could be format accessible on a screen of any to view the disclosure. lost to consumers using mobile devices commercially available size if, for According to recent research, if the validation notice is not in a example, the notice adjusts to different smartphone ownership has doubled responsive format viewable on smaller screen sizes by stacking elements in a since 2011, and today a larger share of screens. manner that accommodates consumer consumers own a smartphone (77 In addition, graphical representations viewing on smaller screens while still percent) than a desktop or laptop of textual content generally cannot be meeting the other applicable formatting computer (73 percent).562 In addition, accessed by assistive technology used requirements in proposed § 1006.34. It roughly half of all consumers own a by the blind and visually impaired, such also explains that a debt collector tablet computer.563 As a result, as screen readers. Providing provides the validation notice in a consumers may view disclosures on a electronically-delivered disclosures in manner accessible via commercially variety of screen sizes. A disclosure that machine-readable text may help ensure available screen readers if, for example, automatically adjusts to the size of the that consumers who use screen readers the validation notice is machine consumer’s screen is sometimes called a can access the information. Thus, unless readable. ‘‘responsive’’ disclosure. If a consumer a debt collector knows that a consumer The Bureau requests comment on views a disclosure using a device to does not use a screen reader, it also may proposed § 1006.42(b)(4) and on which the disclosure is not responsive, be unreasonable for a debt collector to proposed comment 42(b)(4)–1. In the disclosure may appear in small text expect that a consumer has actual notice particular, the Bureau requests comment with truncated margins; in some cases, of an electronic disclosure that is not on the cost to debt collectors of the disclosure may be difficult for the machine readable. The Bureau’s 2016 developing and using a validation consumer to read and navigate. In Prepaid Final Rule requires financial notice that is responsive to screen size addition, some research suggests that institutions to provide electronic and accessible via screen readers, mobile-friendly design may improve disclosures required by that rule using including the one-time costs of machine-readable text that is accessible designing such a disclosure and the consumer attention to digital 566 information.564 Consistent with these on screen readers. ongoing costs of populating such a To address concerns about readability disclosure with information about on mobile devices and accessibility for 561 See, e.g., Johnson v. Midland Credit Mgmt. individual debts. The Bureau also Inc., No. 1:05 CV 1094, 2006 WL 2473004, at *12– persons with disabilities, proposed requests comment on how those costs 13 (N.D. Ohio Aug. 24, 2006) (‘‘[W]hen a written § 1006.42(b)(4) would require a debt might change if the Bureau provides notice is returned as undeliverable, it has not collector who provides electronically debt collectors with source code for a actually been sent to the consumer. Rather, it has the validation notice described in been sent to an improper address for the version of the validation notice that consumer.... If the debt collector knows the § 1006.34(a)(1)(i)(B) to do so in a would comply with proposed validation notice was sent to the wrong address, the responsive format that is reasonably § 1006.42(b)(4). In addition, the Bureau debt collector has not complied with the plain expected to be accessible on a screen of requests comment on whether the language of the statute.’’). any commercially available size and via 562 internet & Tech, Mobile Fact Sheet, Pew Res. original-creditor disclosure described in Ctr. (Feb. 5, 2018), http://www.pewinternet.org/fact- commercially available screen sheet/mobile. 567 In connection with this proposal, the Bureau 563 Id. 2014), https://litmus.com/blog/the-science-of-email- intends to make available on its website the source 564 For example, a 2014 marketing study found clicks-the-impact-of-responsive-design-inbox- code for a version of the validation notice that that optimizing email messages to be read on a testing. would comply with proposed § 1006.42(b)(4). Based variety of devices boosted the rate at which 565 12 CFR 1005.18(b)(6)(i)(B); comment on its own feasibility testing of a mail merge consumers clicked on hyperlinks. See Lauren 18(b)(6)(i)(B)–2. process, the Bureau believes that the burden on Smith, The Science of Email Clicks: The Impact of 566 12 CFR 1005.18(b)(6)(i)(B); comment debt collectors of populating an email based on this Responsive Design & Inbox Testing, Litmus (Dec. 8, 18(b)(6)(i)(B)–3. source code with transaction data may be low.

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proposed § 1006.38(c) and the subject of the consent,’’ as required by ANPRM generally stated that debt validation-information disclosure E-SIGN Act section 101(c)(1)(C)(ii).569 collectors do not send validation notices described in proposed § 1006.38(d)(2) Similarly, although a debt collector electronically. Similarly, a consumer should be subject to proposed could provide E-SIGN disclosures by advocate commenter stated that a survey § 1006.42(b)(4). postal mail, it is not clear how a of its members did not find any consumer could, by postal mail, evidence that debt collectors currently 42(c) Alternative Procedures for ‘‘reasonably demonstrate’’ the ability to deliver validation notices electronically. Providing Certain Disclosures access electronic information. However, the consumer advocate Electronically Thus, even if a debt collector commenter also stated that, given the Under proposed § 1006.42(b)(1), a incorporates some elements of the E- consent requirements of the E-SIGN Act debt collector who provides the SIGN Act consent process into an initial and the timing requirements of the required disclosures electronically telephone or postal mail FDCPA, it is conceivable that electronic must, except as provided in communication, the debt collector likely delivery of validation notices could § 1006.42(c), comply with section 101(c) still must rely on the consumer to take occur under current law. More recently, of the E-SIGN Act as interpreted by the the further step of demonstrating the the consumer advocate commenter Bureau in the proposed rule. Proposed ability to access electronic information. noted that several debt collectors may § 1006.42(c) would allow for electronic A debt collector may be uncertain be delivering validation notices delivery of the required disclosures whether and when the consumer will electronically.572 However, it is unclear outside of the E-SIGN Act’s consent take this further step. Such uncertainty how widespread this practice is and process. The Bureau proposes this may be particularly challenging in whether it involves consumer consent alternative because debt collectors and connection with delivering the provided directly to the debt consumers may benefit from greater validation notice. Under FDCPA section collector.573 flexibility as to electronic disclosures. 809(a) and proposed For these reasons, the Bureau According to industry commenters to § 1006.34(a)(1)(i)(B), the debt collector proposes § 1006.42(c), which describes the Bureau’s ANPRM and to the small must send the validation notice within procedures a debt collector may use to entity representatives who participated five days of the debt collector’s initial provide the required disclosures in the SBREFA process, it is often communication with the consumer, electronically without the need to infeasible for debt collectors to send leaving little time for the debt collector comply with section 101(c) of the E- electronic disclosures for two reasons. to arrange an alternative delivery SIGN Act. As discussed below, First, debt collectors are concerned method if the consumer does not proposed § 1006.42(c)(1) would require about violating FDCPA section 805(b)’s complete the E-SIGN Act consent a debt collector to send an electronic limitations on third-party process soon after receiving the initial communication to a particular email communications when they engage in communication. While a debt collector address or, in the case of a text message, electronic communications with could, by introductory letter, ask the a particular telephone number. consumers, an issue the Bureau consumer to complete the entire E-SIGN Proposed § 1006.42(c)(2) would provide proposes to address in § 1006.6(d)(3).568 Act consent process online, a consumer two methods from which debt collectors Second, the process for obtaining E- may be unlikely to respond quickly to could choose for placing a required SIGN Act consent is particularly such a request from a debt collector disclosure in such an electronic cumbersome in the debt collection with whom the consumer lacks a prior communication. A debt collector who context, where consumers and debt relationship. follows the procedures described in collectors typically lack a pre-existing Further, it may not be effective for proposed § 1006.42(c) would satisfy relationship. debt collectors to adopt the practice that proposed § 1006.42(a)(1)’s requirement The process for obtaining consumer creditors often use of sending emails or to provide the required disclosures in a consent under the E-SIGN Act may text messages with hyperlinks directing manner that is reasonably expected to impose a substantial burden on consumers to websites requesting E- provide actual notice and in a form that electronic commerce in the unique SIGN Act consent. Even if the creditor the consumer may keep and access later, context of debt collection. Most previously identified the debt collector provided that the debt collector also communication between debt collectors for the consumer,570 the debt collector satisfies proposed § 1006.42(b)(2) and consumers continues to take place would need to send the validation through (4). by telephone and postal mail, neither of notice within five days of the initial The Bureau proposes § 1006.42(c) which is well-suited to obtaining E- communication, again leaving little time pursuant to its authority, under section SIGN Act consent. Section 101(c) of the for the debt collector to arrange an 104(d)(1) of the E-SIGN Act, to exempt E-SIGN Act requires that the consumer alternate delivery method if the a specified category or type of record receive certain disclosures before consumer does not consent to electronic from the requirements relating to consenting to electronic delivery. These delivery quickly.571 disclosures may be more than 1,000 The Bureau is not aware of instances 572 Similarly, an association of State regulators words long and, although a debt in which a debt collector has delivered stated that many technologically sophisticated debt collectors provided disclosures electronically, but it collector could provide them over the a validation notice electronically did not provide further details. telephone, they could take a pursuant to E-SIGN Act consent 573 Direct consent may be easier to obtain for considerable amount of time to recite to provided directly to the debt collector. required disclosures other than the validation the consumer. Moreover, on a telephone Industry commenters to the Bureau’s notice. For example, in response to the ANPRM, one industry trade association reported that 20 call, it may be challenging for a percent of members that responded to a survey consumer to ‘‘reasonably demonstrate[ 569 Id. delivered verification materials by email and fax. ]’’ the ability to ‘‘access information in 570 See the section-by-section analysis of However, this commenter did not identify the the electronic form that will be used to proposed § 1006.6(d)(3). proportion sent by email, and it did not indicate 571 As discussed in the section-by-section analysis whether these debt collectors obtained E-SIGN Act provide the information that is the of proposed § 1006.42(b)(1), the Bureau proposes to consent directly from the consumer before doing so. interpret the E-SIGN Act to require consent to be Another industry trade association commenting on 568 See the section-by-section analysis of provided directly from the consumer to the debt the ANPRM stated that electronic delivery of proposed § 1006.6(d)(3). collector. verification materials occurs rarely.

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consent in section 101(c) of the E-SIGN consumer is prepared to view required particular email address or telephone Act if such exemption is necessary to disclosures electronically, including number by, for example, following eliminate a substantial burden on when provided on a website; and the instructions provided pursuant to electronic commerce and will not consumer can retain electronic § 1006.6(e), then a debt collector cannot increase the material risk of harm to disclosures. use that email address or telephone consumers.574 The Bureau proposes the The Bureau requests comment on number to deliver disclosures under exemption on the basis that requiring proposed § 1006.42(c), including on § 1006.42(c). This would be the case debt collectors to comply with the whether the requirements relating to even if the consumer provided consent requirements in section 101(c) consent in section 101(c) of the E-SIGN unwithdrawn E-SIGN Act consent E-SIGN Act may impose a substantial Act—including as the Bureau proposes allowing the creditor or an earlier debt burden on electronic commerce by to interpret them—impose a substantial collector to use that email address or potentially reducing opportunities for burden on electronic commerce in the telephone number. consumers and debt collectors to debt collection context, and on whether The Bureau requests comment on communicate and resolve debts more proposed § 1006.42(c) is necessary and proposed § 1006.42(c)(1) and on quickly; for consumers to submit sufficient to eliminate those burdens. proposed comment 42(c)(1)–1, disputes more easily; and for consumers With respect to possible burdens on including on the risks and benefits of to make online payments in response to electronic commerce, the Bureau allowing debt collectors to use an email notices delivered electronically. requests information on the costs of address or telephone number with Further, as discussed in part VI, the delivering required disclosures respect to which the consumer provided Bureau estimates that as many as 140 electronically, how those costs compare to the creditor or a prior debt collector million validation notices are sent to delivering required disclosures on unwithdrawn E-SIGN Act consent annually, almost all by postal mail. As paper, and the broader impacts of related to the debt. The Bureau also also discussed in part VI, electronic increased electronic delivery in the debt requests comment on how often delivery costs may be substantially collection context. The Bureau also creditors obtain E-SIGN Act consent lower than the costs of printing requests comment on whether the from consumers and how often disclosures and delivering them by procedures described in proposed consumers withdraw any such consent. 575 § 1006.42(c) increase the material risk of postal mail. Given the number of 42(c)(2) validation notices sent annually, and harm to consumers and, if so, any the unique challenges in the debt adjustments that can be made to Proposed § 1006.42(c)(2) would collection context of obtaining E-SIGN mitigate that risk. provide two methods from which debt collectors could choose for placing a Act consent to receive them 42(c)(1) electronically, these printing and required disclosure in an electronic mailing costs also may impose a To help ensure that a consumer communication. The first method, substantial burden on the debt receives a required disclosure provided described in proposed § 1006.42(c)(2)(i), collection industry, which may, in turn, electronically when a debt collector would be to place the disclosure in the result in increased cost and decreased uses the alternative procedures, body of an email. The second method, availability of credit. proposed § 1006.42(c)(1) would require described in proposed The procedures described in proposed a debt collector to provide the § 1006.42(c)(2)(ii), would be to place the § 1006.42(c) are designed so as not to disclosure by sending an electronic disclosure on a secure website that is increase the material risk of harm to communication to an email address or, accessible by clicking on a hyperlink consumers. Consumers are exposed to a in the case of a text message, a included within an electronic materially increased risk of harm when telephone number that the creditor or a communication, provided certain other electronic delivery of the required prior debt collector could have used to conditions are met. provide electronic disclosures related to disclosures by the alternative method 42(c)(2)(i) would make consumers less likely to that debt in accordance with section receive, identify, open, read, or 101(c) of the E-SIGN Act. This may Proposed § 1006.42(c)(2)(i) would understand the disclosures, or would include, for example, an email address allow a debt collector to place the increase the likelihood of an unintended or telephone number covered by the disclosure in the body of an email sent third-party disclosure. Pursuant to its E- consumer’s unwithdrawn E-SIGN Act to an email address described in SIGN Act exemption authority, the consent provided directly to the creditor § 1006.42(c)(1). Proposed comment Bureau designed each component of or a prior debt collector. The Bureau 42(c)(2)(i)–1 would clarify that a debt proposed § 1006.42(c) to prevent an proposes to exercise its E-SIGN Act collector places a disclosure in the body increase in these risks. For example, as exemption authority to limit the email of an email if the disclosure’s content is discussed below, the procedures in addresses and telephone numbers to viewable within the email itself. Some proposed § 1006.42(c) are designed to which a debt collector may send pre-proposal feedback suggested that help ensure that, among other things, required disclosures under proposed creditors rarely provide required the email address or telephone number § 1006.42(c)(1) on the basis that, if a disclosures within the body of an email to which a debt collector sends a consumer has not provided if those disclosures include transaction- required disclosure or a hyperlink to unwithdrawn E-SIGN Act consent for a specific information. This may be such a disclosure belongs to the particular email address or telephone because email has not traditionally been consumer; the consumer is prepared to number to the creditor or a prior debt viewed as a secure form of receive electronic disclosures at that collector, a new debt collector should communication. It may also be because email address or telephone number; the not presume that the consumer is able creditors prefer to provide required or prepared to receive electronic disclosures in a PDF or similar format. 574 15 U.S.C. 7004(d)(1). disclosures at that email address or On the other hand, many creditors now 575 As discussed in part VI, the Bureau estimates telephone number. send email alerts to consumers, and that it costs between $0.50 and $0.80 to send a Proposed comment 42(c)(1)–1 would these alerts often include transaction- validation notice by postal mail, whereas the marginal cost of sending a validation notice clarify that, if a consumer has opted out specific information. In addition, the electronically is approximately zero. of debt collection communications to a use of technology that protects

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consumer privacy by encrypting emails reasonable period of time and be expect to receive a hyperlinked while in transit appears to be capable of being saved or printed. The disclosure from that particular debt increasing.576 For these reasons, Bureau proposes these requirements collector. Proposed § 1006.42(d), providing a disclosure in the body of an because a disclosure that is only briefly discussed below, describes consumer email may pose no more risk of third- accessible, like a disclosure that cannot notice-and-opt-out processes meant to party interception than delivery by be saved or printed, may be unlikely to ensure that, before a debt collector mail.577 provide notice in a form the consumer sends a required disclosure by The Bureau requests comment on can keep and access later. hyperlink, the consumer expects to proposed § 1006.42(c)(2)(i) and on Second, proposed receive it and does not object to such proposed comment 42(c)(2)(i)–1, § 1006.42(c)(2)(ii)(B) would require that receipt. By helping the consumer including on the risks and benefits of the consumer receive notice and an identify the sender in advance, a notice- allowing a debt collector to place a opportunity to opt out of hyperlinked and-opt-out process may also reduce the required disclosure in the body of an delivery as described in proposed risk that the consumer will treat an email without first providing the § 1006.42(d). Placing a required email containing a hyperlink as spam. consumer with notice and an disclosure on a secure website and Third, proposed § 1006.42(c)(2)(ii)(C) opportunity to opt out. In addition, the sending the consumer an electronic would require that the consumer not Bureau requests comment on whether communication containing a hyperlink have opted out during the opt-out creditors or debt collectors currently may be more convenient for some debt period. The Bureau proposes this provide required disclosures bearing collectors than including the required requirement because a debt collector transaction-specific information in the disclosure in the body of an email. may not reasonably expect that a body of emails and, if not, the reasons However, because debt collectors and consumer has actual notice of a why not. The Bureau also requests consumers typically lack a pre-existing hyperlinked disclosure if the consumer comment on the prevalence of ‘‘in- relationship, delivering a required has opted out of receiving disclosures in transit’’ encryption technology and disclosure by hyperlink without first that manner. whether that technology has reduced alerting the consumer by separate means The Bureau requests comment on any concerns about the security of may not be reasonably expected to proposed § 1006.42(c)(2)(ii), including emails. The Bureau also requests provide actual notice. Federal agencies on the risks and benefits of allowing a comment on the prevalence of have advised consumers against clicking debt collector to place a required technology that would allow a on hyperlinks provided by unfamiliar disclosure on a secure website 578 consumer to save or print a text senders. According to recent reports, accessible by hyperlink, particularly message. some scams have used fake debt compared to placing a required collection emails to lure consumers into disclosure in the body of an email. The 42(c)(2)(ii) clicking on hyperlinks.579 To address Bureau also requests comment on Proposed § 1006.42(c)(2)(ii) provides these risks, some consumer email whether to clarify further what it means that, in lieu of placing a disclosure in services can be configured to block for a hyperlink to be clear and the body of an email, a debt collector hyperlinks from unrecognized conspicuous and, if so, what factors may who is delivering a required disclosure senders.580 Consumers may be likely to be relevant to determining whether a electronically pursuant to the follow safe browsing habits and not hyperlink is clear and conspicuous. In alternative procedures may place the click on a hyperlink in an initial addition, the Bureau requests comment disclosure on a secure website that is communication from an unfamiliar debt on whether to clarify further what it accessible by clicking on a clear and collector.581 Therefore, it may be means for a disclosure to remain conspicuous hyperlink included within unreasonable for a debt collector to available on a website for a reasonable an electronic communication sent to an expect that a consumer has actual notice time and, if so, the length of time that email address or a telephone number of an electronic disclosure delivered by should qualify as reasonable. In described in § 1006.42(c)(1). However, hyperlink if the consumer does not addition, the Bureau requests comment this method would be available only if on the prevalence of anti-virus software three additional conditions, described 578 For example, the FTC advises consumers not and other technologies that identify to open links or attachments to emails they do not in proposed § 1006.42(c)(2)(ii)(A) whether a hyperlink included in an recognize, in order to prevent phishing and email or text message is safe, and through (C), are satisfied. malware. See Fed. Trade Comm’n, Phishing (July First, proposed § 1006.42(c)(2)(ii)(A) 2017), https://www.consumer.ftc.gov/articles/0003- whether consumers using such would require that the disclosure be phishing; Fed. Trade Comm’n, Malware (Nov. technologies are likely click on 2015), https://www.consumer.ftc.gov/articles/0011- hyperlinks from unrecognized debt accessible on the website for a malware. The FDIC offers consumers similar guidance. See Fed. Deposit Ins. Comm’n, Beware of collectors. The Bureau also requests 576 For example, at least one major email provider Malware: Think Before You Click, https:// comment on whether debt collectors reports that a growing number of email providers www.fdic.gov/consumers/consumer/news/cnwin16/ who wish to provide required encrypt messages sent to and from their services malware.html (last updated Mar. 8, 2016). disclosures electronically would be 579 using Transport Layer Security encryption, and that See, e.g., Claer Barrett, Beware Fake Debt more likely to do so in the body of an use of ‘‘in transit’’ encryption continues to increase. Collection Emails, Says Action Fraud, Fin. Times, See Google, Email Encryption in Transit, Google Apr. 8, 2016, https://www.ft.com/content/43fdbb30- email under proposed § 1006.42(c)(2)(i) Transparency Rep., https:// fce4-11e5-b3f6-11d5706b613b. or on a secure website that is accessible transparencyreport.google.com/safer-email/ 580 See Microsoft Off. Support, Help Keep Spam by clicking on a hyperlinked included overview (last visited May 6, 2019). and Junk Email Out of Your Inbox in Outlook.com, within an electronic communication 577 In pre-proposal feedback, several industry Microsoft, https://support.office.com/en-us/article/ stakeholders and a small entity representative who help-keep-spam-and-junk-email-out-of-your-inbox- under proposed § 1006.42(c)(2)(ii), and participated in the SBREFA process requested that in-outlook-com-a3ece97b-82f8-4a5e-9ac3- the reasons why. the Bureau clarify how to deliver required e92fa6427ae4 (last visited May 6, 2019). disclosures by text message. As described in the 581 In comments to the Bureau’s ANPRM, a large 42(d) Notice and Opportunity To Opt section-by-section analysis of proposed debt collector agreed that consumers may view Out of Hyperlinked Delivery § 1006.42(c)(2)(ii), the Bureau’s proposal would, disclosures from unknown collectors with subject to certain conditions, permit a debt collector suspicion, such as when the consumer has not Proposed § 1006.42(d) describes two to use a text message to deliver a hyperlink to a received advance information about the debt processes for providing consumers with disclosure placed on a secure website. collector from a creditor. notice and an opportunity to opt out of

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hyperlinked delivery of required identify any such electronic decision during that same disclosures, as required by proposed communication once the communication; however, a written or § 1006.42(c)(2)(ii)(B). A debt collector communication reaches the consumer’s electronic communication that requires who wishes to place a required inbox. Finally, proposed the consumer to make an opt-out disclosure on a website that is § 1006.42(d)(1)(v) and (vi) would require decision within a period of five or fewer accessible by clicking on a hyperlink the debt collector to inform the days does not satisfy proposed included within an electronic consumer of the consumer’s ability to § 1006.42(d)(1). The Bureau proposes to communication would be required to opt out of hyperlinked delivery of require a debt collector to allow a choose between these notice-and-opt- disclosures and to provide instructions consumer more than five days to make out processes. One process, described in for doing so within a reasonable period an opt-out decision in order to grant proposed § 1006.42(d)(1), would involve of time. The Bureau proposes to require sufficient time for the consumer to see a communication between the debt this information to enable the consumer and respond to an opt-out notice collector and the consumer before the to choose whether to opt out of provided in a written or electronic required disclosure is provided; the hyperlinked electronic disclosures from communication. Because no more than other process, described in proposed the debt collector—a choice the five days may elapse between an initial § 1006.42(d)(2), would involve a consumer would not have had the debt collection communication and the communication between the creditor opportunity to make when providing E- time the debt collector sends the and the consumer before the required SIGN Act consent originally to the validation notice under FDCPA section disclosure is provided. creditor because the consumer likely 809(a) as implemented by proposed Proposed comment 42(d)–1 would would not have known the identity of § 1006.34(a)(1)(i)(B), a debt collector clarify that a debt collector’s or a any future debt collector.582 who wishes to obtain consumer consent creditor’s communication with a Proposed comment 42(d)(1)–1 would to hyperlinked delivery in an initial consumer pursuant to § 1006.42(d)(1) or clarify that, for purposes of a debt communication must do so orally.584 (2), respectively, applies to all collector’s communication with the Proposed comment 42(d)(1)–4 would disclosures covered by § 1006.42(a) that consumer under § 1006.42(d)(1), the clarify that an opt-out notice provided the debt collector thereafter sends term ‘‘name of the consumer’’ has the by a debt collector under § 1006.42(d)(1) regarding that debt, unless the consumer same meaning as the term ‘‘consumer’s may be combined with an opt-out notice later designates that email address or, in name’’ under § 1006.34(c)(2)(ii). The provided by the debt collector under the case of text messages, that telephone comment also includes a cross-reference § 1006.6(d)(3)(i)(B)(1). number as unavailable for the debt to proposed comment 34(c)(2)(ii)–1, The Bureau requests comment on collector’s use, such as by opting out which explains that the consumer’s proposed § 1006.42(d)(1) and its related pursuant to the instructions required by name is what the debt collector commentary. In particular, the Bureau § 1006.6(e). The Bureau proposes reasonably determines is the most requests comment on whether, to limit § 1006.42(d) for the same reasons and complete version of the name about the risk of third-party disclosure of the pursuant to the same authority which the debt collector has knowledge, opt-out notice and to increase the discussed in the section-by-section whether obtained from the creditor or likelihood that a consumer will receive analysis of proposed § 1006.42(c). another source. Proposed comment actual notice of a required disclosure 42(d)(1) Communication by the Debt 42(d)(1)–2 would clarify that, if a debt delivered by hyperlink, the rule should Collector collector’s communication with the restrict the email addresses or telephone consumer under § 1006.42(d)(1) applies numbers to which a debt collector may Under proposed § 1006.42(d)(1), a to multiple debts, § 1006.42(d)(1)(i) and debt collector must inform the send the opt-out notice that would be (ii) require the debt collector to identify required by proposed § 1006.42(d)(1), consumer, in a communication with the the consumer and the creditor for each consumer before providing the required such as by requiring that the opt-out debt to which the communication notice be sent to an email address or disclosure, of the information in applies.583 proposed § 1006.42(d)(1)(i) through (vi). telephone number other than the one to Proposed comment 42(d)(1)–3 would which the debt collector intends to send Proposed § 1006.42(d)(1)(i) and (ii) clarify how the requirement to would require the debt collector to the hyperlink. The Bureau also requests communicate with the consumer before comment on whether the information inform the consumer of the name of the providing a hyperlinked disclosure consumer who owes or allegedly owes required to be provided under proposed works together with the requirement to § 1006.42(d)(1)(i) through (vi) is the debt, and the name of the creditor provide the consumer a reasonable to whom the debt currently is owed or sufficient to allow a consumer to make period within which to opt out. The an informed decision whether to opt out allegedly owed. The Bureau proposes to comment explains that, in an oral require this information to help the of receiving hyperlinked delivery of communication with the consumer, required disclosures. The Bureau also consumer identify whether the debt such as a telephone or in-person belongs to the consumer. Proposed requests comment on whether to clarify conversation, the debt collector may further what it means to provide a § 1006.42(d)(1)(iii) and (iv) would require the consumer to make an opt-out require the debt collector to inform the reasonable opt-out period and, if so, how long an opt-out period should be to consumer of the email address or 582 As discussed in the section-by-section analysis telephone number from which and to of proposed § 1006.42(c)(2)(ii), the rule would not qualify as reasonable. In particular, the which the debt collector intends to send permit a debt collector to deliver required the electronic communication disclosures by hyperlink to a consumer who opted 584 Under proposed § 1006.6(e), the out of such delivery. communication containing the hyperlink would containing the hyperlink. The Bureau 583 As discussed in the section-by-section analysis need to include a clear and conspicuous statement proposes to require this information to of proposed § 1006.42(c)(1), proposed comment describing one or more ways the consumer can opt help the consumer ensure that an 42(c)(1)–1 would clarify that, if a consumer has out of further electronic communications or electronic communication containing opted out of communications by the debt collector attempts to communicate by the debt collector to to an email address or, in the case of text messages, that address or telephone number. A consumer who the hyperlink is directed to an a telephone number, then that email address or no longer wished to receive hyperlinked delivery of appropriate email address or telephone telephone number cannot be used to deliver required disclosures could revoke consent by number, and to help the consumer disclosures under § 1006.42(c). following the opt-out instructions.

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Bureau requests comment on whether message, the consumer’s telephone information that proposed the requirement to allow a consumer number to provide any legally required § 1006.42(d)(2)(i) through (iv) would more than five days to make an opt-out debt collection disclosures in a manner require is sufficient to allow a consumer decision in response to an opt-out that is consistent with Federal law. The to make an informed decision whether notice delivered electronically, as Bureau proposes to require this to opt out of receiving hyperlinked described in proposed comment information to help the consumer delivery of required disclosures. The 42(d)(1)–3, should be imposed or should expect and recognize an electronic Bureau also requests comment on how be shortened or lengthened. In addition, communication from the debt collector often creditors communicate with the Bureau requests comment on how a containing a hyperlink to a disclosure. consumers regarding the placement or debt collector could obtain a consumer’s Proposed § 1006.42(d)(2)(iv) provides sale of a debt. The Bureau also requests oral consent to hyperlinked delivery of that the creditor must have informed the comment on whether debt collectors required disclosures. consumer of the information described who wish to provide required in § 1006.42(d)(1)(iii), (v), and (vi). The disclosures electronically pursuant to 42(d)(2) Communication by the Creditor Bureau proposes to require this proposed § 1006.42(c)(2)(ii) would be Instead of complying with the notice- information for the reasons discussed in more likely to choose the notice-and- and-opt-out process described in the section-by-section analysis of opt-out process described in proposed proposed § 1006.42(d)(1), which would proposed § 1006.42(d)(1).585 Proposed § 1006.42(d)(1) (communication by the rely on a communication between the comment 42(d)(2)–1 would clarify that a debt collector) or the notice-and-opt-out debt collector and the consumer, a debt creditor’s communication with the process described in proposed collector could choose to comply with consumer under § 1006.42(d)(2) may § 1006.42(d)(2) (communication by the the notice-and-opt-out process apply to multiple debts being placed creditor), and the reasons why. described in proposed § 1006.42(d)(2). with or sold to the same debt collector 42(e) Safe Harbors The notice-and-opt-out process at the same time. Proposed comment described in proposed § 1006.42(d)(2) 42(d)(2)–2 would clarify how the Proposed § 1006.42(e) would establish would rely on a communication requirement to communicate with the two safe harbors, the first covering between the creditor and the consumer. consumer before providing a provision of disclosures by mail and the Under proposed § 1006.42(d)(2), a hyperlinked disclosure works together second covering provision of the debt collector must, no more than 30 with the requirement to provide the validation notice within the body of an days before the debt collector’s consumer a reasonable period within email that is a debt collector’s initial electronic communication containing which to opt out. The comment explains communication with the consumer. the hyperlink to the disclosure, confirm that, in an oral communication with the Conduct that falls within these safe that the creditor: (1) Communicated consumer, such as a telephone or in- harbors would satisfy proposed with the consumer using the email person conversation, the creditor may § 1006.42(a)(1)’s notice and retainability address or, in the case of a text message, require the consumer to make an opt-out requirements. the telephone number to which the debt The Bureau proposes § 1006.42(e) to decision during that same collector intends to send the electronic implement and interpret FDCPA communication; however, a written or communication, and (2) informed the sections 809(a) and (b) and pursuant to electronic communication that requires consumer of the information in its authority under FDCPA section the consumer to make an opt-out proposed § 1006.42(d)(2)(i) through (iv). 814(d) to prescribe rules with respect to decision within a period of five or fewer The Bureau proposes to require the the collection of debts by debt creditor to have communicated using days does not satisfy proposed collectors. Under FDCPA section 809(a), the same email address or telephone § 1006.42(d)(2). The Bureau proposes to a debt collector must include certain number to which the debt collector require a creditor to allow a consumer information in the debt collector’s intends to send the electronic more than five days to make an opt-out initial communication with the communication containing the decision in order to grant sufficient time consumer or ‘‘send the consumer’’ a hyperlink to help ensure that the email for the consumer to see and respond to ‘‘written’’ notice (i.e., the validation address or telephone number is a valid an opt-out notice provided in a written notice) containing that information. one. The Bureau proposes the 30-day or electronic communication. Proposed Under FDCPA section 809(b), a debt timing requirement to ensure that the comment 42(d)(2)–3 would clarify that collector must ‘‘mail[ ] to the consumer’’ creditor’s communication with the an opt-out notice provided by a creditor any original-creditor or verification consumer occurs shortly before the debt under § 1006.42(d)(2) may be combined information it provides. As discussed in collector’s delivery of the electronic with an opt-out notice provided by the the section-by-section analysis of communication containing the creditor under § 1006.6(d)(3)(i)(B)(1). proposed § 1006.42(a)(1), a form of hyperlink to the consumer. The Bureau requests comment on delivery that is not reasonably expected Proposed § 1006.42(d)(2)(i) and (ii) proposed § 1006.42(d)(2) and on to provide actual notice may not satisfy provide that the creditor must have proposed comment 42(d)(2)–1. In FDCPA section 809(a)’s requirement to informed the consumer of the placement particular, the Bureau requests comment ‘‘send the consumer’’ a notice or FDCPA or sale of the debt to the debt collector, on whether the 30-day timing section 809(b)’s requirement to ‘‘mail[ ]’’ and of the name the debt collector uses requirement should be lengthened or original-creditor and verification when collecting debts. The Bureau shortened. In addition, the Bureau information to the consumer. In proposes to require this information to requests comment on whether the addition, a written or electronic notice help the consumer identify the debt that is not retainable may not satisfy 585 The process described in proposed collector and the debt collector’s § 1006.42(d)(2) for ensuring that consumers FDCPA section 809’s writing relationship to the creditor and the reasonably expect delivery of hyperlinked requirement. Conversely, a debt account. Proposed § 1006.42(d)(2)(iii) disclosures may generally align with some existing collector may reasonably expect that provides that the creditor must have industry practices. For example, some creditors conduct falling within the safe harbors may already notify consumers when a debt is informed the consumer of the debt placed for collection or sold to a third party. The described in proposed § 1006.42(e) will collector’s option to use the consumer’s communications described in proposed provide actual notice to the consumer in email address or, in the case of a text § 1006.42(d)(2) could be included in such notices. a retainable form.

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42(e)(1) Disclosures Provided by Mail 42(e)(2) Validation Notice Contained in would, except as provided in Proposed § 1006.42(e)(1) would the Initial Communication § 1006.42(c), require a debt collector to establish a safe harbor for delivery of In pre-proposal feedback, industry provide the disclosure in accordance disclosures by mail. Specifically, stakeholders asked the Bureau to clarify with the E-SIGN Act after the consumer proposed § 1006.42(e)(1) provides that a how to deliver the validation notice provides affirmative consent directly to debt collector satisfies § 1006.42(a)(1) if electronically in a debt collector’s initial the debt collector. Proposed the debt collector mails a printed copy communication with the consumer. § 1006.42(c)(1), which describes one of a required disclosure to the Proposed § 1006.42(e)(2) would provide element of the alternative procedures, consumer’s residential address, unless a safe harbor to debt collectors who would require a debt collector to the debt collector receives notification deliver a validation notice in the body provide the disclosure by sending an electronic communication to an email from the entity or person responsible for of an email that is the debt collector’s address or, in the case of a text message, delivery that the disclosure was not initial communication with the a telephone number that the creditor or delivered. consumer, provided certain other a prior debt collector could have used Although proposed § 1006.42(e)(1) conditions are satisfied. mentions the consumer’s residential The E-SIGN Act’s consumer consent to provide electronic disclosures in address, mailing a printed disclosure to provisions apply if a statute, regulation, accordance with section 101(c) of the E- another address, such as a consumer’s or other rule of law requires that SIGN Act. When it comes to providing the post office box, may be reasonably information relating to a transaction or validation notice in the body of an email expected to provide actual notice in transactions in or affecting interstate or that is the initial communication with certain circumstances. The Bureau foreign commerce be provided or made the consumer, however, it may be understands, however, that most debt available to a consumer in writing.587 appropriate to expand the email collectors send paper validation notices As discussed in the section-by-section addresses to which a debt collector may to residential addresses and that, in analysis of proposed § 1006.34(a)(1), send the disclosure. In particular, general, it is reasonable to expect that neither FDCPA section 809(a) nor because the E-SIGN Act does not apply sending a validation notice to a proposed Regulation F prohibit a debt to this form of delivery in the first place, consumer’s residential address will collector from providing the validation it may not be necessary to limit the safe provide actual notice. Accordingly, the information described in proposed harbor to those email addresses for safe harbor in proposed § 1006.42(e)(1) § 1006.34(c) orally or electronically in which a consumer has already provided only covers validation notices sent to the debt collector’s initial E-SIGN Act consent to the creditor or a residential addresses. The safe harbor in communication with the consumer. prior debt collector. Proposed proposed § 1006.42(e)(1) also would not Accordingly, the E-SIGN Act’s § 1006.6(d)(3) identifies procedures for apply if a debt collector receives consumer consent provisions do not identifying email addresses to which notification that the disclosure was not apply to the extent a debt collector debt collection communications can be delivered. This aspect of proposed provides the validation information in sent. As described in the section-by- § 1006.42(e)(1) is consistent with case the body of an email that is the debt section analysis of proposed law holding that a written notice collector’s initial communication with § 1006.6(d)(3), these proposed returned as undeliverable has not the consumer.588 However, proposed procedures are designed to ensure that actually been sent to the consumer § 1006.42(a)(1) would apply.589 Thus, a 586 a debt collector who uses a particular within the meaning of the FDCPA. debt collector who provides the Proposed comment 42(e)(1)–1 would email address or telephone number validation notice in the body of an email clarify that, for purposes of selected through the procedures does that is the debt collector’s initial § 1006.42(e)(1), a disclosure is not not have a reason to anticipate that an communication with the consumer mailed to a consumer’s residential unauthorized third-party disclosure may would need to do so in a manner address if the debt collector knows or occur. One point of the procedures is to reasonably expected to provide actual should know at the time of mailing that identify an email address or telephone notice and in a form that the consumer the consumer does not currently reside number that the consumer who owes or may keep and access later. at that location. The Bureau proposes allegedly owes the debt uses. Thus, if a The processes described in proposed this comment because, in such a debt collector includes the validation § 1006.42(b) may be reasonably circumstance, the debt collector likely notice in the body of an email that is its expected to provide actual notice in a lacks a reasonable expectation of actual initial communication with the form that the consumer may keep and notice. The Bureau requests comment consumer, sending the email to an email access later. Accordingly, a debt on proposed § 1006.42(e)(1) and on address selected through the procedures collector who provides the validation proposed comment 42(e)(1)–1. described in proposed § 1006.6(d)(3) notice in the body of an email that is the may be reasonably likely to provide debt collector’s initial communication 586 See, e.g., Johnson v. CFS II, Inc., No. 12–CV– actual notice to the consumer. 01091, 2013 WL 1809081, at *10 (N.D. Cal. Apr. 28, with the consumer would satisfy For these reasons, proposed 2013) (‘‘[I]f a debtor rebuts the presumption of § 1006.42(a)(1) by complying with § 1006.42(e)(2) provides that a debt proper delivery by showing that notice was sent to § 1006.42(b). Proposed § 1006.42(b)(1) an incorrect address or returned as undeliverable, collector who provides the validation the language and purpose of the FDCPA require notice described in § 1006.34(a)(1)(i)(A) 587 15 U.S.C. 7001(c). further action by a debt collector.’’); Johnson v. within the body of an email that is the Midland Credit Mgmt. Inc., No. 1:05 CV 1094, 2006 588 Conversely, the E-SIGN Act’s consumer WL 2473004, at *12 (N.D. Ohio Aug. 24, 2006) consent provisions do apply to the extent a debt initial communication with the (‘‘[W]hile the plain language of the statute does not collector provides the validation information consumer satisfies § 1006.42(a)(1) if the require the debt collector to ensure actual receipt outside of the initial communication because, under debt collector satisfies the requirements of the validation notice, the plain language does FDCPA section 809(a), that information must be in writing if not contained in the initial of § 1006.42(b) for validation notices require the debt collector to send the validation 590 notice to a valid and proper address where the communication. described in § 1006.34(a)(1)(i)(B). If consumer may actually receive it. If the debt 589 This is because proposed § 1006.42(a)(1) collector knows the validation notice was sent to would apply if a debt collector provides in writing 590 This means that, among other things, for a the wrong address, the debt collector has not or electronically a disclosure that is required by debt collector’s conduct to fall within the safe complied with the plain language of the statute.’’). Regulation F. harbor that proposed § 1006.42(e)(2) would create,

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such a debt collector follows the described in proposed § 1006.6(d)(3). In effective and efficient enforcement and procedures described in proposed addition, the Bureau requests comment supervision of Regulation F while not § 1006.42(c), the debt collector may, in on whether a debt collector who wishes unduly burdening debt collectors; lieu of sending the validation notice to to provide a validation notice in the during the SBREFA process, nearly all an email address that the creditor or a debt collector’s initial communication small entity representatives stated that prior debt collector could use for with the consumer is likely to use the they already retain many records for at delivery of electronic disclosures in safe harbor in proposed § 1006.42(d)(2) least three years. accordance with section 101(c) of the E- and, if not, the reasons why not. Proposed comment 100–1 would SIGN Act (as described in clarify that, under proposed § 1006.100, Subpart C—Reserved § 1006.42(c)(1)), send the validation a debt collector must retain evidence notice to an email address selected Subpart D—Miscellaneous that the debt collector performed the actions and made the disclosures through the procedures described in Section 1006.100 Record Retention proposed § 1006.6(d)(3). required by Regulation F. Proposed Proposed § 1006.42(e)(2) would create Proposed § 1006.100 would require a comment 100–1 also provides examples a safe harbor. It would not establish the debt collector to retain evidence of of the evidence that a debt collector only way a debt collector may deliver compliance with Regulation F. The could retain to show that the debt the validation notice in the body of an purpose of a record retention collector complied with certain sections email that is the debt collector’s initial requirement would be to promote of the regulation. Proposed comment communication with the consumer. Nor effective and efficient enforcement and 100–2 would clarify that proposed would it provide a safe harbor for a debt supervision of Regulation F. Any § 1006.100 would not require debt collector delivering the validation retention period therefore must be long collectors to retain paper copies of notice as a hyperlink in an email or text enough to ensure access to evidence that documents, provided the records are message that is the debt collector’s the debt collector performed the actions retained by a method that reproduces initial communication with the and made the disclosures required by the records accurately. Proposed consumer. Indeed, for the reasons the regulation. For ease of compliance, comment 100–3 would clarify that discussed in the section-by-section any retention period also should have proposed § 1006.100 would not require analysis of proposed § 1006.42(c)(2)(ii), easily determinable beginning and end debt collectors to record telephone calls, it may be unreasonable for a debt dates. but that a debt collector who records collector to expect that a consumer has For these reasons, the Bureau such calls must retain the recordings if actual notice of a validation notice proposes § 1006.100 to require a debt they are evidence of compliance with delivered by hyperlink—no matter the collector to retain evidence of Regulation F. email address or telephone number to compliance with Regulation F starting The Bureau requests comment on which the electronic communication on the date that the debt collector begins proposed § 1006.100 and on whether containing the hyperlink is sent—if the collection activity on a debt and ending any additional clarification is needed. In consumer does not expect to receive a three years after: (1) The debt collector’s particular, the Bureau requests comment hyperlinked disclosure from that last communication or attempted on the length of the retention period, the particular debt collector. Proposed communication in connection with the date from which the retention obligation collection of the debt; or (2) the debt is comment 42(e)(2)–1 would clarify that, should be measured, and the types of settled, discharged, or transferred to the if a consumer has opted out of debt records that should be maintained. The debt owner or to another debt collector. collection communications to a Bureau also requests comment on the Requiring debt collectors to begin particular email address or telephone burden proposed § 1006.100 would retaining evidence of compliance when number by, for example, following the impose on debt collectors who may collection activity begins should instructions provided pursuant to engage in initial attempts to collect a provide an easily determinable start § 1006.6(e), then a debt collector cannot debt and then transition to monitoring date. use that email address or telephone the account without engaging in any In the Small Business Review Panel number to deliver disclosures under collection communications but with the Outline, the Bureau described a § 1006.42(e)(2). intent or option of restarting collection proposal to determine the end of the The Bureau requests comment on at a later date. The Bureau also requests retention obligation from a debt proposed § 1006.42(e)(2) and on comment on whether there are scenarios collector’s last communication or proposed comment 42(e)(2)–1. In in which it is not possible to determine attempted communication with the particular, the Bureau requests comment the last communication or attempted consumer about a debt. Proposed on whether using an email address communication, such as when a person § 1006.100 is not limited to selected through the procedures contacts the debt collector without communications or attempted described in proposed § 1006.6(d)(3) is outreach from the debt collector. The communications with a consumer; a reasonably likely to provide actual Bureau further requests comment on the communication with any person may notice to the consumer. The Bureau also merits of narrowing this prong to the serve as the end date from which the requests comment on whether a debt debt collector’s last communication or retention period may be calculated. collector who wishes to provide the attempted communication with the Proposed § 1006.100 also adds that the validation notice in the body of an email consumer in connection with the end of the retention period may be that is the debt collector’s initial collection of the debt, instead of the calculated from the time a debt is communication with the consumer is debt collector’s last communication or settled, discharged, or transferred to the more likely to send the validation notice attempted communication with any debt owner or to another debt collector. to an email address described in person. The Bureau requests comment This addition is intended to provide proposed § 1006.42(c)(1) or to an email on whether the two alternative proposed debt collectors with a more easily address selected through the procedures end dates of the retention period ascertainable date from which to provide sufficient clarity on calculating a debt collector would need to comply with the measure their retention obligations, if the retention period. requirement proposed in § 1006.42(b)(4) to provide such a date exists. The proposed three- During the SBREFA process, some the validation notice in a responsive form. year retention period should promote small entity representatives stated that

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they retain some information, such as with the laws of any State 592 with particular, consistent with the Small telephone calls or notes, for less than respect to debt collection practices, Business Review Panel’s three years, and they expressed concern except to the extent that those laws are recommendation, the Bureau requests about the potential cost of storing inconsistent with any provision of the comment on whether disclosures additional data. The Small Business Act, and then only to the extent of the required by specific State or local laws Review Panel recommended that the inconsistency. FDCPA section 816 also are inconsistent with the Bureau’s Bureau seek more information to provides that, for purposes of that proposed disclosures, and any specific estimate the costs of record retention section, a State law is not inconsistent burdens or costs caused by such overlap and request comment about whether the with the Act if the protection such law or conflict. affords any consumer is greater than the retention of some records, such as Section 1006.108 Exemption for State protection provided by the Act.593 telephone calls, poses particularly high Regulation and Appendix A Procedures costs for any debt collectors. The Bureau The Bureau proposes § 1006.104 to implement FDCPA section 816 and for State Application for Exemption requests comment on these topics, on From the Provisions of the Act debt collectors’ current record retention pursuant to its authority under FDCPA FDCPA section 817 provides that the practices, and on the benefits to section 814(d) to prescribe rules with respect to the collection of debts by debt Bureau shall by regulation exempt from consumers of a record retention collectors. Proposed § 1006.104 mirrors the requirements of the Act any class of requirement that applies to all FDCPA- the statute, except that proposed debt collection practices within any covered debt collectors. § 1006.104 refers to both the provisions State if the Bureau determines that, The Bureau proposes § 1006.100 of the Act and the corresponding under the law of that State, that class of pursuant to its authority under Dodd- provisions of Regulation F. debt collection practices is subject to Frank Act section 1022(b)(1), which, As discussed in the section-by-section requirements substantially similar to among other things, provides that the analysis of proposed § 1006.34, some those imposed by the Act, and that there Bureau’s director may prescribe rules States and localities impose their own is adequate provision for and issue orders and guidance as may disclosure requirements on debt enforcement.596 Sections 1006.1 be necessary or appropriate to enable collectors. During the SBREFA process, through 1006.8 of current Regulation F the Bureau to administer and carry out several small entity representatives implement FDCPA section 817 and set the purposes and objectives of the expressed concern about possible forth procedures and criteria whereby Federal consumer financial laws and to overlap or inconsistencies between State States may apply to the Bureau for prevent evasions thereof. The Bureau and local disclosure requirements and exemption of debt collection practices also proposes § 1006.100 pursuant to the Bureau’s proposed disclosure within the applying State from the Dodd-Frank Act section 1024(b)(7)(A), requirements. In its report, the Small provisions of the Act.597 The Bureau which authorizes the Bureau to Business Review Panel recommended proposes to retain these procedures and prescribe rules to facilitate supervision that the Bureau continue to consider criteria, reorganized as § 1006.108 and of persons identified as larger State law disclosures, particularly to appendix A and with the minor changes participants of a market for a consumer determine whether there are any for clarity described below, to financial product or service as defined specific burdens or costs caused by implement and interpret FDCPA section by rule in accordance with section overlap or conflict between the Bureau’s 817 and pursuant to its authority under 1024(a)(1)(B) of the Dodd-Frank Act; 591 disclosures and State disclosures. The FDCPA section 814(d) to prescribe rules and Dodd-Frank Act section Panel also recommended that the with respect to the collection of debts by 1024(b)(7)(B), which authorizes the Bureau continue to consider whether debt collectors. Bureau to require a person described in clarifications may be necessary in the Consistent with existing § 1006.2, Dodd-Frank Act section 1024(a)(1) to event that Federal disclosures overlap proposed § 1006.108(a) provides that 594 retain records for the purpose of with State law requirements. any State may apply to the Bureau for facilitating supervision of such persons Consistent with the Small Business a determination that, under the laws of and assessing and detecting risks to Review Panel’s recommendations, that State, any class of debt collection consumers. For the reasons described proposed comment 104–1 would clarify practices within that State is subject to above, the Bureau proposes § 1006.100 that a disclosure required by applicable requirements that are substantially to facilitate supervision of, and to assess State law that describes additional similar to, or provide greater protection and detect risks to consumers posed by, protections under State law does not for consumers than, those imposed contradict the requirements of the Act under FDCPA sections 803 through 812, debt collectors that are larger or the corresponding provisions of the and that there is adequate provision for participants of the consumer debt regulation.595 State enforcement of such requirements. collection market, as defined by rule, The Bureau requests comment on Proposed § 1006.108(a) would clarify and to enable the Bureau to conduct proposed § 1006.104 and proposed that, to be eligible for an exemption, the enforcement investigations to identify comment 104–1, including on whether class of debt collection practices within and help prevent and deter the abusive, any additional clarification is needed. In that State also would need to be subject unfair, and deceptive debt collection to requirements that are substantially practices identified in the regulation. 592 Proposed § 1006.2(l) would define State to similar to, or provide greater protection mean ‘‘any State, territory, or possession of the for consumers than, the provisions of Section 1006.104 Relation to State United States, the District of Columbia, the Laws Commonwealth of Puerto Rico, or any political Regulation F corresponding to FDCPA subdivision of any of the foregoing.’’ sections 803 through 812. FDCPA section 816 provides that the 593 15 U.S.C. 1692n. Proposed § 1006.108(b) provides that Act does not annul, alter, or affect, or 594 Small Business Review Panel Report, supra the procedures and criteria whereby exempt any person subject to the note 57, at 34. States may apply to the Bureau for provisions of the Act from complying 595 In response to the Small Business Review exemption of a class of debt collection Panel’s recommendations on this issue, proposed § 1006.34(d)(3)(iv) permits a debt collector to 591 12 CFR 1090.105 defines larger participants of include State law disclosures on the reverse of the 596 15 U.S.C. 1692o. the consumer debt collection market. validation notice. 597 12 CFR part 1006.

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practices within the applying State from Third, proposed paragraph III(d) of has obtained an exemption to submit the provisions of the Act and the appendix A would repeat existing such reports to the Bureau as the Bureau corresponding provisions of Regulation § 1006.3(e) with certain clarifications. may from time to time require. The F are set forth in appendix A to the Existing § 1006.3(e) requires the Bureau proposes to clarify that this regulation. Proposed appendix A, in applicant State to submit, among other provision requires the State to submit to turn, sets forth the procedures and supporting materials, information the Bureau, not later than two years criteria whereby States may apply to the regarding the State’s fiscal arrangements after the date the exemption is granted, Bureau for the exemption described in for administrative enforcement and the and every two years thereafter, a written proposed § 1006.108. Proposed number and qualifications of report concerning the manner in which enforcement personnel, along with a appendix A largely mirrors existing the State has enforced its law in the description of State enforcement §§ 1006.1 through 1006.8, with certain preceding two years and an update of procedures. In assessing the adequacy of organizational changes and other, minor the information required under changes for clarity and to more closely State enforcement, however, existing proposed paragraph III(d) of appendix track the statute. The Bureau also § 1006.4(b)—which is repeated in A. By requiring such information to be proposes to amend the current notice proposed paragraph IV(b) of appendix system for acting on State requests for A—requires the Bureau to consider updated every two years, proposed exemption to a proposed and final rule three general categories of information: appendix A would ensure that the system. necessary facilities, personnel, and Bureau is aware of changes that may As with proposed § 1006.108(a), funding. Because the criteria for affect the State’s capacity to enforce the proposed appendix A would clarify evaluating the adequacy of State laws that qualified the State for the that, to be eligible for an exemption, the enforcement refers to these general exemption. class of debt collection practices within categories of information, the Bureau The Bureau requests comment on the applying State also would need to be proposes that paragraph III(d) of proposed § 1006.108 and proposed subject to requirements that are appendix A also refer to these general appendix A, and on whether any substantially similar to, or provide categories of information. Proposed additional clarification is needed. The paragraph III(d) of appendix A therefore greater protection for consumers than, Bureau also requests comment on the provisions of Regulation F would require the applicant State to submit information concerning the whether proposed § 1006.108 should be corresponding to FDCPA sections 803 clarified or broadened to allow for an through 812. The Bureau also proposes adequacy of enforcement, including information about necessary facilities, exemption from provisions of to revise certain phrases in existing Regulation F that are not based §§ 1006.1 through 1006.8 to ensure personnel, and funding. Proposed paragraph III(d) of appendix A also exclusively on FDCPA sections 803 uniform terminology throughout through 812. Similarly, the Bureau appendix A. For example, proposed would clarify that examples of requests comment on whether proposed appendix A would use the phrase ‘‘more information relating to adequacy of § 1006.108 should be clarified or protective of consumers than’’ State law enforcement that an applicant State throughout, rather than variations such must submit include the State’s fiscal broadened to allow for an exemption as ‘‘more extensive than’’ and ‘‘more arrangements for administrative State from provisions of Regulation F that are favorable than’’ State law, which appear enforcement, the number and based solely on the Bureau’s authority in certain places in existing §§ 1006.3 qualifications of enforcement personnel, under the Dodd-Frank Act. The Bureau and 1006.4. and a description of the State’s potentially could adopt such a process enforcement procedures. pursuant to its exemption authority Proposed appendix A would include Fourth, the Bureau proposes to clarify several additional changes to existing under section 1022(b)(3)(A) of the Dodd- in proposed paragraph IV(a)(1)(i) of Frank Act. Regulation F. appendix A that the ‘‘substantially First, to streamline appendix A, the similar’’ standard in FDCPA section 817 Further, current Regulation F includes Bureau proposes to include two new applies to the Bureau’s consideration of the phrase ‘‘provide greater protection definitions in proposed paragraph I(b). all aspects of the State law for which the for consumers than,’’ which is a concept The first, in proposed paragraph I(b)(1), exemption is sought, including defined incorporated from FDCPA section 816. would define ‘‘applicant State law’’ to terms and rules of construction. Existing It also provides that ‘‘[a]fter an mean the State law that, for a class of § 1006.4(a)(1)(i) states that defined terms exemption is granted, the requirements debt collection practices within that and rules of construction must be ‘‘the of the applicable State law constitute State, is claimed to contain same’’ as the FDCPA. The Bureau the requirements of relevant Federal requirements that are substantially interprets FDCPA section 817’s law, except to the extent such State law similar to the requirements that relevant substantial similarity standard also to imposes requirements not imposed by Federal law imposes on that class of apply to defined terms and rules of the Act or this part.’’ The Bureau does debt collection practices, and that construction. That standard permits not propose to change this language in contains adequate provision for State variation from FDCPA defined terms proposed § 1006.108 or proposed enforcement. The second, in proposed and rules of construction, as long as the paragraph I(b)(3), would define appendix A, as the Bureau does not seek State law definitions and rules of to make additional substantive changes ‘‘relevant Federal law’’ to mean sections construction are substantially similar to to the requirements for State requests for 803 through 812 of the Act (15 U.S.C. or more protective of consumers than exemption. The Bureau requests 1692a through 1692j) and the the FDCPA. Accordingly, proposed corresponding provisions of Regulation paragraph IV(a)(1)(iv) of appendix A comment on the use of this language in F. Accordingly, the proposed text of uses the phrase ‘‘substantially similar’’ proposed § 1006.108 and proposed appendix A substitutes these terms rather than ‘‘the same.’’ appendix A. throughout where appropriate. Fifth, proposed paragraph VI(b) of Second, proposed appendix A would appendix A would repeat existing strike existing § 1006.3(c) as redundant § 1006.6(b) with certain clarifications. of proposed paragraph III(a) as revised. Existing § 1006.6(b) requires a State that

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Appendix C to Part 1006—Issuance of The Bureau requests comment on the this, policies that increase protections Advisory Opinions 598 preliminary analysis presented below as for consumers with debts in collection The Bureau proposes to add appendix well as submissions of additional data involve a tradeoff between the benefits C to Regulation F to publish a list of any that could inform the Bureau’s analysis of protections for such consumers and advisory opinions that the Bureau issues of the benefits, costs, and impacts. the possibility of increased costs of pursuant to FDCPA section 813(e). Debt collectors play a critical role in credit and reduced availability of credit Proposed appendix C would clarify that markets for consumer financial products for all consumers. Whether there is a net any act done or omitted in good faith in and services. Credit markets function benefit from such protections depends conformity with any advisory opinion because lenders expect that borrowers on whether consumers value the issued by the Bureau, including those will pay them back. In consumer credit protections enough to outweigh any referenced in appendix C, provides the markets, if borrowers fail to repay what associated increase in the cost of credit protection from liability for FDCPA- they owe per the terms of their loan or reduction in availability of credit. based violations afforded under FDCPA agreement, creditors often engage debt The proposal would further the section 813(e). Proposed appendix C collectors to attempt to recover amounts FDCPA’s goals of eliminating abusive also includes instructions for requesting owed, whether through the court system debt collection practices and ensuring an advisory opinion. The Bureau or through less formal demands for that debt collectors who refrain from repayment. such practices are not competitively requests comment on whether 602 additional clarification regarding the In general, third-party debt collection disadvantaged. However, as effect of conformity with Bureau creates the potential for market failures. discussed below, it is not clear based on advisory opinions would be helpful. Consumers do not choose their debt the information available to the Bureau collectors, and as a result debt collectors at this time whether the net effect of the Supplement I to Part 1006—Official do not have the same incentives that proposal’s different provisions would be Interpretations creditors have to treat consumers to make it more costly or less costly for The Bureau proposes to add fairly.600 Certain provisions of the debt collectors to recover unpaid Supplement I to Regulation F to publish FDCPA may help mitigate such market amounts, and therefore not clear official interpretations of the regulation failures in debt collection, for example whether the proposal would tend to (i.e., commentary). Proposed comment by prohibiting unfair, deceptive, or increase or decrease the supply of I–1 explains that the commentary is the abusive debt collection practices by credit. The proposed rule would benefit Bureau’s vehicle for supplementing third-party debt collectors. both consumers and debt collectors by Regulation F and has been issued Any restriction on debt collection increasing clarity and certainty about pursuant to the Bureau’s authority to may reduce repayment of debts, what the FDCPA prohibits and requires. prescribe rules under 15 U.S.C. 1692l(d) providing a benefit to some consumers When a law is unclear, it is more likely and in accordance with the notice-and- who owe debts and an offsetting cost to that parties will disagree about what the comment procedures for informal creditors and debt collectors. A decrease law requires, that legal disputes will rulemaking under the Administrative in repayment will in turn lower the arise, and that litigation will be required Procedure Act. Proposed comment I–2 expected return to lending. This can to resolve disputes. Since 2010, sets forth the procedure for requesting lead lenders to increase interest rates consumers have filed approximately that an official interpretation be added and other borrowing costs and to restrict 10,000 to 12,000 lawsuits under the to Supplement I, and proposed availability of credit, particularly to FDCPA each year.603 The number of comment I–3 describes how the higher-risk borrowers.601 Because of disputes settled without litigation has commentary is organized and likely been much greater.604 Perhaps numbered. Proposed commentary by consumers to consumer financial products or more important than the costs of relating to specific sections of the services; the impact of the proposed rule on insured resolving legal disputes are the steps depository institutions and insured credit unions regulation are addressed in the section- with $10 billion or less in total assets as described that debt collectors take to prevent legal by-section analyses of those sections, in section 1026 of the Dodd-Frank Act (12 U.S.C. disputes from arising in the first place. above. The Bureau requests comment on 5516); and the impact on consumers in rural areas. This includes direct costs of legal proposed comments I–1, –2, and –3, 600 Consumers do choose their lenders, and in compliance, such as auditing and legal principle consumer loan contracts could specify advice, as well as indirect costs from including on whether additional which debt collector would be used or what debt clarification regarding either the collection practices would be in the event a loan avoiding collection practices that might purpose or organization of Supplement is not repaid. Some economists have identified be both effective and legal but that raise I, or the procedure for requesting official potential market failures that prevent loan contracts potential legal risks. In some cases, debt from including such terms even when they could interpretations, would be helpful. make both borrowers and lenders better off. For consumer demand for credit is generally not VI. Dodd-Frank Act Section 1022(b) example, terms related to debt collection may not be salient to consumers at the time a loan is made. responsive to differences in creditor remedies. See Analysis Alternatively, if such terms are salient, a contract James Barth et al., Benefits and Costs of Legal Restrictions on Personal Loan Markets, Journal of A. Overview that provides for more lenient collection practices may lead to adverse selection, attracting a Law & Economics, 29(2) (1986). In developing the proposed rule, the disproportionate share of borrowers who know they 601 See 15 U.S.C. 1692(e). are more likely to default. See Thomas A. Durkin 602 See id. Bureau has considered the proposal’s 603 599 et al., Consumer Credit and the American Economy See WebRecon LLC, WebRecon Stats for Dec potential benefits, costs, and impacts. 521–525 (Oxford U. Press 2014) (discussing 2017 & Year in Review, https://webrecon.com/ potential sources of market failure and potential webrecon-stats-for-dec-2017-year-in-review (last 598 Proposed appendix A is discussed in the problems with some of those arguments). visited May 6, 2019). Greater clarity about legal section-by-section analysis of proposed § 1006.108. 601 See id. (discussing theory and evidence on requirements could reduce unintentional violations Proposed appendix B is discussed in the section- how restrictions on creditor remedies affect the and could also reduce lawsuits because, when by-section analyses of proposed §§ 1006.26 and supply of credit). Empirical evidence on the impact parties can better predict the outcome of a lawsuit, 1006.34. of State laws restricting debt collection is discussed they may be more likely to settle claims out of 599 Specifically, section 1022(b)(2)(A) of the in section G below. The provisions in this proposal court. Dodd-Frank Act (12 U.S.C. 5512(b)(2)(A)) requires could also affect consumer demand for credit, to the 604 Some debt collectors have reported that they the Bureau to consider the potential benefits and extent that consumers contemplate collection receive approximately 10 demand letters for each costs of the regulation to consumers and covered practices when making borrowing decisions. lawsuit filed. See Small Business Review Panel persons, including the potential reduction of access However, there is evidence suggesting that Outline, supra note 56, at 69 n.105.

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collectors seeking to follow the law and by using voicemail and email as currently receive about debts, which avoid litigation have adopted practices communication channels. This might could reduce costs to consumers and that appear to be economically occur if debt collectors still fear some debt collectors from disputes that arise inefficient, with costs that exceed the legal risk from other channels, or if they when consumers do not recognize the benefits to consumers or even impose find the new communication methods debt or understand the basis for the net costs on consumers.605 are not effective in reaching consumers. alleged amount due. At the same time, Several provisions of the proposed In this case, although the number of the proposal’s clearer explanation of rule would likely change the way debt telephone calls would be reduced, it dispute rights could make consumers collectors communicate with would come at the cost of making it more likely to dispute, which could consumers, and the potential impacts of more difficult for debt collectors to provide benefits to consumers while these provisions are likely to interact reach some consumers, reducing increasing costs for debt collectors. with each other in ways that are revenue and potentially imposing costs Disputes are costly for debt collectors to difficult for the Bureau to predict. Most on both consumers and debt collectors process, so these proposed requirements significant of these are the provisions from increased litigation to recover could either increase or decrease debt related to frequency limits for telephone debts. collector and consumer costs depending calls, limited-content messages, and The effect of the proposal on debt on the net effect on dispute rates. electronic disclosures, although other collectors would likely lie somewhere In developing the proposed rule, the provisions such as the proposed model in between these two extremes, and the Bureau has consulted, or offered to validation notice might fall into this Bureau believes these effects will likely consult with, the appropriate prudential category as well. The communication vary by debt collector and type of debt. regulators and other Federal agencies, provisions collectively are likely to If the proposed communication including regarding consistency with reduce the number of telephone calls provisions were adopted in a final rule, any prudential, market, or systemic from debt collectors. Currently many, some firms would likely adopt newer objectives administered by such though by no means all, debt collectors communication methods due to the agencies. communicate with consumers strictly reduced legal risk and find less need for through actual and attempted live telephone calls, while other firms would B. Provisions To Be Analyzed telephone calls and postal mail, with no not do so or would not experience the The analysis below considers the communication by voice message, same effect. Still other firms might be potential benefits, costs, and impacts to email, text message, or other electronic largely unaffected by the consumers and covered persons of key media. communication-related provisions in provisions of the proposed rule It is possible that the net effect of the the proposal. As discussed below, some (proposed provisions), which include: proposed provisions would be to make debt collectors currently place only one 1. Prohibited communications with debt collection more effective: Debt or two calls per week to any consumer, consumers. collectors who currently communicate and such debt collectors are unlikely to 2. Frequency limits for telephone calls by live telephone calls in excess of the change their calling practices and may and telephone conversations. proposed limits could substitute for not find it cost-effective to develop the 3. Limited-content messages. some of the excessive call volume by information-technology infrastructure 4. Time-barred debt: prohibiting suits leaving voice messages and sending necessary to communicate by email or and threats of suit. email, and consumers could respond to text message. Relatedly, the Bureau is 5. Communication prior to furnishing this change in communication channels aware of at least one mid-sized information. by engaging with such debt collectors as collection firm that primarily uses email 6. Prohibition on the sale or transfer much as or more than they currently do for communication currently, and such of certain debts. by telephone. If this occurs, consumers firms also will be unlikely to alter their 7. Notice for validation of debts. could benefit from a reduction in calls practices, although they may benefit 8. Electronic disclosures and that may annoy, abuse, or harass them, from reduced litigation costs. communications. as well as from resolving their In short, the proposed provisions In addition to the proposed provisions outstanding debts in a more timely related to communications would likely listed above, the Bureau proposes to fashion. At the same time, debt reduce the overall number of calls per codify several FDCPA provisions into collectors could benefit from reduced consumer, while at the same time the rule and to add certain clarifying time spent making calls and from potentially reducing the number of calls commentary. increased revenue. There is some reason required to reach each consumer. C. Data Limitations and Quantification to believe this may occur—as noted Although the Bureau believes it is likely of Benefits, Costs, and Impacts below, a substantial fraction of that consumers would benefit directly consumers prefers to communicate by from a reduction in calls that annoy, The discussion in this part VI.C relies email, and consumers may well be more abuse, or harass them, the Bureau on publicly available information as likely to return a voice message than to cannot predict the net effect of these well as information the Bureau has answer their telephones in response to provisions on debt collectors’ costs and obtained. To better understand a call from an unknown number. revenues or the net change in indirect consumer experiences with debt Alternatively, the proposed costs to consumers from potential credit collection, the Bureau developed its provisions might make debt collection reporting and litigation in the event debt 2015 Debt Collection Consumer Survey, less effective: Debt collectors could collectors cannot reach them. which provides the first comprehensive comply with the frequency limits, Apart from the proposed and nationally representative data on reducing outbound calling, but end up communication provisions, other consumers’ experiences and preferences not increasing contact with consumers provisions of the proposal could make related to debt collection.606 The Bureau debt collection either more or less costly 605 For example, as discussed further below, in ways that are difficult to predict. For 606 The Bureau’s survey was conducted between many debt collectors currently avoid leaving voice example, the proposed validation notice December 2014 and March 2015. Consumers with messages for consumers or communicating with and without debts in collection were asked to consumers by email because sending voice requirements would provide consumers complete this survey in order to provide the Bureau messages or emails may create legal risks. with more information than they Continued

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also relies on its consumer complaint quantitative estimates based on these collect consumer debt owed to others; data, its Consumer Credit Panel, the principles and the data available. Some and loan servicers when they acquire Credit Card Database,607 and other benefits and costs, however, are not servicing of loans already in default. sources to understand potential benefits amenable to quantification, or are not Although creditors that collect on and costs to consumers of the proposed quantifiable given the data available to debts they own generally would not be rule.608 To better understand potential the Bureau. The Bureau provides a affected directly by the proposal, they effects of the proposed rule on industry, qualitative discussion of those benefits, may experience indirect effects. the Bureau has engaged in significant costs, and impacts. The Bureau requests Creditors that hire or sell debts to outreach to industry, including the additional data or studies that could FDCPA-covered debt collectors may Operations Survey.609 In July 2016, the help quantify the benefits and costs to experience higher costs if debt Bureau consulted with small entities as consumers and covered persons of the collectors’ costs increase and if those part of the SBREFA process and proposed rule. costs are passed on to creditors. As obtained important information on the D. Baseline for Analysis described below, the Bureau believes potential impacts of proposals that the that many compliance costs on FDCPA- Bureau was considering at the time, In evaluating the potential benefits, covered debt collectors will be one-time many of which are included in the costs, and impacts of the proposal, the costs to come into compliance rather proposed rule.610 Bureau takes as a baseline the current than ongoing costs to stay in The sources described above, together legal framework governing debt compliance. To the extent compliance with other sources of information and collection. This includes the costs are incurred only once to adjust the Bureau’s market knowledge, form requirements of the FDCPA as currently existing debt collectors’ systems and do the basis for the Bureau’s consideration interpreted by courts and law not increase costs for new entrants, they of the likely impacts of the proposed enforcement agencies, other Federal are unlikely to be passed on to creditors. rule. The Bureau makes every attempt to laws, and the rules and statutory provide reasonable estimates of the requirements promulgated by the States. F. Potential Benefits and Costs to potential benefits and costs to In the consideration of benefits and Consumers and Covered Persons consumers and covered persons of this costs below, the Bureau discusses its The Bureau discusses the benefits and proposal. While the Debt Collection understanding of practices in the debt costs of the proposal to consumers and Consumer Survey provides collection market under this baseline covered persons (generally FDCPA- representative data on consumer and how those practices would change covered debt collectors) in detail experiences with debt collection, the under the proposal. below.611 The Bureau believes that an survey responses generally do not Until the creation of the Bureau, no important benefit of many of the permit the Bureau to quantify, in dollar Federal agency was given the authority proposed provisions to both consumers terms, how particular proposed to write substantive regulations and covered persons—compared to the provisions will affect consumers. With implementing the FDCPA, meaning that baseline of the FDCPA as currently respect to industry impacts, much of the many of the FDCPA’s requirements are interpreted by courts and law Bureau’s existing data come from subject to interpretations in court enforcement agencies—is an increase in qualitative input from debt collectors decisions that are not always consistent clarity and precision of the law and other entities that operate in this or fully authoritative, such as a single governing debt collection. Greater market rather than representative district court opinion on an issue. Debt certainty about legal requirements can sampling that would allow the Bureau collectors’ practices reflect their benefit both consumers and debt to estimate total benefits and costs. interpretations of the FDCPA and their collectors, making it easier for General economic principles and the decisions about how to balance effective consumers to understand and assert Bureau’s expertise in consumer collection practices against litigation their rights and easier for firms to financial markets, together with the data risk. Many of the impacts of the ensure they are in compliance. The and findings that are available, provide proposed rule relative to the baseline Bureau discusses these benefits in more insight into the potential benefits, costs, would arise from changes that debt detail with respect to certain provisions and impacts of the proposed rule. collectors would make in response to below but believes that they generally Where possible, the Bureau has made additional clarity about the most apply, in varying degrees, to all of the appropriate interpretation of what proposed provisions discussed below. with data necessary to understand experience and conduct is permissible and not demographics of consumers who have been permissible under the FDCPA’s 1. Prohibited Communications With contacted by debt collectors. Consumers were Consumers selected using the Bureau’s Consumer Credit Panel, provisions. a de-identified 1-in-48 sample of Americans with E. Coverage of Proposal Proposed § 1006.6(b) generally would consumer reports at one of the nationwide CRAs. implement FDCPA section 805(a)’s See CFPB Debt Collection Consumer Survey, supra The proposed rule would apply to prohibition on a debt collector note 18, at 7–10. debt collectors as defined in the FDCPA. 607 communicating with a consumer at The Credit Card Database is a compilation of This definition encompasses a number de-identified loan-level information from the credit unusual or inconvenient times and of types of businesses, which can be card portfolios of large banks. See Bureau of places, with a consumer represented by generally categorized as: Collection Consumer Fin. Prot., Credit Card Agreement an attorney, and at a consumer’s place Database, https://www.consumerfinance.gov/credit- agencies, which collect payments owed of employment. This section would also cards/agreements/ (last visited May 6, 2019). to their clients, often for a contingency 608 For more information about Bureau data expressly prohibit attempts to make sources, see Sources and Uses of Data at the Bureau fee; debt buyers, which purchase of Consumer Financial Protection (Sept. 2018), delinquent debt and attempt to collect 611 For purposes of the section 1022(b)(2) https://www.consumerfinance.gov/data-research/ it, either themselves or through agents, analysis, the Bureau considers any consequences research-reports/sources-and-uses-data-bureau- or who may have as their principal that consumers perceive as harmful to be a cost to consumer-financial-protection/. purpose the collection of consumer consumers. In considering whether consumers 609 See CFPB Debt Collection Operations Study, might perceive certain activities as harmful, the supra note 45. debt; collection law firms that either Bureau is not analyzing whether those activities 610 See Small Business Review Panel Report, have as their principal purpose the would be unlawful under the FDCPA or the Dodd- supra note 57. collection of consumer debt or regularly Frank Act.

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such communications, which debt of a particular debt either: (i) More than of this reduction. Although the Bureau’s collectors already must avoid given that seven times within seven consecutive data do not permit it to reliably quantify a successful attempt would be an days, or (ii) within a period of seven either the reduction in call frequency or FDCPA violation. Proposed consecutive days after having had a how much borrowers would value this § 1006.14(h)(1) would interpret FDCPA telephone conversation with the person reduction in dollar terms, the discussion section 806’s prohibition on a debt in connection with the collection of below summarizes the data available to collector engaging in any conduct the such debt. Proposed § 1006.14(b)(4) the Bureau on these two points. natural consequence of which is to would clarify the effect of complying Data from the CFPB Debt Collection harass, oppress, or abuse any person in with the frequency limits in Consumer Survey indicate that debt connection with the collection of a debt § 1006.14(b)(2), stating that a debt collectors often may attempt to contact to prohibit debt collectors from collector who does not exceed the limits consumers more frequently than seven communicating or attempting to complies with § 1006.14(b)(1) and times per week. In the survey, 35 communicate with consumers through a FDCPA section 806(5), and does not, percent of consumers who had been medium of communication if the based on the frequency of its telephone contacted by a debt collector said the consumer has requested that the debt calls, violate § 1006.14(a), FDCPA debt collector had contacted or collector not use that medium to section 806, or Dodd-Frank Act sections attempted to contact them four or more communicate with the consumer. 1031 or 1036(a)(1)(B). times per week, including 14 percent Debt collectors are already prohibited Potential benefits to consumers. Calls who said the debt collector had from communicating with consumers at debt collectors make with intent to contacted or attempted to contact them a time or place that is known or should annoy, abuse, or harass consumers are eight or more times per week.614 be known to be inconvenient to the likely to cause them harm, and the Another 29 percent said that the debt consumer. The Bureau therefore expects Bureau has evidence, discussed below collector had attempted to contact them that debt collectors already keep track of and in part V, that many consumers one to three times per week.615 The what consumers tell them about the perceive harm from debt collectors’ survey question did not ask respondents times and places that they find repeated telephone calls.612 The to distinguish between actual contacts inconvenient and avoid communicating proposed provision would limit this and contact attempts, and consumers or attempting to communicate with harm by capping the frequency of are likely not aware of all unsuccessful consumers at those times or places. telephone calls and telephone contact attempts. Still, the survey Similarly, the proposed provisions conversations.613 FDCPA section 806 responses suggest that it is not regarding communication with already prohibits conduct the natural uncommon for debt collectors to attorneys and at the consumer’s place of consequence of which is to harass, attempt to telephone consumers more employment track consumer debt oppress, or abuse any person. FDCPA than seven times per week, and the collector practices that are already section 806(5) also specifically prohibits responses would be consistent with required to comply with the FDCPA. repeated or continuous calling and many debt collectors having live The Bureau understands that many debt telephone conversations with ‘‘intent to telephone conversations with collectors currently employ systems and annoy, abuse, or harass any person at consumers more frequently than the one business processes designed to limit the called number.’’ These prohibitions time per week that generally would be communication attempts to consumers have been interpreted differently by permitted under the proposal.616 Based at inconvenient times and places and different courts, and while some debt on this, it is reasonable to estimate that that many debt collectors also use these collectors call consumers less frequently at least 6.9 million consumers 617 are systems and processes to prevent than the proposed frequency limits called by debt collectors more than communications with consumers would permit, there are many debt seven times in one week during a year. through media that consumers have told collectors who place telephone calls to The CFPB Debt Collection Consumer them are inconvenient. The proposed consumers or engage consumers in Survey provides evidence that many provisions might benefit consumers and telephone conversations more consumers would benefit if they debt collectors by providing further frequently than the proposed frequency received fewer calls from debt clarity in the application of the limits would permit. collectors, although it does not provide requirements of FDCPA section 805(a) To quantify consumer benefits from and 806, but the Bureau does not expect the proposed provision, the Bureau 614 CFPB Debt Collection Consumer Survey, supra that the proposed provision would would need information regarding both note 18, at 44 n.5. cause significant changes to debt how much the provision would reduce 615 Id. collectors’ existing practices. the number of calls debt collectors place 616 Information from industry also confirms that to consumers and the benefit (or harm) debt collectors sometimes attempt to communicate 2. Frequency Limits for Telephone Calls more than seven times per week. See discussion each consumer would receive as a result and Telephone Conversations under ‘‘Costs to covered persons’’ below. 617 This is calculated as 14 percent of an Proposed § 1006.14(b)(1) would 612 The FDCPA’s standard of liability for estimated 49 million consumers contacted by debt prohibit a debt collector from, in excessive calling is not perceived harm by collectors each year. The Bureau estimates that connection with the collection of a debt, consumers, but rather depends on the debt about 32 percent of consumers with a credit file, or collector’s intent or the ‘‘natural consequence’’ of about 67 million, are contacted each year by a placing telephone calls or engaging in the conduct. See FDCPA section 806(5) and 806, 15 creditor or debt collector attempting to collect a telephone conversations repeatedly or U.S.C. 1692d(5) and 1692d. Nonetheless, section debt. Of those, 23 percent were most recently continuously with intent to annoy, 1022(b)(2)(A) of the Dodd-Frank Act requires the contacted by a creditor, 63 percent by a debt abuse, or harass any person at the called Bureau to consider the potential benefits and costs collector, and 15 percent did not know whether the of its regulation to consumers and covered persons, contact was from a creditor or debt collector. Based number. Proposed § 1006.14(b)(2) which may include potential benefits or costs that on this, the Bureau estimates that 73 percent of provides that, subject to certain were not contemplated or intended by the FDCPA. consumers were contacted by a debt collector, exceptions set forth in proposed 613 The proposed rule could have the ancillary assuming that the share of consumers contacted by § 1006.14(b)(3), a debt collector violates effect of preventing some calls that are not intended a debt collector is the same in this group as it is to annoy, abuse, or harass consumers and could in among consumers who did know whether the most proposed § 1006.14(b)(1) if the debt fact prevent some calls that consumers would find recent contact was from a debt collector. See CFPB collector places a telephone call to a beneficial, as discussed below under ‘‘Potential Debt Collection Consumer Survey, supra note 18, at person in connection with the collection costs to consumers.’’ 13, 40–41.

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evidence with which to estimate the the monetary value consumers attach to and how debt collectors communicate dollar value of those benefits. Most a reduction in call frequency, there is with them. For example, consumers respondents who had been contacted by indirect evidence of costs consumers are who tell debt collectors to cease a debt collector at least once per week willing to bear to avoid unwanted calls. communication orally may not benefit said they had been contacted too often. One leading service that offers to block because some debt collectors may not As shown in Table 1, 95 percent of inbound ‘‘robocalls’’ to a consumer’s respond to consumers’ requests to limit respondents who said debt collectors cellular telephone charges $1.99 per communications unless they are made had contacted or attempted to contact month for the service and claims over in writing. In the Debt Collection them four or more times per week and 1,000,000 users. Such services are an Consumer Survey, 42 percent of 76 percent of those reporting contact or imperfect analogy to the proposed respondents who had been contacted attempted contact one to three times per frequency limits for at least two about a debt in collection reported week said that they had been contacted different reasons: First, they are having requested that a creditor or debt too often by the debt collector, whereas intended to completely block calls collector stop contacting them.621 These 22 percent of those contacted less than rather than limit their frequency; and respondents generally did not make the once per week said they had been second, such services block request in writing.622 Of these contacted too often. telemarketing calls in addition to debt consumers, approximately 75 percent collection calls, while not blocking all reported that the creditor or debt TABLE 1—CONSUMERS INDICATING debt collection calls. Given these collector did not stop attempting to THEY HAD BEEN CONTACTED TOO differences, the price of this service contact them.623 As discussed above, technological OFTEN, BY CONTACT FREQUENCY does not provide a precise analog for the value to consumers of the proposed call solutions are also increasingly available [Percent] frequency limits. Nonetheless, the to consumers who want to avoid certain calls and may be used to screen out calls Consumers example does provide evidence that who said many consumers are willing to pay from some debt collectors. However, Contact frequency they were prices in the range of $24 per year to such solutions may be under-inclusive contacted avoid unwanted telephone calls.620 (in that they do not screen out calls from too often Some of the benefits from the all debt collectors) or over-inclusive (in that a consumer may want to maintain Less than once per week ..... 22 proposed call frequency limits could be One to three times per week 76 obtained if consumers used protections some telephone contact with a debt Four or more times per week 95 they already have under the FDCPA to collector rather than eliminating all help them avoid too-frequent debt calls from that debt collector). The survey questions did not collection calls. Debt collectors must Potential costs to consumers. distinguish between contact attempts cease most communications in response Consumers may benefit from and contacts that result in a live to a written request from the consumer communicating with debt collectors communication. They also did not to do so. Furthermore, because section about their debts. For consumers being distinguish among different types of 805(a)(1) of the FDCPA prohibits debt contacted about a debt they in fact owe, contact, and survey responses may have collectors from communicating about a communicating with the debt collector included contacts such as letters or debt at any time or place that the debt may help consumers resolve the debt, emails that would not be included in collector knows or should know is which could help avoid further fees and the proposed limits.618 Nonetheless, the inconvenient to the consumer, debt interest, credit reporting harms, or results indicate that a large majority of collectors risk violating section 805(a)(1) lawsuits. For consumers being contacted consumers who are contacted at least if they do not take heed when about a debt they do not owe, once per week believe they are being consumers say they do not want to communications from debt collectors contacted too frequently. communicate at certain times or places. may alert consumers to errors in their The Bureau’s consumer complaint However, many consumers may not credit reports or that they are victims of data also indicate that consumers find want to completely cease identity theft. During the meeting of the frequent or repeated calls harmful. communication about a debt because, Small Business Review Panel, some debt collectors said that frequency Communication tactics ranked third in for example, debt collectors who cannot limits could extend the period needed debt collection complaints submitted to recover through such communications to establish contact with a consumer, as the Bureau during 2018, and the may initiate litigation to recover on the further discussed below under majority of complaints in this debt. Many consumers may also be ‘‘Potential costs to covered persons.’’ If category—55 percent, or about 6,000 unaware of their rights to limit whether complaints during 2018—were about the proposed frequency limits mean that debt collectors are less able to reach frequent or repeated telephone calls.619 620 Another source of indirect evidence on the Although the Bureau does not have value to consumers of reduced call frequency is the some consumers, or that communication evidence that could be used to estimate Bureau’s consumer complaints. The Bureau with some consumers is delayed, those received approximately 6,000 complaints about call consumers may be harmed. frequency during 2018. See id. Based on the To quantify any such harm, the 618 The survey suggests that contact attempts from Bureau’s records, the average time for a consumer debt collectors other than by telephone or letter are to file a complaint with the Bureau by telephone Bureau would need data to estimate relatively uncommon. Id. at 42, table 22. The or through the web portal is approximately 15 how the proposed frequency limits Bureau understands that debt collectors seldom minutes, although this varies over time and across would affect whether and when debt send letters more than once per week, so the survey complaint categories. Valuing consumers’ time collectors communicate with consumers responses suggest that a large majority of contact using the average U.S. private sector wage of as well as the harm consumers attempts are by telephone. approximately $27 per hour suggests that some 619 See 2018 FDCPA Annual Report, supra note consumers are willing to give up approximately 16, at 16–17, table 1. Also note that consumers can $6.75 worth of their time in hopes of reducing call 621 CFPB Debt Collection Consumer Survey, supra identify only one issue to categorize their frequency from one debt collector. See U.S. Dept. note 18, at 35, table 17. complaints, so that the count does not include cases of Labor, Bureau of Lab. Stat., Economic News 622 Of consumers who asked not to be contacted, in which a consumer chooses a different issue (such Release: Employment Situation, table B–3 (Feb. 1, 87 percent said they made the request by telephone as ‘‘I don’t owe the debt’’) but still express concern 2019), https://www.bls.gov/news.release/ or in person only. Id. at 34–35. about call frequency. empsit.t19.htm. 623 Id.

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experience when they do not different debt collectors.624 In seeking revisions could range from small communicate with debt collectors. The payments from consumers, multiple updates to existing systems to the Bureau discusses the available evidence debt collectors compete with each other introduction of completely new systems on how the proposed frequency limits for consumers’ attention, which can and processes. The Bureau understands would affect whether debt collectors lead to a large aggregate number of debt that larger debt collectors generally communicate with consumers below in collection calls, potentially already implement system limits on call its discussion of costs to covered overwhelming some consumers and frequency to comply with client persons. As discussed there, the data are making them less likely to answer calls contractual requirements, debt collector limited, but evidence the Bureau does or otherwise engage with debt internal policies, and State and local have suggests that the proposed limits collectors.625 This in turn could make it laws.627 Such debt collectors might might somewhat reduce the number of harder for each debt collector to recover need only to revise existing calling consumers reached by telephone within outstanding debt.626 Thus, one potential restrictions to ensure that existing a few months after a debt collector starts benefit to debt collectors of the systems comply with the caps. Larger attempting contact, but that the proposed call frequency limits is a collection agencies might also need to reduction is likely to be limited to a lower frequency of telephone calls by respond to client requests for additional relatively small fraction of debts. other debt collectors, which could make reports and audit items to verify that The Bureau does not have consumers more likely to engage and they comply with the caps, which could representative data that can be used to repay. require these agencies to make systems In addition, some debt collectors quantify the harm consumers changes to alter the reports and data specialize in approaches to collection experience when they do not they produce for their clients to review. that do not rely on frequent call Smaller debt collectors and collection communicate with debt collectors, or attempts, and these debt collectors may law firms are less likely to have existing when those communications are benefit from the proposed call frequency systems that track or limit calling delayed. If consumers do not limits. In particular, debt collectors who frequency, and may therefore face larger communicate with debt collectors about focus on litigation and those who costs to establish systems to do so. debts, they could suffer additional harm communicate with consumers primarily However, many smaller debt collectors from debt collection in some cases, by means not covered by the proposed report that they generally attempt to particularly if the debt collector or limits, such as letters and emails, may reach each consumer by telephone only creditor initiates a lawsuit. A suit could be more effective in communicating one or two times per week and generally lead to increased fees, legal costs, and with consumers relative to debt do not speak to a consumer more than the possibility of a judgment that could collectors who are affected by the one time per week, which suggests that lead to garnishment of wages or other proposed limits. This, in turn, may their practices are already within the legal steps to recover the debt. increase their market share at the proposed frequency limits.628 For such To the extent that some debt expense of debt collectors who are more debt collectors, existing policies may be collectors currently call less than the dependent on frequent calls. sufficient to ensure compliance with the proposed frequency limits to avoid legal Potential costs to covered persons. proposed provision. risks, such debt collectors could The proposed provision would impose With respect to ongoing costs of increase their calling frequency as a at least two categories of costs on debt compliance, the Bureau expects that the result of the proposal. This would result collectors. First, it would mean that debt proposed limit on call attempts in in costs to some consumers if they find collectors must track the frequency of § 1006.14(b)(2)(i) could have an impact the increase in call frequency harmful. outbound telephone calls, which would on some debt collectors’ ability to reach Potential benefits to covered persons. require many debt collectors to bear consumers, particularly when the debt As with several other provisions of the one-time costs to update their systems collector has not yet established contact proposed rule, the proposed limits and train staff, and which would create with a consumer. These impacts are would reduce legal uncertainty about ongoing costs for some debt collectors. discussed below. The Bureau’s the interpretation of existing FDCPA Second, for some debt collectors, the understanding, based on feedback from language. Frequent telephone calls are a proposed provision would require a small entity representatives and other consistent source of consumer-initiated reduction in the frequency with which industry outreach, is that the proposed litigation and consumer complaints to they place telephone calls to consumers, limit of one telephone conversation per Federal and State law enforcement which could make it harder to reach week in § 1006.14(b)(2)(ii) is unlikely to agencies. By establishing a clear consumers and delay or reduce affect debt collectors’ ability to standard for call frequency, the collections revenue. communicate with consumers in most 629 630 proposed provision would make it With respect to one-time cases. easier for debt collectors to know what implementation costs, many debt 627 calling patterns are permitted and avoid collectors would incur costs to revise See CFPB Debt Collection Operations Study, their systems to incorporate the supra note 45, at 28–29. the costs of litigation and threats of 628 proposed call frequency limits. Such See id. at 29. litigation. To the extent that some debt 629 The impact might be greater if consumers collectors currently call less than the could not consent to more frequent contact. For proposed frequency limits to avoid legal 624 The Bureau’s survey indicates that 72 percent example, if a debt collector reached a consumer on of consumers with a debt in collection were the telephone and the consumer said it was not a risks, such debt collectors could contacted about two or more debts in collection, good time to speak, then the proposal would permit increase their calling frequency, and 16 percent were contacted about five or more the debt collector and consumer to agree to speak potentially increasing collection debts. Id. at 13, table 1. again at a specified time within less than one week. revenue. 625 For example, borrowers could simply ignore See the section-by-section analysis of proposed telephone calls or could adopt call screening or § 1006.14(b)(3)(ii). Some debt collectors might also blocking technology. 630 Similarly, the Bureau expects that debt benefit from a reduction in calls made 626 In other words, debt collectors may face a collectors would be largely unaffected by the by other debt collectors. The Bureau ‘‘prisoner’s dilemma,’’ in which each debt collector proposal to apply the frequency limits to location has incentives to call more frequently even though contacts with third parties because the Bureau understands that many consumers have debt collectors might collectively benefit from a understands that while location calls may be made multiple debts being collected by mutual reduction in call frequency. Continued

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The proposed limit of placing no the consumer.633 Additionally, some probability that each call results in an more than seven telephone calls per debt collectors specialize in attempting RPC declines with successive calls, the week would cause many debt collectors to collect debts for which the creditor rate at which RPCs are translated into to place telephone calls less frequently has lost contact with the consumer, and payments increases steadily through at than they currently do. This decrease in frequent call attempts to establish least the first 50 calls. As a result, an telephone calls may impose ongoing contact with the consumer may be RPC that is achieved in any of the first costs on debt collectors by increasing especially important for such debt 50 calls is approximately equal in value the time it takes to establish contact collectors. to the debt collector as an RPC that is with consumers. Most debt collectors For debt collectors who currently call achieved with fewer calls, suggesting rely heavily on telephone calls as a consumers more frequently, the that call attempts remain important to means of establishing contact with proposed frequency limits could affect debt collection even after many calls consumers. While debt collectors when and if they establish have been attempted. generally send letters in addition to communication with consumers. The Summary data provided by some calling,631 the Bureau understands that Bureau does not have representative other large debt collectors indicate that response rates to letters can be quite data that would permit it to quantify the number of calls needed to reach low. If contact with consumers is how the proposed limits on call consumers can vary considerably, but delayed, it will delay collection revenue frequency would impact how long it that the majority of debts would not be and may reduce revenue if consumers takes to establish contact or whether affected or would be affected very little who are reached later are less willing or contact is established at all. However, by the proposed frequency limits. These able to repay the debt. In addition, if the the Bureau has analyzed microdata on data indicate that 50 percent or more of debt collector is unable to reach the outbound calling from one large consumers who are ultimately reached consumer using the permitted number collection agency (Calling Data) that by these debt collectors are reached of telephone calls during the period the helps illustrate the potential impact of within the first seven calls overall (not owner of the debt permits the debt the proposed limits. While the data from per week), though other debt collectors collector to attempt to collect the debt, this agency may not be representative of have indicated that it takes 15 to 21 then the call frequency limits might the market as a whole, the results of the calls to reach 50 percent of such prevent a debt collector from reaching Bureau’s analysis of the data are consumers. These data also indicate that the consumer entirely.632 generally consistent with summary reaching 95 percent of consumers may take between 50 and 60 calls, meaning Some debt collectors do not place information shared by other large that 5 percent of consumers reached are telephone calls frequently enough to be collection agencies.634 contacted only after more than 50 or 60 affected by the proposed caps. While the The Calling Data show that, in the first eight weeks of collections, the communication attempts. Bureau understands that some debt There are limitations to using the data overall frequency of call attempts to collectors regularly call consumers two discussed above to make inferences consumers who have not yet spoken to three times per day or more, others about how limits on telephone calls may with the debt collector declines slowly. have told the Bureau that they seldom affect debt collectors’ ability to reach Roughly 40 percent of consumers attempt to call more than once or twice consumers. This is in part because receive more than seven calls per week per week. These differences may reflect establishing contact depends on factors in the first four weeks, but this drops to different debt types and collection other than the number of calls made 27 percent by week eight. Although the strategies. For example, smaller debt (e.g., the time of day called) and in part overall distribution of contact attempts collectors frequently retain debts because debt collectors subject to indefinitely, and they may face less changes slowly from week to week, the frequency limits might change their pressure to reach consumers quickly data show that over time some contact behavior in ways that permit than debt collectors who collect debts consumers get called more, while others them to reach a given number of for a limited period. Debt collectors who get called less. Consumers with whom consumers with fewer calls, as focus on litigation may also place less a ‘‘right-party contact’’ (RPC) has been discussed further below. In addition, emphasis on establishing telephone established and who made no payment other aspects of the proposed rule, communication with consumers. and consumers for whom RPC has not including the provision that would Some debt collectors have indicated been achieved tend to receive the most clarify the legal status of limited-content that frequent calling is especially collection calls. Consumers who have voice messages, could make it easier for important if the debt collector has engaged but made a partial payment debt collectors to reach consumers with multiple potential telephone numbers receive fewer calls. Moreover, the debt a smaller number of calls. and does not know the best way to reach collector who provided the Calling Data The data discussed above may not be engages in ‘‘call sloping,’’ meaning that representative, meaning that some debt to several numbers, they do not generally involve it places fewer total calls each week that collectors might need more or fewer frequently calling each number. it works a portfolio of debts. calls to reach similar numbers of 631 In the Bureau’s survey, 85 percent of The Calling Data show that, for the consumers. Overall, however, the respondents who had been contacted by a debt debts included in that data set, available data suggest that the proposed collector said that they had been contacted by consumers who take longer to reach are telephone and 71 percent said that they had been limits would somewhat reduce the contacted by letter. Respondents were asked to not less likely to pay. Although the ability of debt collectors to reach select all ways in which they had been contacted. consumers by telephone within a few CFPB Debt Collection Consumer Survey, supra note 633 See, e.g., Small Business Review Panel Report, months, but that the reduction is likely 18, at 29–30, table 14. supra note 57, at appendix A (letter from Venable). 632 If the provision were to cause some debt 634 The summary information was shared with to be limited to a relatively small collectors to lose revenue for this reason, the Bureau staff during industry outreach meetings that fraction of debts. This could affect amounts not collected would generally be are part of the Bureau’s routine market-monitoring primarily debt collectors who receive transferred to another party: Either to consumers (if efforts. Although most debt collectors are small placements of debts for four to six the amounts were never collected) or to another firms, evidence suggests that a majority of debt debt collector (if the amounts were collected collected is collected by collection agencies with months and do not engage in litigation. through further collection efforts, including through 100 or more employees. See CFPB Debt Collection Such debt collectors could lose revenue a lawsuit). Operations Study, supra note 45, at 7. if the limits prevent them from

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establishing contact with consumers or telephone numbers would be most collector or other external factors, rather if collections based on telephone calls likely to be affected by the frequency than by a number of calls.637 The become less effective and, as a result, limits. The Bureau is not able to identify Bureau also made additional creditors place more debts with debt telephone type (such as mobile vs. assumptions to simulate the effect on collectors specializing in litigation. landline, or work vs. home) in the data, payments. The Calling Data indicate if To illustrate potential effects of the but the debt collector would generally the consumer ever paid and how much, provision on debt collector revenue, the be able to do so. The Bureau would but they do not always indicate when Bureau used the Calling Data to expect debt collectors in similar payment was received—the Bureau simulate the effect of the proposed situations to omit calls to less promising observes the timing of payments only if frequency limits under specific telephone numbers, rather than call the the consumer made a payment over the assumptions about how the call same telephones and cease calling telephone. About one-half of all frequency limits affect collections. That earlier in the process. consumers in the data who make at least is, the Bureau created a ‘‘but-for’’ In the first, more conservative version a partial payment do so without ever version of the Calling Data in which of the simulation (Version 1), the having an RPC. For the simulation, the calls that would not have been Bureau assumed that all calls in excess Bureau assumed that, if the debt permitted under the proposed frequency of the proposed frequency limit each collector achieved at least one RPC in limits were assumed to have been either week were simply shifted to the next the simulation, then the amount of any 635 delayed or eliminated, and compared week. The Bureau assumed that any payments made by the consumer is RPCs and payments in this ‘‘but-for’’ successful RPCs that occur after the 25th unchanged. If the consumer received an data with the actual outcomes achieved simulated week would never occur RPC in the original data but did not by the debt collector. This is at best a under a frequency limit because in receive any RPC in the simulation, the rough approximation of the effects of reality the debt collector was only Bureau assumed that any payments the proposed provision, both because it contracted to collect on the debts in the recorded in the original data did not relies heavily on the assumptions made data for up to 25 weeks. Version 1 occur for purposes of the simulation. and because it is based on the data of implicitly assumes that the probability one particular debt collector, and may that a call results in an RPC does not Table 2 shows the results of the not be representative of other firms in depend on how much time has passed simulation analysis described above. the industry. since collection began, only on the Under Version 1, the proposed The Bureau created two versions of its number of calls that have been made. frequency limit would reduce first RPCs simulation analysis, one of which uses In a second, more aggressive version by 2.76 percent of the first RPCs and more conservative assumptions as to the of the simulation (Version 2), the dollars collected by 1 percent.638 The impact of the proposed provision on Bureau assumed that any calls that average first RPC would be delayed by successful contacts and collections. would be above the proposed frequency less than one week. These effects are not However, the Bureau believes that even limit are eliminated, rather than shifted evenly distributed across consumers, the more conservative version of this forward. When a consumer’s first RPC however. In the simulation, the debt analysis likely overstates the potential would have occurred on a call that collector is much more likely to miss an effects of the proposed frequency limits would not be permitted under the RPC or payment when it calls multiple because it cannot reflect any changes proposed frequency limit in a given telephone numbers for a consumer.639 the debt collector would make to its week, the Bureau treats the data for that For consumers where the debt collector calling strategy in response to the debt as censored as of that week.636 calls only one telephone number, hardly frequency limits. That is, one would The Bureau made additional any miss an RPC in the simulation, and expect a rational collection firm to assumptions that were common to both the average delay is almost zero. This is strategically choose which calls to versions of the simulation. For inbound because the debt collector rarely calls a eliminate or delay in response to the calls, that is, calls from consumers to particular telephone more than seven proposed frequency limits, while the the debt collector, the Bureau assumed times per week. In contrast, for Bureau’s analysis must to some extent that the calls were not delayed or consumers where the debt collector select calls arbitrarily. In particular, at eliminated. Thus, the Bureau is calls five or more telephone numbers, least for the debt collector who provided implicitly assuming that inbound calls the simulation predicts that the data to the Bureau, debts with multiple are prompted by letters from the debt frequency limit would eliminate more

635 For example, if the debt collector called a changes its calling behavior, particularly if it particular consumer 10 times in the first week, eight obtains a promise to pay. times in the second week, and five times in the 637 The debt collector who provided the data does third week, in the Bureau’s simulation, the last not leave voicemails, but it is possible that three calls in the first week would become the first consumers eventually return a call in response to three calls in the second week. The second week repeated missed calls on their telephones. would then have a total of 11 calls, and the last four 638 The change in payments is less than the calls would become the first four calls in the third change in RPCs both because some consumers pay week. The third week would then have eight calls, so the last call would become the first call of the without an RPC (and the Bureau assumed this did fourth week, and so on. not change in the simulation) and because 636 That is, the Bureau assumes that it does not consumers in the data who had an earlier first RPC, know when or whether that consumer would ever and thus were less likely to be affected by the have a successful RPC, only that there was no RPC frequency limits, were also more likely to pay in up until that week. The Bureau then calculates the full. percent of debts with an RPC by the 25th week of 639 The Bureau does not observe in the data how collections using the Kaplan-Meier product limit many telephone numbers the consumer has, only estimator for the survival function, a standard tool how many the debt collector chooses to call. for measuring rates of an outcome when some observations are censored. It is necessary to assume that such consumers are censored because in reality after an initial RPC, the debt collector generally

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than 7 percent of RPCs and delay the collections, although the Bureau notes predicts that RPCs would decline by remaining RPCs by almost two weeks. again that even Version 1 likely 15.7 percent, and dollars collected The assumptions of Version 2 suggest overstates the potential effect of the would decline by 7.7 percent. a more substantial effect on RPCs and proposed provision. The simulation

TABLE 2—RESULTS OF SIMULATION ANALYSIS

Percent Percent Average delay change in Assumed effect of proposed call frequency change in in remaining dollars Version limit RPCs within RPCs collected 25 weeks (weeks) within 25 weeks

Version 1 ...... Calls above limit roll to next week ...... ¥2.76 0.85 ¥1.04 Version 2 ...... Calls above limit eliminated ...... ¥15.7 0 ¥7.7

Overall, the Bureau believes that the revenue from the proposed frequency and costs of those alternatives to simulation analysis overstates the limit. As indicated, if multiple consumers and covered persons relative potential effect of the provision because telephone numbers are available, debt to the proposal are discussed briefly it ignores any changes debt collectors collectors might reduce their calls to below. would make to mitigate the effects of the numbers that they can identify as being The Bureau considered proposing a call frequency limit. Nevertheless, less likely to yield a successful contact. broader version of proposed certain assumptions that the Bureau In addition, the Bureau understands that § 1006.14(b)(1)(i) that would have makes for simplicity likely reduce the debt collectors can reduce the number prohibited repeated or continuous predicted impact of the provision. In of calls needed to establish an RPC by attempts to contact a person by other particular, in Version 1 the Bureau purchasing higher-quality contact media, such as by sending letters, assumes that a call with an RPC that is information from data vendors. emails, or text messages to a person in In addition and as discussed below, shifted later due to the proposed connection with the collection of a debt. the Bureau’s proposed rule also frequency limit will remain an RPC. Such an approach could provide includes provisions that could reduce This may not be true in practice. additional benefits to consumers if they the legal risks associated with other Empirically, the probability that a call are harassed or abused by frequent means of communication, such as voice results in an RPC declines over time— communication from debt collectors messages or emails, which could enable this is evident in the data examined by who use such media. However, as the Bureau and is consistent with input debt collectors to reach consumers more discussed in part V, the Bureau is not from industry stakeholders. If effectively with fewer calls. This could aware of evidence demonstrating that consumers are less likely to answer the mitigate the impact of call frequency debt collectors commonly harass telephone as time passes, irrespective of limits and might mean that the net effect consumers or others through repeated or the number of calls debt collectors have of the proposal would be to increase the continuous debt collection contacts by made, the proposed frequency limit likelihood that debt collectors are able media other than telephone calls. The could reduce payments and revenue by to reach consumers. In addition, debt cost of sending letters is much higher a larger fraction than the simulation collectors who are unable to reach than that of placing telephone calls, suggests (assuming no re-optimization consumers as a result of frequency which likely discourages frequent by debt collectors).640 limits might still pursue such debts communication by mail, and the Bureau Debt collectors could take steps to through litigation. To the extent that has received few complaints about debt reduce the number of calls necessary to frequent call attempts play a more collectors sending excessive letters. The establish contact and mitigate any lost important role in collecting certain Bureau understands that few debt types of debt relative to others, some collectors currently communicate by 640 Another assumption that might reduce the debt collectors might shift their business email or text message, and stakeholders predicted effect of the proposed frequency limits in toward collecting those types for which both versions is the assumption that payment is tied have suggested that such media may be frequent calls are less important. to whether or not the first RPC occurs. For instance, inherently less harassing than telephone in Version 1, the Bureau assumed that a consumer The Bureau requests data and other would not pay under the frequency limits only if information about the benefits and costs calls because, for example, recipients the first RPC would have occurred after the 25th of the proposed frequency limits for may have more ability to decide week in the simulation. Yet about a quarter of both consumers and debt collectors. In whether or when to engage with an consumers in the data who eventually pay some email or a text message than with a debt portion of their debt had at least two RPCs. It may particular, the Bureau requests data and be that the subsequent RPCs were necessary for the other information on current calling collection telephone call. payment to occur, but the Bureau’s analysis did not practices, how those practices are likely In addition, during the SBREFA track whether subsequent RPCs occurred after the 25th week under the simulated frequency limits. to be affected by the proposed frequency process, some small entity The Bureau also notes there is an implicit limits, and how those changes are likely representatives suggested that assumption in both versions of the simulation that to affect debt collectors’ ability to compliance with a rule that limited the could lead to overstating the effect of the proposed contact consumers. frequency of communications by media frequency limits. The simulation assumes that, if all other than telephone calls would be RPCs for a consumer were eliminated by the Alternative approaches to limiting the proposed frequency limits, then the consumer frequency of communications or more costly than compliance with a rule would never pay. Given that, as noted above, a communication attempts. The Bureau that applied only to calls. These small substantial number of consumers in the original considered alternatives to the proposed entity representatives indicated that, data pay despite having no RPCs, it is possible that while many existing debt collection some consumers whose RPCs were eliminated by frequency limits on debt collector the proposed frequency limits would nonetheless telephone calls and telephone systems already track the frequency of pay something eventually. conversations. The potential benefits telephone calls, modifying systems to

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track communication by other media § 1006.2(j)(2) provides that a limited- Business Review Panel, small entity would be significantly more expensive. content message also may include one representatives indicated that limited- The Bureau also considered a or more of the following: A salutation, content messages would reduce the proposal that would have limited the the date and time of the message, a need for frequent calling.643 Thus, some number of calls permitted to any generic statement that the message consumers may experience reduced particular telephone number (e.g., at relates to an account, and suggested numbers of calls if more debt collectors most two calls to each of a consumer’s dates and times for the consumer to leave messages and wait for a return landline, mobile, and work telephone reply to the message. Proposed call. numbers). The Bureau considered such § 1006.2(b) and (d), which define the Debt collectors cannot be certain that a limit either instead of or in addition terms attempt to communicate and a voice message will be heard only by to an overall limit on the frequency of communication, respectively, provide the consumer for whom it was left. telephone calls to one consumer. Such that a limited-content message is an Some consumers could be harmed by an an alternative could potentially reduce attempt to communicate but is not a increase in limited-content messages, the effect of frequency limits on debt communication. either because they are harassed by collector calls if it permitted more total Potential benefits and costs to frequent messages or because the calls when a consumer has multiple consumers. As discussed below under messages increase the risk of third-party telephone numbers. Such an approach ‘‘potential benefits and costs to covered disclosure. Although the message itself could impose smaller costs on debt persons,’’ many debt collectors would not convey any information collectors in some cases by making it currently do not leave voice or text about the debt, some third parties who easier to contact consumers for whom messages for consumers because of the hear the message may discover that the debt collectors have multiple telephone risk of litigation. The Bureau expects caller is a debt collector, either because numbers. At the same time, such an that, by clarifying that they have familiarity with the type of approach might provide smaller ‘‘communication’’ for purposes of the generic messages that debt collectors consumer benefits compared to the FDCPA does not include the proposed leave or because they do further proposal by potentially permitting a limited-content message, the proposed research, such as by researching the high frequency of calls in some cases. rule would make debt collectors more telephone number. On the other hand, Some consumers could receive (and likely to leave voice or text messages if the proposal might lead debt collectors some debt collectors could place) more they are unable to reach consumers by who currently leave more detailed telephone calls simply based on the telephone. messages that risk revealing the purpose number of telephone numbers that In general, an increased use of voice of the call to third parties to switch to certain consumers happened to have and text messages should make it more messages that reveal no information (and that debt collectors happened to convenient for consumers to about the debt. In such instances, the know about). Such an approach also communicate with debt collectors impact of the proposal may be to reduce could create incentives for debt because consumers will be better able to the likelihood of third-party disclosures. collectors to, for example, place arrange a discussion at a time that is telephone calls to less convenient convenient for them rather than at a Survey results indicate that telephone numbers after exhausting time when the debt collector happens to consumers are concerned about third their telephone calls to consumers’ reach them. Related to this, some parties overhearing voice messages left preferred numbers. consumers express annoyance at by debt collectors, with nearly two- receiving repeated calls from callers thirds of consumers saying it is very 3. Limited-Content Messages who do not leave messages. To the important that others do not hear or see Proposed § 1006.2(j) would define a extent that debt collectors respond to a message from a creditor or debt limited-content message as a message the proposed rule by leaving messages collector, as shown in Table 3 below. for a consumer that includes all of the when a consumer does not answer the However, most respondents also said content described in § 1006.2(j)(1), that telephone, the proposal might help that they would prefer that a voice may include any of the content address that problem. message from a debt collector indicate described in § 1006.2(j)(2), and that If more debt collectors are willing to that the caller is attempting to collect a includes no other content. In particular, leave messages, it may lead to an debt. Even among consumers who said proposed § 1006.2(j)(1) provides that a indirect benefit to consumers by it was ‘‘very important’’ that others not limited-content message must include reducing the number of unwanted call see or hear messages about debt all of the following: The consumer’s attempts without reducing the collection, 63 percent said they name, a request that the consumer reply likelihood that consumers communicate preferred that the purpose of the call be to the message, the name or names of with debt collectors. Although some included in a message from a creditor or one or more natural persons whom the debt collectors may leave frequent debt collector attempting to collect the consumer can contact to reply to the messages or continue to call frequently debt. This suggests that many debt collector, a telephone number that despite having left messages, an consumers either do not expect third the consumer can use to reply to the industry trade publication recommends parties to overhear voice messages left debt collector, and, if applicable, a a best practice of waiting three to seven for them or attach greater importance to disclosure explaining how the consumer days after leaving a message to give the knowing what the call is about than to can stop receiving messages through a consumer an opportunity to return the the risk a third party will overhear the particular medium.641 Proposed call.642 During the meeting of the Small message.

641 As discussed below, proposed § 1006.6(e) medium address to include in such communication 642 insideARM, Operations Guide: Call Volume would require a debt collector who communicates or attempt to communicate a clear and conspicuous 10 (Nov. 14, 2014). or attempts to communicate with a consumer statement describing one or more ways the 643 Small Business Review Panel Report, supra electronically in connection with the collection of consumer can opt out of further electronic note 57, at 25. a debt using a particular email address, telephone communications or attempts to communicate by the number for text messages, or other electronic- debt collector to that address or telephone number.

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TABLE 3—PREFERENCES REGARDING OTHERS SEEING OR HEARING DEBT COLLECTOR MESSAGE [Percent]

Consumers All contacted Importance of others not seeing or hearing a message consumers about a debt in collection

Very important ...... 64 65 Somewhat important ...... 23 24 Not at all important ...... 14 10

Potential benefits and costs to covered the Bureau does not have data on the 4. Time-Barred Debt: Prohibiting Suits persons. The Bureau understands that costs to debt collectors of defending and Threats of Suit many debt collectors avoid leaving such litigation, some debt collectors Proposed § 1006.26(b) would prohibit messages, or leave them only under have suggested that resolving an a debt collector from suing or limited circumstances, because of the individual lawsuit typically costs threatening to sue on a debt that the legal risk associated with leaving a $5,000 to $10,000, and resolving a class debt collector knows or should know is message. Currently, debt collectors action could cost much more. Moreover, time-barred. leaving a voice message for a consumer debt collectors report that the large As discussed in part V, multiple either omit the disclosure stating that majority of threatened lawsuits are courts have held that the FDCPA the call is from a debt collector (the so- settled before a suit is filed, so the prohibits suits and threats of suit on called ‘‘mini-Miranda’’ warning) and frequency of filed lawsuits substantially time-barred debt. In light of this, the risk being deemed in violation of understates how often debt collectors Bureau understands that most debt FDCPA section 807(11) or include that bear costs from claimed FDCPA collectors do not knowingly sue or disclosure and risk that the existence of violations.646 The Bureau anticipates threaten to sue consumers to collect a debt will be disclosed to a third party that the proposed clarification of the time-barred debts, and therefore the hearing the message and that they will definition of communication would Bureau does not expect this provision of be deemed in violation of FDCPA significantly reduce any legal risk to the proposed rule to have a significant section 805(b). The proposed provision debt collectors of leaving voice effect on most consumers or debt would reduce both direct and indirect messages that fit within the definition of collectors.647 costs to some debt collectors by limited-content message. To the extent that there are costs to interpreting the FDCPA not to require The proposed provision would covered persons or benefits to the mini-Miranda warning in a limited- generally not require debt collectors to consumers from this provision, they content message, which would reduce incur new costs because it would not will most likely come from reduced legal risks associated with messages. require any debt collectors to change payments on time-barred debts, to the Debt collectors may indirectly benefit their policies regarding messages. extent that some debt collectors from clarification of the type of However, in order to obtain benefits currently use lawsuits or threats to sue messages that may be left because from the provision, debt collectors who on time-barred debts as a strategy to messages may make it easier to establish plan to adopt the practice of leaving elicit payment.648 If it is currently true contact with consumers. Currently, limited-content messages would incur that (1) suing or threatening to sue on many debt collectors limit or avoid one-time costs to develop policies and debts is an important means of leaving messages for fear of FDCPA procedures to implement limited- collection for debts for which the statute 644 liability. Leaving messages may be a content messages under the rule and to of limitations is close to expiring, and more efficient way of reaching train employees on these policies and (2) most debt collectors stop suing or consumers than repeated call attempts procedures. threatening to sue once the statute of without leaving messages. For example, The Bureau requests data and other limitations for a debt expires, then one consumers who do not answer calls information about the benefits and costs from callers they do not recognize might to consumers and covered persons of 647 For example, small entity representatives at return a message. If so, the proposed the meeting of the Small Business Review Panel the proposed limited-content messages. indicated that it was standard practice in the provision could permit debt collectors In particular, the Bureau requests to reach such consumers with fewer industry not to knowingly initiate lawsuits to information that is informative of how collect time-barred debt. See Small Business contact attempts. consumers would respond to limited- Review Panel Report, supra note 57, at 35. Some The proposal may also reduce the industry groups have adopted policies requiring direct costs of voicemail-related content messages, how the proposed members to refrain from suing or threatening to sue litigation, which can be large.645 While limited-content messages would affect on time-barred debts. See, e.g., Receivables Mgmt. debt collectors’ ability to contact Ass’n, Receivables Management Certification consumers, and the one-time and Program at 32 (Jan. 19, 2018), https:// 644 In the Bureau’s Debt Collection Operations rmassociation.org/wp-content/uploads/2018/02/ Study, 42 of 58 respondents reported sometimes ongoing costs to debt collectors who Certification-Policy-version-6.0-FINAL- leaving voice messages. Of those that do leave voice plan to adopt the practice of leaving 20180119.pdf. messages, many reported leaving them only under limited-content messages. 648 As noted above in section V, although certain specific circumstances. CFPB Debt multiple courts have held and the FTC has stated Collection Operations Study, supra note 45, at 29– that suing or threating to sue on time-barred debts 30. the mini-Miranda disclosure; of these 49 cases were violates the FDCPA, the Bureau’s enforcement 645 There were at least 162 voicemail-related class actions. See Small Business Review Panel experience has shown that some debt collectors lawsuits filed in 2015 under section 805(b) of the Outline, supra note 56, at 69 n.104 (citing data may continue to sue or threaten to sue on time- FDCPA, which prohibits third-party disclosures; of provided by WebRecon, LLC). barred debts. The proposal could reduce such these, 11 cases were class actions. In addition, at 646 Some debt collectors have reported that they activity by eliminating any legal uncertainty about least 125 voicemail-related lawsuits were pursued receive approximately 10 demand letters for every whether such suits or threats of suit are permitted under section 807(11), which prohibits lawsuit filed and that FDCPA claims are typically and potentially by strengthening enforcement of the communicating with a consumer without providing settled for $1,000 to $3,000. See id. at 69 n.105. prohibition.

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would expect repayment rates to drop assumed that the applicable statute of expiration of the statute of limitations after the statute of limitations expires, limitations is the one applicable to has an effect on the likelihood that a and that drop might be made more written contracts in the consumer’s debt is reported to have been paid. significant by the proposed provision. State of residence and that the statute of The Bureau calculated the probability Such a reduction in payments would limitations begins for a debt on the date of payment occurring after a given benefit consumers who owe the debts that the debt first appears on the number of days, conditional on no while imposing costs on debt collectors consumer’s credit report.650 The Bureau payment occurring before—in technical and creditors and potentially increasing assumed this starting date because there the cost of credit generally. was no other reasonable basis in the terms, the ‘‘hazard rate’’ for payments— The Bureau therefore attempted to available data to assign the beginning of for all collections tradelines in the CCP. indirectly measure the potential effect of the statute of limitations. There is likely The Bureau then calculated the average the provision by examining the behavior to be some inaccuracy in this hazard rate based on the number of of consumers who owe debts that either assumption due to a variety of factors, months before or after the estimated recently expired or are close to expiring including delays between the beginning expiration of the applicable statute of under their state’s statutes of of the period defined by the statute of limitations. This calculation is plotted limitations. To do so, the Bureau used limitations and the first report and cases in Figure 1, below.651 The figure shows data from its Consumer Credit Panel in which the applicable statute of that the probability of a collections (CCP), which contains information from limitations is not the one in the tradeline showing evidence of payment one of the three nationwide CRAs. The consumer’s State. However, if the declines steadily for at least one year Bureau used data from the CCP to estimated expiration of the statute of leading up to the estimated expiration of attempt to estimate the current effect of limitations is at least approximately the statute of limitations, and continues State statutes of limitation on the correct in most cases, then one would to decline at roughly the same rate propensity of consumers to pay old expect to observe whether the afterwards.652 Thus, while the debts in collection. probability of payment declines over The CCP contains information on original balance and it was opened on or after the time, the reduced ability to pursue collections tradelines—records that latest balance date for the previous tradeline. Debt litigation does not seem to materially were furnished to this nationwide CRA collectors do not appear to consistently report payment information when furnishing information affect payments on collections by third-party debt collectors or debt to the nationwide CRA. As such, for this analysis, tradelines. Combined with the Bureau’s buyers. The Bureau analyzed these data the Bureau considered a debt to have had a understanding that debt collectors payment made if in any month: (1) There is a to determine whether the probability of generally do not sue on time-barred payment declines around the expiration positive payment amount; (2) there is a populated last payment date, or (3) the account is marked paid debt, this suggests that the proposed of the statute of limitations in the in full or settled. With regard to the timing of the provision would be unlikely to cause consumer’s State. Specifically, the first payment, the Bureau’s analysis used the any further reduction in the rate of Bureau followed debts reported in the earliest value of the last payment date for a debt, if populated, or the earliest balance data associated repayment on time-barred debt.653 CCP from the time they were first with a payment amount or paid-in-full flag, as reported on consumers’ credit records appropriate. The method for determining whether 651 The overall level of the hazard rate in the until they either showed some record of a debt was ever paid is the same as is used in figure is quite low—on the order of two-tenths of payment or disappeared from the credit Charles Romeo and Ryan Sandler, The Effect of 1 percent. This is to be expected given the monthly 649 Debt Collection Laws on Access to Credit (Bureau nature of the series—although around 10 percent of records. In this analysis, the Bureau of Consumer Fin. Prot., Office of Research Working all collections tradelines eventually show some Paper No. 2018–01, Feb. 12, 2018), https:// evidence of payment, the proportion that do so in 649 Debts in the CCP that are reported by multiple papers.ssrn.com/sol3/papers.cfm?abstract_ any given month is quite low. debt collectors, for instance if the debt is transferred id=3124954. 652 While Figure 1 is based on all collections 650 or sold, are not explicitly linked. As in the Bureau’s The collections tradelines in the CCP are tradelines, regardless of the type of original prior quarterly Consumer Credit Trends report on primarily medical debts, utility debts, and creditor, the pattern over time looks very similar if collection of telecommunication debt, tradelines telecommunications debts, and it is the Bureau’s the calculation is done separately by type of were linked based on the dollar amount and understanding that the statute of limitations for original creditor. opening dates associated with the tradelines. written contracts is the one that would generally 653 Bureau of Consumer Fin. Prot., Quarterly Consumer apply for these types of debts. Relatively few Alternatively, this result would also be Credit Trends: Telecommunication Debt Collection collection tradelines relate to credit card debt; the consistent with all debt collectors currently (Aug. 22, 2018), https://www.consumerfinance.gov/ Bureau understands that this is because credit card ignoring the statute of limitations and continuing to data-research/research-reports/quarterly-consumer- issuers prefer to furnish information to the sue or threaten to sue on time-barred debt. credit-trends-telecommunications-debt-collection/. nationwide CRAs regarding their customers’ However, as discussed above, the Bureau For this analysis, a tradeline was considered to be accounts even when accounts have been charged off understands that most debt collectors avoid suits or a continuation of a previous debt if it had the same and placed with a debt collector. threats of suits on time-barred debt.

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Because the available data do not reports. They may pay more for credit collector or the consumer).655 In permit the Bureau to identify the or lose out on employment or housing addition, a number of debt collectors do expiration of the statute of limitations because they are unaware that their not furnish information to CRAs, so precisely, the analysis above may fail to credit scores have been negatively again in these cases the proposed identify some effects. The Bureau affected or they may discover the provision would not affect consumers. requests data and other evidence on adverse information only when they The Bureau does not have how the expiration of the statute of apply for credit, employment, or representative data to estimate how limitations affects debt collection in the housing. often consumers would be affected by current market. To quantify the potential consumer the proposed provision, but the benefits from the proposal, the Bureau evidence suggests that a relatively small 5. Communication Prior To Furnishing would need to know: (1) How frequently share of debt collectors furnish Information consumers are unaware debt collectors information to CRAs before providing a Proposed § 1006.30(a) would prohibit had furnished information about their validation notice. If this occurs in 5 a debt collector from furnishing debts to credit bureaus but would percent of cases, for example, it could information to a CRA regarding a debt become aware of it if the debt collectors result in approximately 7 million before communicating with the communicated with consumers prior to additional validation notices sent each consumer about that debt, a requirement furnishing data; and (2) the benefit to year (assuming that no debt collectors that a debt collector could satisfy by these consumers of becoming aware would cease credit reporting in response sending a validation notice prior to they had a debt in collections. to the proposed provision).656 furnishing information. In many cases, consumers would not Learning that a debt is in collections Potential benefits and costs to be affected by the proposed provision shortly after the collections process consumers. The proposal would help because many debt collectors already begins can help consumers prevent or ensure that consumers learn about an send validation notices before mitigate harm from adverse information alleged debt before a debt collector furnishing information to CRAs. Many on their credit reports. It can be furnishes adverse information to a CRA. other consumers would not be affected particularly important if the information When consumers believe that the because debt collectors do not furnish information is in error, they will have information to CRAs for some or all 655 In the Bureau’s Operations Study, 53 of 58 an opportunity to dispute the debt. debts on which they are seeking to respondents said that they send a validation notice When debt collectors furnish shortly after debt placement, and of those that do recover. not, three respondents that said that they furnish information about unpaid debts to The Bureau understands that most data to CRAs. CFPB Debt Collection Operations CRAs, that information can appear on debt collectors mail validation notices Study, supra note 45, at 28. During the meeting of consumer credit reports, potentially to consumers shortly after they receive the Small Business Review Panel, only one small limiting consumers’ ability to obtain 654 entity representative described additional burdens accounts for collections. A minority it would face as a result of a requirement to credit, employment, or housing. If of debt collectors sometimes or always communicate with consumers before furnishing consumers are unaware that information mail validation notices only after information to credit bureaus. about a possible unpaid debt is being speaking with consumers (whether 656 This estimate assumes 140 million validation furnished to a CRA, then they may not notices are sent each year, based on an estimated contact was initiated by the debt 49 million consumers contacted by debt collectors realize that their ability to obtain credit, each year and an assumption that each receives employment or housing may be affected 654 See CFPB Debt Collection Operations Study, notices about an average of approximately 2.8 by the debt’s presence on their credit supra note 45, at 28. notices during the year.

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about the debt is inaccurate because in debt collectors have communicated with could cease furnishing information to those cases consumers who learn of the consumers. The Bureau understands CRAs, which could impact the alleged debt can dispute the item under that most debt collectors mail validation effectiveness of their collection the FCRA. By informing consumers notices to consumers shortly after they efforts.664 Because debt collectors could about the collection item before it is receive the accounts for collections and choose the less burdensome of these furnished to a CRA, the proposal would before they furnish data on those options, the additional costs of make it less likely that consumers learn accounts, and so they already would be delivering notices represent an upper about a collection item when they are in in compliance with the proposed bound on the burden of the provision the process of applying for credit or requirement.661 Forty-five out of 58 debt for debt collectors. other benefits, at which point they may collectors responding to the Bureau’s The Bureau requests data and other feel pressure to resolve the item and Operations Survey said that they furnish information about the benefits and costs may not have the opportunity to fully information to credit bureaus.662 Of to consumers and covered persons of dispute the item. these respondents, all but three said that the proposed requirement. In particular, An FTC report addressed the they send a validation notice upon the Bureau requests information that prevalence of collections-related errors account placement, such that the would help the Bureau to estimate the in credit reports.657 The FTC report proposed requirement would be number of consumers affected by the analyzed data from a sample of 1,001 satisfied. These debt collectors likely proposed provision, the benefits for consumers and identified errors in the would need to review their policies to these consumers, and the potential costs credit records of three nationwide ensure that validation notices always to covered persons of complying with CRAs. The report found collections- are sent (or validation information is the proposed provision. related errors in 4.9 percent of credit provided in an initial communication) 6. Prohibition on the Sale or Transfer of reports, and credit reports with prior to reporting on accounts, which Certain Debts documented errors contained, on the Bureau expects would involve a average, 1.8 errors per report. The small one-time cost. Other debt Proposed § 1006.30(b)(1) would Bureau’s Debt Collection Consumer collectors do not furnish information at prohibit a debt collector from selling, Survey also suggests that debt collectors all to CRAs and so would not be affected transferring, or placing for collection a made collection errors, finding that 53 by the proposed requirement. debt if the debt collector knows or percent of consumers who said they had Debt collectors who furnish should know that the debt was paid or been contacted about one or more debts information to CRAs but provide settled, the debt was discharged in in collection said that these contacts validation notices to consumers only bankruptcy, or an identity theft report included at least one debt the consumer after they have been in contact with was filed with respect to the debt. thought was in error.658 consumers would need to change their Proposed § 1006.30(b)(2) would create Credit scores are based on a wide practices and would face increased costs several exceptions to this prohibition. The Bureau understands, based on its variety of information in consumer as a result of the proposal. Because market knowledge and outreach to debt credit files. While many errors have these debt collectors are already collectors, that debt collectors generally only small effects on consumers’ credit required to provide validation notices to do not sell, transfer, or place for scores,659 in some cases information in consumers (unless validation collections debts (other than in credit files about unpaid debts can have information is provided in an initial circumstances covered in the a reasonably large impact on credit communication), the Bureau expects exceptions) if they have reason to scores. For example, analysis of that they already have systems in place believe the debts cannot be validly telecommunications collection items in for sending notices and would not face collected because they have been paid, credit reports has shown that, while one-time compliance costs greater than they were settled in bankruptcy, or an additional collection items have those of other debt collectors. However, identity theft report was filed with relatively small effects in some cases, it debt collectors would face ongoing costs respect to them.665 can have substantial effects for some from sending validation notices to more Therefore, the consumers, with an average reduction in consumers than they would otherwise, Bureau expects the benefits and costs of credit score of more than 41 points for at an estimated cost of $0.50 to $0.80 this provision to be minimal. super-prime consumers.660 In some per debt if sent by postal mail.663 To the 7. Notice for Validation of Debts extent debt collectors take advantage of circumstances, these changes could lead Proposed § 1006.34 would implement opportunities to send validation notices to higher interest rates for consumers or and interpret FDCPA section 809(a), (b), electronically, an option the proposal denial of credit, in particular for (d), and (e). Specifically, proposed elsewhere seeks to make more viable, borrowers with otherwise high credit § 1006.34(a) provides that, subject to the marginal cost of sending each notice scores. certain exceptions, a debt collector must is likely to be approximately zero. Potential benefits and costs to covered provide a consumer the validation Alternatively, these debt collectors persons. The proposal would affect the information described in § 1006.34(c). practices of debt collectors who Proposed § 1006.34(c) would implement sometimes furnish information about 661 In the Operations Survey, 53 of 58 respondents said that they send a validation notice FDCPA section 809(a)’s content consumers’ debts to CRAs before the shortly after debt placement. CFPB Debt Collection Operations Study, supra note 45, at 28. 664 If debt collectors furnish information to CRAs 657 Fed. Trade Comm’n, Report to Congress under 662 Id. at 19. less frequently this could make consumer reports Section 319 of the Fair and Accurate Credit 663 See CFPB Debt Collection Operations Study, less informative in general, which could have Transactions Act of 2003, (2012). supra note 45, at 32–33. One small entity negative effects on the credit system by making it 658 CFPB Debt Collection Consumer Survey, supra representative on the Bureau’s Small Business harder for creditors to assess credit risk. note 18, at 24. Review Panel indicated that, for about one-half of 665 With respect to debts subject to an identity 659 See Fed. Trade Comm’n, Report to Congress its accounts, it currently sends validation notices theft report, FCRA section 615(f) already prohibits under Section 319 of the Fair and Accurate Credit only after speaking with a consumer, and that, if it a debt collector from selling, transferring for Transactions Act of 2003, at 43 (2012). were required to send validation notices to all consideration, or placing for collection debts if the 660 See Brian Bucks et al., Collection of consumers, it would incur additional mailing costs debt collector has been notified by a consumer Telecommunication Debt, Bureau of Consumer Fin. of $0.63 per mailing for an estimated 400,000 reporting agency that the debt resulted from Prot. (Aug. 2018). accounts per year. identity theft.

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requirements and require that the owed has changed over time due to The Bureau’s Debt Collection validation notice include certain interest, fees, payments, or credits; (2) Consumer Survey suggests that the information about the debt and the the debt collector has changed since an proposed validation information would consumer’s protections with respect to original collection attempt; or (3) the likely be helpful in recognizing a debt. debt collection that debt collectors do creditor’s name is not one the consumer Specifically, when asked how helpful not currently provide on validation associates with the debt (as with some various pieces of information would be notices. Proposed § 1006.34(d) would store-branded credit cards issued by in figuring out whether they owed a set forth general formatting third-party financial institutions). debt, consumers were most likely to requirements and permit debt collectors Consumers who do not recognize a debt indicate that the creditor name, type of to comply with these requirements by because the information on a validation debt, and an itemization of the amount using the proposed model validation notice is insufficient may incur costs if owed (such as principal, interest, and notice in appendix B. Proposed they mistakenly dispute a debt they fees) were especially valuable. These § 1006.34(e) would permit, but not owe, pay a debt they do not owe, or opinions were echoed in focus groups in require, debt collectors to provide a ignore a debt on the assumption that the which consumers noted that after a debt consumer the validation notice collection attempt is in error. is sold it is more difficult to recognize, translated into any language, if the debt Relative to current validation notices, and that they wanted as much collector also sends an English-language the proposed validation information information as possible to help them validation notice. would include more specific details recognize the debt as theirs (especially Potential benefits and costs to about the debt, such as the debt’s the account number, creditor, and consumers. The proposed validation account number and an itemization of amount due) with the exception of information may benefit consumers in the debt. The Bureau believes this sensitive information like social security four ways. First, the disclosures would information would benefit consumers numbers.666 provide more information about the by making it easier for them to To quantify the benefits of the debt, which may help consumers determine whether they owe a debt and, proposed provision requiring a clear determine whether the debt is theirs and therefore, reducing the likelihood of and conspicuous disclosure of a whether the reported amount owed is incurring costs due to mistakes like consumer’s right to dispute a debt, the accurate. Second, the notice would those noted above. The consumer can Bureau would need to estimate the provide a plain-language disclosure of also use the consumer response number of consumers who fail to the consumer’s rights in debt collection, information to request the name and dispute debts that they do not owe in particular the right to dispute, which address of the original creditor, which because they are unaware of, or do not should help consumers to know their may further help the consumer to comprehend, their right to dispute. The rights and be able to exercise them. recognize the debt. Bureau cannot precisely quantify this Third, the validation information would To fully evaluate the benefits to benefit; however, the discussion below include consumer response information consumers of disclosing additional identifies several applicable that should make it easier for consumers information, the Bureau would need considerations and estimates. to take certain actions, including representative data to estimate how The Bureau estimates that at least 49 disputing a debt. Finally, the proposed often consumers would read and million consumers are contacted by debt model validation notice form is understand the additional information collectors each year.667 Twenty-eight intended to provide information to on the notice and the extent to which percent of consumers who said they had consumers in a more appealing and that information increases consumer been contacted about one or more debts easy-to-read format, making it more recognition and understanding in collection reported that the contacts likely that consumers read and compared to a notice without it. For included attempts to collect at least one comprehend the information than with example, the Bureau could further debt that the consumers believed they the validation notices currently in use. quantify some of the consumer benefits did not owe.668 One-third of consumers To quantify the benefit of providing of the notice if the Bureau were able to who had been contacted said the more and clearer validation information, estimate: (1) How many consumers amount the creditor or debt collector the Bureau would need to estimate the ignore notices out of a mistaken was trying to collect was wrong for at impact of this additional information on conclusion that the debt is not theirs; (2) least one of these debts, and 16 percent consumers’ ability to recognize their how many consumers dispute correct said the contacts included at least one debts compared to what is currently debts, and subsequently, how much contact about a debt that was instead provided on validation notices, as well time the proposed validation notice owed by a family member. Taken as how consumers would respond to would save by obviating later together, more than one-half of the that additional information. Although interactions that result from improper consumers (53 percent) who said they the Bureau is not aware of data that disputes; and (3) how many consumers had been contacted about one or more would permit a full accounting of these fail to dispute or make payments on debts in collection reported that they benefits, below is a summary of incorrect debts. The Bureau is not aware thought at least one of the debts they information the Bureau is aware of that of a source of information on the is relevant to some factors affecting number of consumers in these categories 666 FMG Focus Group Report, supra note 38, at these benefits. or the possible time savings that could 15–16. The Bureau understands that, in result from the proposed validation 667 See CFPB Debt Collection Consumer Survey, general, validation notices currently information. As discussed in the supra note 18, at 13, 40–41. include little or no information about section-by-section analysis in part V, the 668 The survey questions concerning consumer beliefs about errors in collections did not ask the debt beyond the information Bureau currently is conducting respondents to distinguish between debts owed to specifically listed in section 809(a) of additional consumer testing of possible a debt collector and debts owed to a creditor. If the FDCPA (i.e., the current amount of time-barred debt and revival consumers are more or less likely to believe there the debt and the name of the current disclosures. This testing may also is an error for collection attempts by debt collectors, then this percentage and those below may over- or creditor). This information may not be provide additional evidence about the under-estimate the likelihood that a consumer sufficient for the consumer to recognize benefits of the proposed validation believes a debt is in error when contacted by a debt the debt, particularly if: (1) The amount information to consumers. collector.

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were contacted about was in error. This Additionally, the consumer response for subsection headings. It uses shading suggests that there are many consumers information includes an option to to highlight the amount due and uses who receive the validation notices in request information about the original plain language rather than technical use today who might be likely to creditor. This additional information terms. Usability testing research using dispute based on their perception that may help consumers in determining eye-tracking suggests that participants either the debt is not theirs or is wrong. whether the debt is theirs. were able to locate relevant information The Bureau has proposed a model Among the 53 percent of consumers on the proposed form, with most validation notice. Several who cited one of the issues noted above, participants able to quickly locate their considerations went into the content account number and the contact 42 percent reported that they disputed and design of the model validation information of the creditor.674 The a collection in the prior year, and 11 notice. First, consumers must have information presented in the proposed percent of consumers who had not cited relevant and accurate information to form is also concise, presenting one of those issues indicated that they make informed decisions on how to act consumers with a manageable amount had disputed a debt. The fact that less with regard to the debt; therefore the of information about the debt and what than one-half of the consumers who Bureau conducted consumer testing to they can do in response to the notice. questioned a debt about which the identify what pieces of information This is important, as the perceived cost creditor or collector contacted them consumers considered to be important to a consumer of reading a disclosure reported disputing a debt is consistent to help them identify whether a debt increases with the amount of with the possibility that some was theirs, whether the amount stated information provided.675 consumers do not dispute in response to was correct, and how the amount the The Bureau expects consumers to a collection effort because they are not debt collector was attempting to collect experience few costs as a result of the aware of the option to dispute or do not has changed over time (e.g., due to fees, proposed provision. understand the steps required to do so. interest, and payments).670 However, Potential benefits to covered persons. The proposed clear and conspicuous there is some indication that consumers The proposed provision would statement of the dispute right could tend to not read certain types of significantly reduce the litigation risk benefit consumers by making salient the standard-form disclosures.671 To try to that debt collectors face when mailing possibility of dispute. avoid this result, the Bureau conducted validation notices. This would benefit The survey’s finding that only 42 consumer testing exploring how debt collectors directly, by reducing percent of consumers who thought they consumers interacted and engaged with litigation costs related to validation experienced an error with a debt in the notice and the pieces of information notices. It could also indirectly benefit collection disputed the error suggests contained therein.672 This helped the debt collectors by adding information to consumers are uncertain about how to Bureau understand whether consumers validation notices that would be helpful dispute a debt in collection or that they were inclined to engage with the to debt collectors and consumers but believe that disputes require too much document in general, and which pieces which debt collectors currently do not time and effort relative to the expected of the validation notice received more or include for fear that it would increase benefit. The consumer response less consumer attention. litigation risk. The proposed validation information could reduce these The Bureau incorporated the findings information may also make consumers impediments to disputing debts that from this consumer testing in its design more likely to dispute, which could consumers believe are in error. of the proposed model validation notice increase costs for debt collectors, as Specifically, the consumer response form. To increase both engagement and discussed under ‘‘Potential costs to information would provide a clear comprehension of the validation covered persons’’ below. means of disputing a debt in a way that information, the Bureau designed the The Bureau understands that debt triggers the protections provided by the proposed form to be visually engaging. collectors currently face litigation risk FDCPA and this proposed rule, if The proposed form uses plain language associated with the validation notices finalized. Furthermore, the convenience wherever possible and conforms to they send, reflecting, in part, conflicting of the consumer response information recommendations the SEC set forth in court decisions about what language is could reduce barriers to responding by their plain English handbook.673 To required and what language is permitted eliminating or reducing the burden of, reduce the perceived complexity of the in the notices.676 The proposal would for example, deciding what information information, the proposed form uses a reduce this risk for debt collectors who is relevant and how to phrase the clear hierarchy of information through use the proposed model form. response.669 This could allow some positioning in a columnar format, The proposed validation information consumers to save time and avoid other varying type-size, and bold-faced type would include specific information negative consequences, such as lower about the debt intended to help credit scores due to a debt they may not 670 FMG Summary Report, supra note 42. consumers identify the debt and owe being listed as unpaid in their 671 See, e.g., Ian Ayres & Alan Schwartz, The No- understand the amount the debt Reading Problem in Consumer Contract Law, 66 collector claims is owed. The Bureau’s credit files. Stan. L. Rev. 545 (2014); Yannis Bakos et al., Does Anyone Read the Fine Print? Consumer Attention qualitative consumer research and the 669 A 2016 research report by the United to Standard-Form Contracts, 43 J.Legal Studies 1, Kingdom’s Financial Conduct Authority showed 1–35 (2014); George R. Milne & Mary J. Culnan, 674 FMG Summary Report, supra note 42. that, in a large randomized control trial, a tear off Strategies for Reducing Online Privacy Risks: Why 675 The idea that consumers may decrease their form (with a text or email reminder) led to more Consumers Read (or Don’t Read) Online Privacy engagement with information when more consumers switching from a current savings Notices, 18 J. Interactive Mktg. 3, 15–29 (2004); information is provided is somewhat supported by account to one with a better interest rate relative to Jonathan A. Obar & Anne Oeldorf-Hirsch, The research on ‘‘choice overload.’’ This work indicates getting only an informational text and/or email Biggest Lie on the internet: Ignoring the Privacy that if choice sets are large, some people opt to reminder and relative to an informational box with Policies and Terms of Service Policies of Social make no choice at all. See, e.g., Sheena Iyengar et instructions on how to switch. Paul Adams et al., Networking Services, (York U., draft version, 2018), al., How Much Choice is Too Much? Contributions Attention, Search and Switching: Evidence on http://dx.doi.org/10.2139/ssrn.2757465. to 401(k) Retirement Plans, in Pension Design and Mandated Disclosure from the Savings Market, (UK 672 FMG Cognitive Report, supra note 40. Structure: New Lessons from Behavioral Finance, at Fin. Conduct Authority, Occasional Paper No. 19 673 See Sec. Exchange Comm’n, A Plain English 83 (Oxford U. Press 2004). 2016). https://www.fca.org.uk/publication/ Handbook (Aug. 1998), https://www.sec.gov/pdf/ 676 See Small Business Review Panel Report, occasional-papers/occasional-paper-19.pdf. handbook.pdf. supra note 57, at 22.

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Bureau’s complaint data suggest that the Respondents said that disputes took the any one-time costs to debt collectors of information currently included in longest amount of time to resolve if the reformatting the validation notice would validation notices is often not sufficient basis of the dispute was unclear or if the be relatively small, particularly for debt for consumers to identify a debt or consumer said the debt was not collectors who rely on vendors, because whether the amount owed is correct.677 theirs.680 the Bureau expects that most vendors If consumers are better able to identify The Bureau does not have a basis to would provide an updated notice at no debts, they may be less likely to dispute estimate how much the proposed additional cost.683 The Bureau or ignore a debt that they in fact owe, validation information might affect understands from its outreach that many and at the same time may be better able dispute rates. As an illustration of covered persons currently use vendors to articulate the basis for a dispute of a potential cost savings if dispute rates to provide validation notices.684 debt that they do not owe. These effects fall, if the proposed information were to Surveyed firms, and their vendors, told could benefit debt collectors by reduce the number of consumers who the Bureau that vendors do not typically reducing the costs associated with dispute by 1 percent of all validation charge an additional cost to modify an consumer disputes. Although it is notices sent, and assuming that there are existing template (although this practice possible that debt collectors could 140 million validation notices sent per might not apply if the proposal required currently provide such information on year,681 the overall number of annual more extensive changes to validation validation notices, the Bureau disputes would fall by 1.4 million. notices than vendors typically make understands that some debt collectors Assuming an average time to process today).685 Debt collectors and vendors who would like to provide additional each dispute of 0.375 hours, the overall would bear costs to understand the information do not do so largely due to savings to industry would be estimated requirements of the provision and to the legal risks associated with including at 525,000 person-hours, or ensure that their systems generate information in the validation notice approximately 250 full-time notices that comply with the beyond what is expressly listed in the equivalents. Assuming labor costs for requirements, although these costs 682 FDCPA.678 The proposal would debt collectors of $22 per hour, this would be mitigated somewhat by the significantly reduce this legal risk. would represent industry cost savings of availability of a model form. To quantify the benefits of this about $11.5 million. The proposed validation information provision to covered persons, the The proposed validation information would require debt collectors to provide Bureau would need data on how could also reduce the cost of processing certain additional information about the frequently consumers do not recognize disputes by making it easier for debt, which would require that debt the debt or amount owed identified in consumers who dispute to provide at collectors receive and maintain certain a validation notice, how many least some information about the basis data fields and incorporate them into consumers would better recognize the of their disputes. This could reduce the the notices. The Bureau believes that the debt given the proposed information, costs to covered persons of processing large majority of debt collectors already and how consumers would act on that disputes by making it easier for debt receive and maintain most data fields information. While the Bureau is not collectors to investigate disputed debts included in the proposed validation aware of available data that would in order to verify the debt. information. However, some Potential costs to covered persons. permit it to estimate these numbers, the respondents to the Debt Collection Debt collectors already send validation Debt Collection Consumer Survey does Operations Survey reported that they do notices to consumers to comply with the provide some basis for thinking that the not receive information from creditors FDCPA, so the proposed validation proposed validation information would about post-default interest, fees, information would generally affect the 686 be helpful to consumers. payments, and credits. These debt content of existing disclosures debt The proposed validation information collectors would have to update their collectors are sending rather than could reduce debt collector costs systems to track these fields. The require debt collectors to send entirely associated with disputes by preventing Bureau understands that such system new disclosures. Nonetheless, debt some disputes from consumers who are updates would be likely to cost less than collectors would incur certain costs to 687 more likely to recognize that they owe $1,000 for each debt collector. comply with the proposal. These a debt and by making disputes that debt If debt collectors adjust their systems include one-time compliance costs, the collectors receive clearer and easier to to produce notices including the new ongoing costs of obtaining the required resolve. Debt collectors report that validation information, the Bureau validation information, and potentially processing disputes is a costly activity, would not expect there would be an ongoing costs of responding to a and that it can be especially difficult to increase in the ongoing costs of printing potential increase in the number of process disputes if the consumer and sending validation notices. disputes. However, there could be ongoing costs provides little or no detail about the The proposed provision would basis for a dispute. Debt collectors related to the validation information require debt collectors to reformat their requirements if the required data are not surveyed by the Bureau indicated that validation notices to accommodate the most disputes took between five always available to debt collectors. The proposed validation information Bureau understands that some creditors minutes and one hour of staff time to requirements. The Bureau expects that resolve, with 15 to 30 minutes being the do not currently track post-default most common amount of time.679 charges and credits in a way that can be 680 Id. readily transferred to debt collectors. 681 The assumption of 140 million validation 677 See supra notes 451–52 and accompanying notices per year is based on an estimated 49 million 683 text. consumers contacted by debt collectors each year See id. at 33. 678 See Small Business Review Panel Report, and an assumption that each consumer receives an 684 In the Operations Study, over 85 percent of supra note 57, at 22 (finding that small entities average of approximately 2.8 notices during the debt collectors surveyed by the Bureau reported would benefit from a model notice that reduced year. using letter vendors. Id. at 32. litigation risk arising from conflicting court 682 This assumes an hourly wage of $15 and taxes, 685 Id. at 33 decisions about what information is permitted on benefits, and incentives of $7 per hour. See CFPB 686 In the Operations Study, 52 of 58 respondents a validation notice). Debt Collection Operations Study, supra note 45, at reported receiving itemization of post-charge-off 679 CFPB Debt Collection Operations Study, supra 17 (reporting estimated debt collector wages fees on at least some of their accounts. Id. at 23. note 45, at 31. between $10 and $20 per hour plus incentives). 687 Id. at 26.

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Under the proposal, debt collectors than ignoring it. Responding to disputes consumer’s language preference and would be unable to send validation is a costly activity for debt collectors, so responding to that preference. notices—and therefore unable to an increase in dispute rates would The Bureau understands that some collect—if creditors do not provide this increase these costs. As discussed debt collectors currently send validation information.688 Some debt collectors above, covered persons surveyed by the notices in Spanish to some consumers. might lose revenue as a result of not Bureau indicated that most disputes To the extent sending such notices is being able to collect debts if they do not took between five minutes and one hour already prevalent it would limit the obtain this information from creditors. of staff time to resolve, with 15 to 30 consumer benefits of a proposal that The Bureau does not have minutes being the most common required Spanish-language translations representative data that would permit it amount of time.690 as well as the costs to debt collectors of to estimate how frequently this would The Bureau requests additional such a proposal, although there would occur. information about the benefits and costs still be costs associated with ensuring Other potential costs to debt to consumers and covered persons of that such disclosures were made as collectors could arise if changes to the the proposed validation information required by regulation. validation information affect how requirements, including information on consumers respond, particularly 8. Electronic Disclosures and whether and to what extent consumers Communications whether they dispute the debt. As would benefit from the requirements in discussed above, because the proposed the proposal, the costs to covered The proposed rule includes validation information would include persons of providing the information provisions that the Bureau expects more detail, consumers might be more that the proposal would require, and the would encourage debt collectors to likely to recognize the debt and less likely effects of the proposal on communicate with consumers by email likely to mistakenly dispute debts that consumer dispute rates. and text message more frequently than they owe. On the other hand, the new Alternative proposals to require they currently do. With respect to the consumer response information would Spanish-language disclosures. The validation notice, which most debt make it easier to dispute debts or Bureau considered proposals that would collectors currently provide by postal request the name and address of the require debt collectors to provide a mail, proposed § 1006.42 specifies original creditor. Together with the Spanish-language translation of the methods that debt collectors would be additional information about validation information under certain able to use to send notices by email or consumers’ ability to dispute that would circumstances, such as on the reverse by hyperlink to a secure website in a be provided, this could increase the side of any English-language validation way that complies with the FDCPA’s number of consumers who dispute or notice or if requested by a consumer. validation notice requirements. With request original-creditor information. Consumers with limited English respect to any communications about a The overall impact on dispute rates is proficiency may benefit from debt, proposed § 1006.6(d)(3) specifies unclear. translations of the validation procedures that debt collectors would The Bureau does not believe that any information, and Spanish speakers be able to use to send an email or text increases in dispute rates would be represent the second-largest language message to a consumer about a debt likely to substantially reduce collection group in the United States after English without risking liability under the revenue, but increased dispute rates speakers.691 FDCPA for disclosure of the debt to a would increase debt collector costs. Requiring Spanish-language third party. With respect to collections revenue, the disclosures would impose costs on some Potential benefits and costs to Bureau expects that, with some fairly debt collectors. A requirement to send a consumers. Today, debt collectors limited exceptions, consumers who Spanish-language disclosure on the back generally communicate with consumers choose to pay a debt are generally those of each validation notice could increase by letter and telephone. If the proposal who recognize that they owe the debt mailing costs for all validation notices were to lead debt collectors to increase and want to pay it, and that in most that are sent by mail, because it would their use of emails and text messages, cases the proposed validation require information that would the proposal would benefit consumers information would be unlikely to cause otherwise be printed on the back of who prefer electronic communications such consumers to dispute rather than validation notices, such as State- to letters or telephone calls. pay.689 With respect to costs, the mandated disclosures, to be provided on Many consumers appear to prefer to disclosures could lead consumers who a separate page. A requirement to receive certain disclosures about do not recognize the debt or who believe provide Spanish-language validation financial products by electronic means there is a problem with the amount notices upon request could lead to a rather than postal mail. In 2016, of a demanded to dispute the debt rather smaller increase in mailing costs but sample of 203 million active general could require debt collectors to develop purpose credit card accounts, 688 For example, the Bureau understands that approximately 141 million accounts (69 after New York State began requiring itemization of and maintain systems for tracking a post-charge-off fees and credits, some creditors percent of all accounts) were enrolled in were at least initially unable to provide this 690 CFPB Debt Collection Operations Study, supra online servicing, of which information and therefore did not place New York note 45, at 31. The discussion in ‘‘Benefits to approximately 80 million (39 percent of accounts for collection. covered persons’’ above provides an illustration of all accounts) opted into delivery of 689 While there is some evidence that consumers the potential impact on debt collectors of a change in dispute rates. Using the assumptions in that periodic statements by electronic means sometimes pay alleged debts even though they do 692 not believe they owe them, such consumers may be illustration, if the net impact of the proposal were only. Because consumers who motivated by factors, such as concerns about credit to increase industrywide disputes by 1 million reporting, that are not addressed by the validation disputes per year, it could imply increased industry 692 These estimates are based on data reported in notice itself. See Jeff Sovern et al., Validation and costs totaling around $8.25 million per year. Bureau of Consumer Fin. Prot., The Consumer Verification Vignettes: More Results from an 691 In 2013, 38.4 million residents in the United Credit Card Market, at 164–66 (Dec. 2017), https:// Empirical Study of Consumer Understanding of States aged five and older spoke Spanish at home. files.consumerfinance.gov/f/documents/cfpb_ Debt Collection Validation Notices, at 46–47 (St. See U.S. Census Bureau, Facts for Features: consumer-credit-card-market-report_2017.pdf. This John’s U., Working Paper No. 18–0016, 2018), Hispanic Heritage Month 2015 (Sept. 14, 2015), rate has increased every year since at least 2013. https://papers.ssrn.com/sol3/papers.cfm?abstract_ https://www.census.gov/newsroom/facts-for- These rates were lower for private label and retail id=3219171. features/2015/cb15-ff18.html. Continued

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experience debt collection differ from reduced call frequency generally are disclosure, may also reduce the consumers who do not,693 these discussed above. While some consumers likelihood the consumer would read it estimates would be more accurate if the prefer not to receive electronic because more effort is required to obtain Bureau knew how many consumers who communications from debt collectors, the disclosure. experience debt collection have opted the Bureau believes that the proposal’s Based on available information, the into receiving electronic-only opt-out provisions will reduce any harm Bureau does not believe that consumer (paperless) disclosures from their to such consumers by making it comprehension of an electronic notice creditors. It is not clear whether relatively easy for consumers to stop will be different from a paper notice. consumers who experience debt attempts at electronic communication. The proposal includes requirements collection would be more or less The risk of third-party disclosure may designed to make electronic disclosures digitally engaged with disclosures than be different for electronic debt no harder to read than paper notices, their counterparts without debt collection communications than for including requiring that the proposed collection experience.694 letters or telephone calls, although the electronic disclosure resize to fit the Other data from the Debt Collection Bureau is not aware of evidence that consumer’s screen. Some research Consumer Survey show that about 15 would indicate whether such risk is suggests that shorter disclosures (e.g., percent of consumers indicate that higher or lower. Bureau data suggests one to two pages), such as the proposed email is their most preferred method of that almost two-thirds of consumers notice, would result in similar levels of being contacted about a debt in consider it very important that third comprehension regardless of whether collection, with almost half of parties do not hear or see a message they are delivered on paper or consumers indicating that a letter is from a creditor or debt collector.696 To electronically.698 In cases in which their most preferred method, and about the extent that information in an differences in performance exist a quarter identifying a telephone as their electronic disclosure is less likely or between reading information on paper most preferred method.695 The lower more likely to be seen or heard by third and electronically, the difference may percentage for email may suggest that parties than communications by mail or be due to use of different reading consumers are more likely to prefer telephone, consumers receiving the strategies—people tend to scan and electronic communications for periodic validation notice electronically are jump around more when reading statements and similar disclosures than likely to experience a benefit or a cost, electronic information than they do for debt collection communications. respectively. with paper.699 Studies of other reading- Taken together, the available data Receiving disclosures electronically based tasks (surveys, ratings, and tests suggest that a minority of consumers— rather than in the mail may affect the or quizzes) find no differences in between 15 and 39 percent—would likelihood that borrowers notice and performance between tasks completed prefer electronic validation notices, read the disclosures, which could lead on paper and electronically.700 while a majority—as many as 69 to benefits or costs for consumers if they Potential benefits and costs to covered percent—might prefer to receive become more or less likely to persons. Debt collectors who send electronic communications (other than inadvertently ignore or miss important disclosures by email or hyperlink to a the validation notice) instead of or in information. The Bureau does not have secure website rather than sending addition to paper communications or information about how frequently letters could benefit because they would telephone calls. consumers currently read validation no longer have to print and mail As discussed above with respect to notices sent by mail or how often they disclosures. The Bureau estimates that the proposal’s provisions regarding call would read disclosures if sent by email the marginal cost of mailing a validation frequency, most consumers or by hyperlink to a secure website.697 notice is approximately $0.50 to $0.80, experiencing debt collection report that The requirement that debt collectors whereas the marginal cost of sending debt collectors call too often. The provide certain details about the debt in the same communication by email proposed provisions regarding the subject line of an email or the first electronic communications may have line of a text message may lower the 698 Some recent studies find no differences in likelihood that a consumer would miss comprehension between information displayed on the indirect effect of reducing call paper and information displayed on computers; frequency. These provisions may cause or ignore the email or text message from many of these use relatively short texts. See, e.g., debt collectors to substitute email or the debt collector transmitting the Robert Ball & Juan Pablo Hourcade, Rethinking text for telephone calls, and email or disclosure. The option of providing the Reading for Age from Paper and Computers, 27 Int’l disclosure on a secure website, while J. Human-Computer Interaction 11 (2011). In text may provide an easier channel for contrast, many studies using longer texts find consumers to ask debt collectors to call reducing further the risk of third-party comprehension is higher for paper. See, e.g., Lauren less often. The benefits to consumers of Singer & Patricia Alexander, Reading Across 696 See CFPB Debt Collection Consumer Survey, Mediums: Effects of Reading Digital and Print Texts supra note 18, at 38. on Comprehension and Calibration, 85 J. co-brand cards, suggesting that the product’s use 697 One debt collector who currently Experimental Educ. 1 (2017) (finding better case, acquisition channel, and consumer base engagement when undergraduates read from paper); composition may all affect both provider practices communicates with consumers by email reports that 60 percent of consumers open at least one Anne Mangen et al., Reading Linear Texts on Paper and consumer behavior. Versus Computer Screen, 58 Int’l J. Educ. Res. 61– 693 email and 25 percent click a link to review their See CFPB Debt Collection Consumer Survey, options. See Small Business Review Panel Report, 68 (2013) (finding that a small sample of high supra note 18, at 15–17. Consumers who have supra note 57, at 7. As of 2015, about one tenth of school students had lower comprehension of experienced debt collection tend to have lower all mass market credit card consumers accessed electronic information relative to paper); Scott incomes, be under age 62, and be non-white. their online PDF periodic account statements in the Althaus & David Tewksbury, Agenda Setting and 694 An FDIC survey that addressed access to final quarter of the year, which implies that fewer the ‘‘New’’ News: Patterns of Issue Importance banking services found that the share of than one-half of consumers who receive only Among Readers of the Paper and Online Versions respondents accessing bank accounts through electronic statements viewed those statements. See of the New York Times, 29 Comm. Res. 2 (2002) online or mobile methods generally increased with Bureau of Consumer Fin. Prot., The Consumer (randomly assigned participants to read the paper income and was lower for respondents aged 65 or Credit Card Market, at 134 figure 8 (Dec. 2015). or digital version of the New York Times and found more. See 2017 FDIC National Survey of Unbanked However, the Bureau does not have data about the better memory for readers of the paper version). and Underbanked Households at 27 & table 4.4 frequency with which consumers open or otherwise 699 Ziming Liu, Reading Behavior in the Digital (Oct. 2018), https://www.fdic.gov/household access paper periodic statements. In addition, Environment, 61 J. Documentation 6 (2005). survey/. notices of debts in collection may seem more 700 See Jan Noyes & Kate Garland, Computer- vs. 695 CFPB Debt Collection Consumer Survey, supra serious or important than periodic statements, and Paper-based Tasks: Are They Equivalent?, 51 note 18, at 23. may be more likely to be opened. Ergonomics 9 (2008).

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would be approximately zero. The encourage certain debt collection while call frequency limits may reduce Bureau estimates that approximately activities the net impact of which is the expected value of recovery. First, to 140 million validation notices are uncertain. Economic theory indicates the extent that the proposal would raise mailed each year.701 Assuming, for that it is possible for changes in debt costs for debt collectors, debt collectors example, that 40 percent of validation collection rules, such as those contained in theory could pass these costs on to notices that are currently mailed were in this proposal, to affect consumers’ creditors, whether by charging higher sent by email under the proposed rule access to credit. Theory says that contingency fees to creditors or by (the approximate percentage of credit creditors should decide to extend credit paying lower prices to creditors when card customers electing paperless based on the discounted expected value buying debt.704 Second, the proposed disclosures), and assuming average of the revenue stream from that rule may reduce the amount of expected mailing costs of $0.65, this would extension of credit. This entails recovery, either by making it less likely suggest reduced costs to industry in the considering the possibility that the that consumers ultimately pay, or by range of $36 million per year. To the consumer will ultimately default. reducing the amount that consumers extent that debt collectors were to Specifically, the discounted expected pay in the event of a settlement. Finally, provide validation notices by email value of an extension of credit will be the proposed rule could increase the more or less frequently than this under the discounted present value of the time it takes for debt collectors to the proposal, the cost savings would be stream of interest payments under the recover. A rational creditor would proportionately higher or lower. terms of the credit agreement, discount future income more the further Debt collectors who use electronic multiplied by the probability that the in the future it occurs, and so later communication may also benefit to the consumer pays, plus the discounted payment of the same amount of money extent that some consumers are more expected value of the creditor’s recovery would reduce the discounted expected likely to engage with debt collectors should the consumer default, times the value of the payment. Alternatively, the electronically than by telephone call or probability of default. A profit- proposed rule might lower costs for debt letter. During the SBREFA process, maximizing creditor will only extend collectors, increase expected recovery, several small entity representatives said credit to a given consumer if this and decrease the time it takes for debt that communication by email or text expected value is positive.703 Anything collectors to recover amounts owed.705 message was preferred by some that reduces the expected value of a If the proposal were to reduce the consumers and would be a more creditor’s recovery in the event of expected value of extending credit, effective way to engage with them about default, in general, will lower the creditors might respond in three ways: their debts.702 One debt collector who discounted expected value of the (1) Increase their standards for lending, currently uses email to contact extension of credit as a whole. This, in with an aim of reducing the probability consumers reports that its collection turn, may make potential extensions of of default; (2) reduce the amount of rates are greater than those of traditional credit with a discounted expected only credit offered, thus reducing their losses debt collectors. While collection rates slightly above zero to become negative, in the event of a default; or (3) increase are likely to vary according to debt such that a creditor will be less willing interest rates or other costs of credit collector, type of debt, and related to extend credit. Likewise, anything that such as fees, thus increasing their factors, clarifying the legality of increases the expected value of a revenue from consumers who do not electronic communications and creditor’s recovery increases the default. Which of these mechanisms any disclosures would make it easier for discounted expected value of the credit given creditor would pursue with debt collectors to test the efficacy of extension, and may change the sign of respect to any given credit transaction electronic communication and use it if the expected value of potential credit would depend on the specifics of the they find it effective, potentially extensions that had negative expected particular credit market. lowering costs and increasing the values, such that a profit-maximizing The Bureau is aware of three overall effectiveness of collections. creditor will be more willing to extend empirical academic studies using The Bureau requests additional credit. modern data and methods that estimate information about the benefits and costs There are a few ways that the the magnitude of the effect of debt to consumers and covered persons of proposal might increase or decrease the collection restrictions on access to the proposed requirements related to expected value of creditors’ recovery in credit,706 one by a researcher affiliated electronic disclosure and the event of default, although theory communication, including information alone gives no indication whether any 704 The degree of this pass-through depends on on whether and to what extent of these actual effects on recovery the relative degree of market power held by debt consumers would benefit from the collectors and creditors. If creditors have more would be large enough to have practical market power, debt collectors will have limited requirements in the proposal and the significance. The safe harbor for limited- ability to demand higher fees or lower wholesale benefits and costs to covered persons of content messages and affirming the prices. Given that many comments on the Small providing electronic communications as legality of email use would tend to Business Review Panel Outline indicated that debt discussed in the proposal. collectors have little market power in their increase the expected value of recovery, interactions with creditors, it is likely that there is G. Potential Reduction of Access by little pass-through of additional costs. See, e.g., Consumers to Consumer Financial 703 For purposes of this discussion, the Bureau Small Business Review Panel Report, supra note 57, ignores risk preferences and assumes that creditors at 16–17. Products and Services are risk neutral. That is, while a risk-averse decision 705 Because creditors are generally not subject to This proposal contains a mix of maker would prefer a certain payment of $100 to the FDCPA, creditors could also respond to changes provisions that would either restrict or an uncertain investment with expected value of to debt collection rules by changing their decisions $100, the discussion in this section assumes about whether to use third-party debt collectors or creditors are indifferent between these options. to collect debts themselves. The option to move 701 The assumption of 140 million validation Creditors may be risk averse to some degree, such debt collection activities ‘‘in house’’ could reduce notices per year is based on an estimated 49 million that they would prefer the certain investment to the any impact of the proposal on the costs of consumers contacted by debt collectors each year gamble, or even risk seeking, such that they prefer recovering unpaid debts. and an assumption that each receives an average of a gamble with the prospect of a higher return. The 706 In addition, earlier empirical research approximately 2.8 notices during the year. theoretical argument described here does not hinge examined the relationship between restrictions on 702 See, e.g., Small Business Review Panel Report, on creditors’ risk preferences—the Bureau makes creditor remedies and the supply of credit. See supra note 57, at appendix A. this assumption solely for ease of exposition. Continued

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with the Federal Reserve Bank of aside the question of whether monetary Database (CCDB).714 This study focuses Philadelphia (Fedaseyeu Study),707 adjustments under State law are of a on four recent major changes in State or another by researchers at the Federal comparable magnitude to the proposed local laws and regulations that imposed Reserve Bank of New York (Fonseca regulations under Federal law, the additional conduct requirements on Study),708 and a third by researchers at proposed rule focuses on conduct, either debt buyers or on all debt the Bureau (Romeo-Sandler Study).709 rather than State licensing fees, bonds, collectors.715 By focusing on the effect All three studies use changes in State or or penalty amounts. As such, the results of changes to laws that regulate debt local debt collection laws and of the Fedaseyeu Study are less collector conduct, the results of the regulations to examine the effect of informative as to the effects of the Romeo-Sandler Study are arguably more those laws on measures of credit access. proposed rule than they would be if the applicable to understanding the effects The Fedaseyeu Study used aggregate legal changes at issue were more of the proposal, although the specific data on new credit card accounts comparable. The data analysis in the changes to State or local laws studied combined with credit union call report Fedaseyeu Study is also somewhat differ considerably from the provisions data to examine the effect of various limited by the data that were available. of the proposed rule. State law changes between 1999 and The aggregate data used make it difficult The Romeo-Sandler Study assesses 2012 on the number of new revolving to control for confounding factors, such three main outcomes: The probability lines of credit opened each year in each as differences in credit scores between that a credit inquiry results in an open State. This study finds that an consumers. credit card account, the credit limit on additional restriction on debt collectors The Fonseca Study follows a similar newly opened credit card accounts, and decreases the number of new accounts design as the Fedaseyeu Study and initial interest rates on credit card by about two accounts per quarter per examines the same set of State law accounts. As discussed above, creditors 1,000 consumers residing in a State. For changes, but it employs microdata from might limit any of these factors to adjust comparison, the data used for the the Federal Reserve Bank of New York’s for the effects of a regulation such as the Fedaseyeu Study showed an average of Consumer Credit Panel, a nationally proposal. The Romeo-Sandler Study 120 new accounts per quarter per 1,000 representative sample of credit records controls for individual consumers’ consumers. The Fedaseyeu Study finds from Equifax. The main results of the credit scores and census tract no effect of debt collection laws on the Fonseca Study focus on the initial loan demographic information and flexibly average credit card interest rate.710 amounts or limits for automobile loans, adjusts for State-level trends over time However, the Fedaseyeu Study has credit cards, and non-traditional finance that might otherwise bias the estimates 712 some important limitations, particularly loans. The study finds a moderate of an analysis. As with the Fedaseyeu regarding extrapolating its results to the effect on automobile loan amounts, and Study and Fonseca Study, the Romeo- effects of the proposed rule. Most a small effect on initial credit card Sandler Study found effects of debt importantly, it considers a wide variety limits. Like the Fedaseyeu Study, a collection laws that are in the direction of types of debt collection laws, major limitation of the Fonseca Study is predicted by theory (i.e., increased including provisions with limited its focus on licensing requirements, regulation increases the cost or consumer protection aspects. which are not directly comparable to the decreases the availability of credit), but Specifically, a majority of the debt provisions in the proposal. That the the effects are quite small in magnitude. collection law changes included in the Fonseca Study finds larger effects on Using the CCP, this study found that Fedaseyeu Study largely involve automobile loans than credit cards also additional regulations on debt collectors’ conduct caused the success changes to licensing fees, bonds, or raises questions. Although third-party rate of a credit inquiry to decline by less levels of statutory penalties for debt collectors are sometimes involved than 0.02 percentage points off a base violations, rather than prohibiting or in collecting on automobile loans when requiring specific conduct, and each the loan balance exceeds the value of The Bureau’s CCP is an anonymized sample of such change is given the same weight as the car, most delinquent automobile debt is resolved through repossession. credit records from one of the three nationwide a law governing conduct.711 Leaving CRAs, containing a 1-in-48 representative sample of The fact that the Fonseca Study all adults with a credit record. The data contain all Thomas A. Durkin et al, Consumer Credit and the nonetheless found a moderately large credit accounts (trade lines) and hard inquiries on American Economy 521–525 (Oxford U. Press 2014) effect on automobile balances suggests a consumer’s credit report, with a unique, (summarizing this empirical literature). that possibly the study’s methodology anonymous identifier linking records belonging to the same consumer. This CCP does not contain any 707 Viktar Fedaseyeu, Debt Collection Agencies was not successful in isolating the personally identifying information on individual and the Supply of Consumer Credit (Fed. Reserve causal effect of the debt collection laws, consumers. Bank of Phila. Working Paper No. 15–23, 2015). 714 The CCDB is a monthly panel describing 708 Julia Fonseca, Katherine Strair & Basit Zafar, but instead was picking up other, balances, payments, and interest rates on all credit Access to Credit and Financial Health: Evaluating unrelated, factors. card accounts issued by a set of major banks, the Impact of Debt Collection (Fed. Reserve Bank The Romeo-Sandler Study uses representing roughly 90 percent of the credit card of N.Y. Staff Report No. 814, 2017). microdata from two large administrative market. As with the CCP, accounts are identified by 709 Charles Romeo & Ryan Sandler, The Effect of datasets: The Bureau’s Consumer Credit an anonymous identifier, and the CCDB does not Debt Collection Laws on Access to Credit (Bureau Panel (CCP) 713 and Credit Card contain any personally identifying information. of Consumer Fin. Prot., Off. of Research, Working 715 New laws were put into effect in North Paper No. 2018–01, 2018. Carolina in October 2009 and California in January 710 In addition to the results described here, the bonding requirements, and the creation of a board 2014; both of these laws focused exclusively on Fedaseyeu Study also examines the effect of debt to regulate third-party debt collectors. debt buyers. In addition, New York City, in April collection laws on the number of debt collection 712 The Fonseca Study defines non-traditional 2010, and New York State, in December 2014, firms per capita and a measure of the recovery rate finance loans as ‘‘retail cards, personal loans and introduced new debt collection restrictions through from debt collection. The Bureau omits discussion a residual loan category.’’ Like the Fedaseyeu administrative regulations. These updated of these results here because they are not directly Study, the Fonseca Study also examines the effect restrictions generally require debt collectors to take relevant to the question of consumer access—the of the debt collection laws studied on the number additional steps before collecting, including Bureau discusses potential effects on debt of debt collectors present in each State; again, the requiring additional documents to substantiate collection firms above. Bureau omits discussion of those results in this debts before collections can begin, requiring 711 Specifically, Fedaseyeu created an index of section. disclosures or additional documentation before debt collection regulation, with one point added for 713 Although similar in nature, the Bureau’s CCP lawsuits can be filed to enforce a debt, and a tightening in any one of six categories of is not the same as the Federal Reserve Bank of New requiring disclosures once the State’s statute of regulation, including licensing requirements, York’s Consumer Credit Panel, discussed above. limitations has run out.

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rate of about 43 percent. The study speak directly to the likely effects of the rule that are different in certain respects concludes that one can statistically proposed rule on consumer credit from the benefits experienced by reject that the effect was as large as 0.7 markets. The State or local laws consumers in general. For example, percentage points. The study provides analyzed in these studies implement a consumers in rural areas may be more some context for these effects by different set of consumer protections likely to borrow from small local banks comparing them to the effect of than those in the proposed rule. The and credit unions that may be less likely changing consumers’ credit scores. The proposed rule includes some provisions to outsource debt collection to FDCPA- study found that each credit score point likely to increase debt collector costs, covered debt collectors. Debts owed by increases the probability of a successful but it also includes other provisions, consumers in rural areas may also be credit inquiry for subprime borrowers such as those related to limited-content more likely to be collected by smaller by about 0.2 percentage points. Thus, messages and email and text messages, debt collectors, which the Bureau the estimated effect of a debt collection which could lower costs for some debt understands are less likely to attempt law is equivalent to lowering collectors. In addition, creditors and debt collection calls more frequently consumers’ credit scores by less than debt collectors might react differently to than the proposed frequency caps one point.716 The Romeo-Sandler Study changes in State or local collection finds similarly small effects on credit standards than the standards in the would permit. The proposed frequency limits, which are again equivalent to a Bureau’s proposed rule, which could caps may therefore have less of an very small change in credit score. The affect all U.S. consumers. For instance, impact on consumers in rural areas. magnitude of the credit limit effect in a nationwide creditor might choose not The Bureau will further consider the the Romeo-Sandler Study is smaller to adjust its credit standards in response impact of the proposed rule on than that found in the Fonseca Study. to a change in only one State’s debt consumers in rural areas. The Bureau The Romeo-Sandler Study also collection laws, but might find it therefore asks interested parties to analyzes the effect of debt collection optimal to change its standards if provide data, research results, and other laws on credit card interest rates using similar laws applied nationwide or to a factual information on the impact of the the CCDB. The study finds that initial large share of its potential borrowers. proposed rule on consumers in rural interest rates increase slightly following a State or local debt collection law or H. Potential Specific Impacts of the areas. regulation, but that this entirely takes Proposed Rule I. Request for Information the form of a reduced frequency of 1. Depository Institutions and Credit The Bureau will further consider the accounts with an introductory APR of 0 Unions With $10 Billion or Less in Total percent—the level of positive initial Assets, as Described in Section 1026 benefits, costs, and impacts of the interest rates are essentially unchanged. proposed provisions and additional The Romeo-Sandler Study is also able Depository institutions and credit proposed modifications before finalizing to shed light on potential areas of unions are generally not debt collectors the proposal. As noted above, there are heterogeneity in the effects of State debt under the FDCPA and therefore would a number of areas in which additional collection laws because of its access to not be covered by the proposal. information would allow the Bureau to However, as noted above, creditors rich microdata. The Romeo-Sandler better estimate the benefits, costs, and could experience indirect effects from Study explores the effects separately for impacts of this proposal and more fully the proposal to the extent they hire consumers with high and low credit inform the rulemaking. The Bureau asks scores, and finds somewhat larger FDCPA-covered debt collectors or sell interested parties to provide comment (although still small) effects on debt in default to such debt collectors. or data on various aspects of the consumers with sub-prime credit scores. Such creditors could experience higher This is consistent with theory. Even costs if debt collectors’ costs increase proposed rule, as detailed in the within the sub-sample of consumers and if debt collectors are able to pass section-by-section analysis. Information with sub-prime credit scores, the effect those costs on to creditors. provided by interested parties regarding of the laws is equivalent to a three-point The Bureau understands that many these and other aspects of the proposed decrease in sub-prime borrowers’ credit depository institutions and credit rule may be considered in the analysis scores. unions with $10 billion or less in total of the benefits, costs, and impacts of the The studies discussed above provide assets rely on FDCPA-covered debt final rule. The Bureau specifically evidence that regulation of debt collectors to collect unpaid amounts, requests precise cost or operational data collection can affect consumer access to but the Bureau does not have data that would permit it to better evaluate credit in ways consistent with economic indicating whether such institutions are the potential impacts on consumers and theory. However, these studies do not more or less likely than other creditors covered persons, including impacts on to do so. The Bureau requests additional collection rates, implementation costs 716 The study notes, as a point of comparison, that data and other information about and ongoing operational costs imposed this effect is considerably smaller than that of potential benefits and costs of the routine errors in credit reports. See Fed. Trade by the proposed provisions. The Bureau Comm’n, Report to Congress Under Section 319 of proposal for these institutions. also requests comment on the research the Fair and Accurate Credit Transactions Act of referenced above, including its use of 2003, at 43 (Dec. 2012), https://www.ftc.gov/sites/ 2. Impact of the Proposed Provisions on default/files/documents/reports/section-319-fair- Consumers in Rural Areas the Fedaseyeu Study, the Fonseca and-accurate-credit-transactions-act-2003-fifth- Study, and the Romeo-Sandler Study. interim-federal-trade-commission/ Consumers in rural areas may 130211factareport.pdf. experience benefits from the proposed

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VII. Regulatory Flexibility Analysis debt collectors, and to further the consumers and industry participants. Under section 603(a) of the Regulatory FDCPA’s goals of eliminating abusive The Bureau intends that these Flexibility Act (RFA), an initial debt collection practices and ensuring clarifications will help to eliminate regulatory flexibility analysis (IRFA) that debt collectors who refrain from abusive debt collection practices and ‘‘shall describe the impact of the abusive debt collection practices are not ensure that debt collectors who refrain 725 proposed rule on small entities.’’ 717 competitively disadvantaged. The from abusive debt collection practices 727 Section 603(b) of the RFA sets forth the FDCPA established certain consumer are not competitively disadvantaged. required elements of the IRFA. Section protections, but interpretive questions As amended by the Dodd-Frank Act, 603(b)(1) requires a description of the have arisen since its passage. Some FDCPA section 814(d) provides that the reasons agency action is being questions, including those related to Bureau may ‘‘prescribe rules with considered.718 Section 603(b)(2) communication technologies that did respect to the collection of debts by debt not exist at the time the FDCPA was collectors,’’ as that term is defined in requires a succinct statement of the 728 objectives of, and the legal basis for, the enacted (such as mobile telephones, the FDCPA. Section 1022(a) of the proposed rule.719 Section 603(b)(3) emails, and text messages), have been Dodd-Frank Act provides that ‘‘[t]he requires a description of and, where the subject of inconsistent court Bureau is authorized to exercise its feasible, an estimate of the number of decisions, resulting in legal uncertainty authorities under Federal consumer small entities to which the proposed and additional cost for industry and financial law to administer, enforce, and 720 consumers. The Bureau proposes to otherwise implement the provisions of rule will apply. Section 603(b)(4) 729 requires a description of the projected clarify how debt collectors may employ Federal consumer financial law.’’ reporting, recordkeeping, and other such technologies in compliance with ‘‘Federal consumer financial law’’ compliance requirements of the the FDCPA and to address other includes title X of the Dodd-Frank Act proposed rule, including an estimate of communications- and disclosure-related and the FDCPA. The legal basis for the the classes of small entities that will be practices that currently pose a risk of proposed rule is discussed in detail in subject to the requirement and the types harm to consumers, legal uncertainty to the legal authority analysis in part IV and in the section-by-section analysis in of professional skills necessary for the industry, or both. The Bureau also part V. preparation of the report or record.721 proposes that FDCPA-covered debt Section 603(b)(5) requires identifying, to collectors comply with certain C. Description and, Where Feasible, the extent practicable, all relevant additional disclosure-related and record Provision of an Estimate of the Number Federal rules which may duplicate, retention requirements pursuant to the of Small Entities To Which the Proposed overlap, or conflict with the proposed Bureau’s Dodd-Frank Act rulemaking Rule Will Apply authority; these proposed requirements rule.722 Section 603(c) requires a are designed to enhance consumer As discussed in the Small Business description of any significant understanding of the debt collection Review Panel Report, for the purposes alternatives to the proposed rule that process and to promote effective and of assessing the impacts of the proposed accomplish the stated objectives of efficient enforcement and supervision of rule on small entities, ‘‘small entities’’ is applicable statutes and that minimize Regulation F. defined in the RFA to include small any significant economic impact of the businesses, small nonprofit proposed rule on small entities.723 B. Statement of the Objectives of, and organizations, and small government Finally, section 603(d)(1) requires a Legal Basis for, the Proposed Rule jurisdictions.730 A ‘‘small business’’ is description of any projected increase in As discussed in part IV, the Bureau determined by application of SBA the cost of credit for small entities, a issues this proposal pursuant to its regulations in reference to the North description of any significant authority under the FDCPA and the American Industry Classification alternatives to the proposed rule that Dodd-Frank Act. The objectives of the System (NAICS) classifications and size accomplish the stated objectives of proposed rule are to answer certain standards.731 Under such standards, the applicable statutes and that minimize interpretive questions that have arisen Small Business Review Panel (Panel) any increase in the cost of credit for since the FDCPA’s passage and to identified four categories of small small entities (if such an increase in the further the FDCPA’s goals of eliminating entities that may be subject to the cost of credit is projected), and a abusive debt collection practices and to proposed provisions: Collection description of the advice and ensuring that debt collectors who refrain agencies (NAICS 561440) with $15 recommendations of representatives of from abusive debt collection practices million or less in annual receipts, debt small entities relating to the cost of are not competitively disadvantaged.726 buyers (NAICS 522298) with $38.5 credit issues.724 As the first Federal agency with million or less in annual revenues, A. Description of the Reasons Why authority under the FDCPA to prescribe collection law firms (NAICS 54110) Agency Action Is Being Considered substantive rules with respect to the with $11 million or less in annual collection of debts by debt collectors, receipts, and servicers who acquire As noted in part I, the Bureau is the Bureau proposes to clarify by rule accounts in default. These servicers issuing this proposed rule to implement how debt collectors may appropriately include depository institutions (NAICS and interpret the FDCPA, particularly employ newer communication 522110, 522120, and 522130) with $550 with respect to debt collection technologies in compliance with the million or less in annual receipts or communication, disclosure, and other FDCPA and to address other non-depository institutions (NAICS related practices by FDCPA-covered communications-related practices that 522390) with $20.5 million or less in currently pose a risk of harm to annual receipts. The Panel did not meet 717 5 U.S.C. 603(a). 718 consumers, legal uncertainty to 5 U.S.C. 603(b)(1). 727 See id. 719 industry, or both. The Bureau also 5 U.S.C. 603(b)(2). 728 15 U.S.C. 1692l(d). 720 proposes to clarify consumer disclosure 5 U.S.C. 603(b)(3). 729 12 U.S.C. 5512(a). 721 5 U.S.C. 603(b)(4). requirements to provide clarity for both 730 5 U.S.C. 601(6). 722 5 U.S.C. 603(b)(5). 731 The current SBA size standards are found on 723 5 U.S.C. 603(c). 725 See 15 U.S.C. 1692(e). SBA’s website, http://www.sba.gov/content/table- 724 5 U.S.C. 603(d)(1). 726 See 15 U.S.C. 1692(e). small-business-size-standards.

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with small nonprofit organizations or The following table provides the types of entities that may be affected by small government jurisdictions.732 Bureau’s estimate of the number and the proposed provisions:

TABLE 4—ESTIMATED NUMBER OF AFFECTED ENTITIES AND SMALL ENTITIES BY CATEGORY

Estimated total number Estimated of debt number of Category NAICS Small entity threshold collectors small entity within debt category collectors

Collection agencies .. 561440 ...... $15.0 million in annual receipts ...... 9,000 8,800 Debt buyers ...... 522298 ...... $38.5 million in annual receipts ...... 330 300 Collection law firms .. 541110 ...... $11.0 million in annual receipts ...... 1,000 950 Loan servicers...... 522110, 522120, and 522130 (deposi- $550 million in annual receipts for deposi- 700 200 tories); 522390 (non-depositories. tory institutions; $20.5 million or less for non-depositories.

Descriptions of the Four Categories Collection law firms. The Bureau compliance requirements on small estimates that there are 1,000 law firms entities subject to the proposal. The Collection agencies. The Census in the United States that either have as proposed requirements and the costs Bureau defines ‘‘collection agencies’’ their principal purpose the collection of associated with them are discussed (NAICS code 561440) as consumer debt or regularly collect below. ‘‘establishments primarily engaged in consumer debt owed to others, so that 1. Recordkeeping Requirements collecting payments for claims and the proposed rule would apply to them. remitting payments collected to their The Bureau estimates that 95 percent of Proposed § 1006.100 would require clients.’’ 733 In 2012, according to the such law firms are small entities.737 FDCPA-covered debt collectors to retain Census Bureau, there were Loan servicers. Loan servicers would evidence of compliance with Regulation approximately 4,000 collection agencies be covered by the proposed rule if they F starting on the date that the debt with paid employees in the United acquire servicing of loans already in collector begins collection activity on a States. Of these, the Bureau estimates default.738 The Bureau believes that this debt and ending three years after: (1) that 3,800 collection agencies have is most likely to occur with regard to The debt collector’s last communication $15.0 million or less in annual receipts companies that service mortgage loans or attempted communication in and are therefore small entities.734 or student loans. The Bureau estimates connection with the collection of the Census Bureau estimates indicate that in that approximately 200 such mortgage debt; or (2) the debt is settled, 2012 there were also more than 5,000 servicers may be small entities and that discharged, or transferred to the debt collection agencies without employees, few, if any, student loan servicers that owner or to another debt collector. The Bureau believes that most debt all of which are presumably small would be covered by the proposed rule 739 collectors are already maintaining entities. are small. records for three or more years for legal Debt buyers. Debt buyers purchase D. Projected Reporting, Recordkeeping, purposes and therefore would not incur delinquent accounts and attempt to and Other Compliance Requirements of significant costs as a result of the collect amounts owed, either themselves the Proposed Rule, Including an proposal’s record retention requirement. or through agents. The Bureau estimates Estimate of Classes of Small Entities During the SBREFA process, nearly all that there are approximately 330 debt That Will Be Subject to the small entity representatives stated that buyers in the United States, and that a Requirements and the Type of their current practices are already substantial majority of these are small Professional Skills Necessary for the consistent with a three-year record entities.735 Many debt buyers— Preparation of the Report or Record retention requirement, and some said particularly those that are small The proposed rule would not impose that they retain records for longer entities—also collect debt on behalf of new reporting requirements, but would periods ranging from five to 10 years.740 other debt owners.736 impose new recordkeeping and Some participants said, however, that

732 Small Business Review Panel Report, supra and believes that 90 percent of debt buyers are Some depository institutions (NAICS codes 522110, note 57, at 29. current members. 522120, and 522130) also service loans for others 733 As defined by the Census Bureau, collection 736 The Bureau understands that debt buyers are and may be covered by the proposed rule. agencies include entities that collect only generally nondepositories that specialize in debt 739 Based on the December 2015 Call Report data commercial debt, and the proposals under buying and, in some cases, debt collection. The as compiled by SNL Financial (with respect to consideration apply only to debt collectors of Bureau expects that debt buyers that are not insured depositories) and December 2015 data from consumer debt. However, the Bureau understands collection agencies would be classified by the the Nationwide Mortgage Licensing System and that relatively few collection agencies collect only Census Bureau under ‘‘all other nondepository Registry (with respect to non-depositories), the credit intermediation’’ (NAICS Code 522298). commercial debt. Bureau estimates that there are approximately 9,000 737 734 The primary trade association for collection small entities engaged in mortgage servicing, of The Census Bureau estimates average annual attorneys, the National Creditors Bar Association which approximately 100 service more than 5,000 receipts of $95,000 per employee for collection (NARCA), states that it has approximately 600 law loans. See 81 FR 72160, 72363 (Oct. 19, 2016). The agencies. Given this, the Bureau assumes that all firm members, 95 percent of which are small Bureau’s estimate is based on the assumption that firms with fewer than 100 employees and entities. The Bureau estimates that approximately all those servicing more than 5,000 loans may approximately one-half of the firms with 100 to 499 60 percent of law firms that collect debt are NARCA acquire servicing of loans when loans are in default employees are small entities, which implies members and that a similar fraction of non-member and that at most 100 of those servicing 5,000 loans approximately 3,800 firms. law firms are small entities. or fewer acquire servicing of loans when loans are 735 The Receivables Management Association, the 738 The Bureau expects that loan servicers are in default. largest trade group for this industry segment, states generally classified under NAICS code 522390, 740 Small Business Review Panel Report, supra that it has approximately 300 debt buyer members ‘‘Other Activities Related to Credit Intermediation.’’ note 57, at 28.

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they retain some information for a connection with the collection of a debt based on the frequency of its telephone shorter period of time such as one year. to prohibit debt collectors from calls, violate § 1006.14(a), FDCPA Such small entities would incur communicating or attempting to section 806, or Dodd-Frank Act sections additional costs for data storage and to communicate with consumers through a 1031 or 1036(a)(1)(B). update systems to reflect the longer medium of communication if the The proposed provision would storage period. consumer has requested that the debt impose at least two categories of costs collector not use that medium to 2. Compliance Requirements on small entities subject to the FDCPA. communicate with the consumer. First, it would mean that debt collectors The proposal contains a number of Debt collectors are already prohibited must track the frequency of outbound compliance requirements that would from communicating with consumers at apply to FDCPA-covered debt collectors a time or place that is known or should telephone calls, which would require who are small entities. The anticipated be known to be inconvenient to the many debt collectors to bear one-time costs of compliance for small entities of consumer. The Bureau therefore costs to update their systems and train these requirements are discussed below. believes that many debt collectors staff and create ongoing costs for some In evaluating the potential impacts of already keep track of what consumers debt collectors. Second, for some debt the proposal on small entities, the tell them about the times and places that collectors, the proposed provision Bureau takes as a baseline conduct in they find inconvenient and avoid would require a reduction in the the debt collection markets under the communicating or attempting to frequency with which they place current legal framework governing debt communicate with consumers at these telephone calls to consumers, which collection. This includes debt collector times or places. Similarly, the proposed could make it harder to reach practices as they currently exist, provisions regarding communication consumers and delay or reduce responding to the requirements of the with attorneys and at the consumer’s collections revenue. FDCPA as currently interpreted and place of employment track debt With respect to one-time other Federal laws as well as State collector practices that already comply implementation costs, many debt statutes and rules. This baseline with the FDCPA. The Bureau collectors would incur costs to revise represents the status quo from which understands that many debt collectors their systems to incorporate the the impacts of this proposal will be currently employ systems and business proposed call frequency limits. Such evaluated. processes designed to limit revisions could range from small The Bureau requests comment on the communication attempts to consumers updates to existing systems to the estimated impacts on small entities at inconvenient times and places and introduction of completely new systems discussed below and solicits data and that many debt collectors also use these and processes. The Bureau understands analysis that would supplement the systems and processes to prevent that larger debt collectors (including quantitative estimates discussed below communications with consumers those that are small entities) generally or provide quantitative estimates of through media that consumers have told already implement system limits on call benefits, costs, or impacts for which them are inconvenient. For these frequency to comply with client there are currently only qualitative reasons, the Bureau does not expect that contractual requirements, debt collector discussions. the proposed provisions would The discussion here is confined to the internal policies, and State and local significantly impact small entities laws.741 Such debt collectors might direct costs to small entities of subject to the proposal. complying with the requirements of the need only to revise existing calling proposed rule, if finalized. Other (b) Frequency Limits for Telephone restrictions to ensure that existing impacts, such as the impacts of call Calls and Telephone Conversations systems comply with the limits. Larger frequency limits on debt collectors’ Proposed § 1006.14(b)(1) would debt collectors might also need to ability to contact consumers, are prohibit a debt collector from, in respond to client requests for additional discussed at length in part VI. The connection with the collection of a debt, reports and audit items to verify that Bureau believes that, except where placing telephone calls or engaging in they comply with the limits, which otherwise noted, the impacts discussed telephone conversation repeatedly or could require these agencies to make in part VI would apply to small entities. continuously with intent to annoy, systems changes to alter the reports and abuse, or harass any person at the called data they produce for their clients to (a) Prohibited Communications With number. Proposed § 1006.14(b)(2) would review. Consumers provide that, subject to certain Smaller debt collectors and debt Proposed § 1006.6(b) generally would exceptions set forth in proposed collection law firms are less likely to implement FDCPA section 805(a)’s § 1006.14(b)(3), a debt collector violates have existing systems that track or limit prohibition on a debt collector proposed § 1006.14(b)(1) if the debt communication frequency, and may communicating with a consumer at collector places a telephone call to a therefore face larger costs to establish unusual or inconvenient times and person in connection with the collection systems to do so. However, many places, with a consumer represented by of a particular debt either: (i) More than smaller debt collectors report that they an attorney, and at a consumer’s place seven times within seven consecutive generally attempt to reach each of employment. This section would also days; or (ii) within a period of seven consumer by telephone only one or two expressly prohibit attempts to make consecutive days after having had a times per week and generally do not such communications, which debt telephone conversation with the person speak to a consumer more than one time collectors already must avoid given that in connection with the collection of per week, which suggests that their a successful attempt would be an such debt. Proposed § 1006.14(b)(4) practices are already within the FDCPA violation. Proposed would clarify the effect of complying proposed frequency limits.742 For such § 1006.14(h)(1) would interpret FDCPA with the frequency limits in debt collectors, existing policies may be section 806’s prohibition on a debt § 1006.14(b)(2), stating that a debt collector engaging in any conduct the collector who does not exceed the limits 741 Id. at 26. natural consequence of which is to complies with § 1006.14(b)(1) and 742 CFPB Debt Collection Operations Study, supra harass, oppress, or abuse any person in FDCPA section 806(5), and does not, note 45, at 29.

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sufficient to ensure compliance with the requirement would be satisfied. These debt if the debt collector knows or proposed provision. debt collectors would likely need to should know that the debt was paid or review their policies to ensure that settled, the debt was discharged in (c) Time-Barred Debt: Prohibiting Suits validation notices are always sent (or bankruptcy, or an identity theft report and Threats of Suit validation information is provided in an was filed with respect to the debt. Proposed § 1006.26(b) would prohibit initial communication) prior to Proposed § 1006.30(b)(2) would create a debt collector from suing or reporting on the account, which the several exceptions to this prohibition. threatening to sue on a debt that the Bureau expects would involve a small The Bureau understands, based on its debt collector knows or should know is one-time cost. Other debt collectors do market knowledge and outreach to debt time-barred. not furnish information at all to CRAs collectors, that debt collectors generally As discussed in part V, courts have and so would not be affected by the do not sell, transfer, or place for held that the FDCPA prohibits suits and proposed requirement. collections debts (other than in threats of suit on time-barred debt. In Debt collectors who furnish circumstances covered in the light of this, the Bureau understands information to CRAs but provide exceptions) if they have reason to that most debt collectors do not validation notices to consumers only believe the debts cannot be validly knowingly sue or threaten to sue after they have been in contact with collected because they have been paid, consumers to collect time-barred debts, consumers would need to change their they were settled in bankruptcy, or an and therefore the Bureau does not practices and would face increased costs identity theft report was filed with expect this provision of the proposed as a result of the proposal. Because respect to them. Therefore, the Bureau rule to have a significant effect on small these debt collectors are already does not expect this provision to create entities.743 required to provide validation notices to significant compliance costs for small consumers once they communicate with entities. (d) Communication Prior To Furnishing those consumers (unless validation (f) Notice for Validation of Debts Information information is provided in an initial Proposed § 1006.30(a) would prohibit communication or the consumer pays Proposed § 1006.34 would implement a debt collector from furnishing the debt), the Bureau expects that they and interpret FDCPA section 809(a), (b), information to a CRA regarding a debt already have systems in place for (d), and (e). Specifically, proposed before communicating with the sending notices and would not face one- § 1006.34(a) provides that, subject to consumer about that debt, a requirement time compliance costs greater than those certain exceptions, a debt collector must that debt collectors could satisfy by of other debt collectors. However, debt provide a consumer the validation sending a validation notice prior to collectors would face ongoing costs information described in § 1006.34(c). furnishing information. from sending validation notices to more Proposed § 1006.34(c) would implement The proposal would affect the consumers than they would otherwise, FDCPA section 809(a)’s content practices of debt collectors who at an estimated cost of $0.50 to $0.80 requirements and require that the sometimes furnish information about per debt if sent by postal mail.746 To the validation notice include certain consumers’ debts to CRAs before the extent debt collectors take advantage of information about the debt and the debt collectors have communicated with opportunities to send validation notices consumer’s protections with respect to consumers. The Bureau understands electronically, an option the proposal debt collection that debt collectors do that most debt collectors mail validation elsewhere seeks to make more viable, not currently provide on the validation notices to consumers shortly after they the marginal cost of sending each notice notice. Proposed § 1006.34(d) would set receive the accounts for collections and is likely to be approximately zero. forth general formatting requirements before they furnish data on those Alternatively, these debt collectors and permit debt collectors to comply accounts, and so they already would be could cease furnishing information to with these requirements by using the in compliance with the proposed CRAs, which could impact the proposed model validation notice in requirement.744 Forty-five out of 58 debt effectiveness of their collection appendix B. Debt collectors already send collectors responding to the Debt efforts.747 Because debt collectors could validation notices to consumers to Collection Operations Survey said that choose the less burdensome of these comply with the FDCPA, so the they furnish information to credit options, the additional costs of proposed validation information would bureaus.745 In all but three of these delivering notices represent an upper generally affect the content of existing cases, the respondents said that they bound on the burden of the provision on disclosures debt collectors are already send a validation notice upon account small entities. placement, such that the proposed sending rather than require debt (e) Prohibition on the Sale or Transfer collectors to send entirely new 743 For example, small entity representatives at of Certain Debts disclosures. Nonetheless, debt collectors the meeting of the Small Business Review Panel Proposed § 1006.30(b)(1) would would incur certain costs to comply indicated that it was standard practice in the prohibit a debt collector from selling, with the proposal. These include one- industry not to knowingly initiate lawsuits to time compliance costs, the ongoing collect time-barred debt. See Small Business transferring, or placing for collection a Review Panel Report, supra note 57, at 35. Some costs of obtaining the required industry groups have adopted policies requiring 746 One small entity representative on the validation information, and potentially members to refrain from suing or threatening to sue Bureau’s Small Business Review Panel indicated ongoing costs of responding to a on time-barred debts. See, e.g., Receivables Mgmt. that, for about one-half of its debts, it sends potential increase in the number of Ass’n, Receivables Management Certification validation notices only after speaking with a disputes. Program, at 32 (Jan. 19, 2018), https:// consumer and that, if it were required to send rmassociation.org/wp-content/uploads/2018/02/ validation notices to all consumers, it would incur The proposed provision would Certification-Policy-version-6.0–FINAL- mailing costs of $0.63 per mailing for an estimated require debt collectors to reformat their 20180119.pdf. 400,000 accounts per year. validation notices to accommodate the 744 In the Operations Study, 53 of 58 respondents 747 If debt collectors furnish to credit reporting proposed validation information said that they send a validation notice shortly after agencies less frequently this could make consumer account placement. CFPB Debt Collection reports less informative in general, which could requirements. The Bureau expects that Operations Study, supra note 45, at 28. have negative effects on the credit system by any one-time costs to debt collectors of 745 Id. at 19. making it harder for creditors to assess credit risk. reformatting the validation notice would

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be relatively small, particularly for debt Under the proposal, debt collectors apply to FDCPA-covered debt collectors, collectors who rely on vendors, because would be unable to send validation as described below. However, consistent the Bureau expects that most vendors notices—and therefore unable to with the findings of the Small Business would provide an updated notice at no collect—if creditors do not provide this Review Panel, the Bureau is not aware additional cost.748 The Bureau information.753 Some debt collectors of any other Federal regulations that understands from its outreach that many might lose revenue as a result of not currently duplicate, overlap, or conflict debt collectors currently use vendors to being able to collect debts if they do not with the proposed rule. provide validation notices.749 Surveyed obtain this information from creditors. For example, the Bureau’s Mortgage firms, and their vendors, told the The Bureau does not have Rules under the Real Estate Settlement Bureau that vendors do not typically representative data that would permit it Procedures Act (RESPA) and Truth in charge an additional cost to modify an to estimate how frequently this would Lending Act (TILA) include existing template (although this practice occur. communication requirements and might not apply if the proposal required policies and procedures applicable to (g) Electronic Disclosures and mortgage servicers, some of whom may more extensive changes to validation Communications notices than vendors typically make also be subject to the FDCPA. As a today).750 Debt collectors and vendors The proposed rule includes result, when the Bureau issued the 2016 would bear costs to understand the provisions that the Bureau expects Servicing Final Rule, the Bureau requirements of the proposed provision would encourage debt collectors to concurrently issued an FDCPA and to ensure that their systems communicate with consumers by email interpretive rule to clarify the generate notices that comply with the and text message more frequently than interaction of the FDCPA and specified requirement, although these costs would they currently do. With respect to the mortgage servicing rules in Regulations be mitigated somewhat by the validation notice, which most debt X and Z.754 availability of a model form. collectors currently provide by postal The Fair Credit Reporting Act (FCRA) The proposed validation information mail, proposed § 1006.42 specifies also includes certain provisions that requires debt collectors to provide methods that debt collectors would be apply to debt collectors, including a certain additional information about the able to use to send notices by email or provision that prohibits any person from debt, which would require that debt by hyperlink to a secure website in a selling, transferring for consideration, or collectors receive and maintain certain way that complies with the FDCPA’s placing for collection a debt that the data fields and incorporate them into validation notice requirements. With person has been notified resulted from 755 the notices. The Bureau believes that the respect to any communications about a identity theft. large majority of debt collectors already debt, proposed § 1006.6(d)(3) specifies Some Federal laws implemented by receive and maintain most data fields procedures that debt collectors would other government agencies also include included in the proposed validation be able to use to send an email or text protections and requirements that may apply to debt collection activities. For information. However, some message to a consumer about a debt example, the Telephone Consumer respondents to the Operations Survey without risking liability under the Protection Act (TCPA),756 which is reported that they do not receive from FDCPA for disclosure of the debt to a implemented by the Federal creditors information on post-default third party. The Bureau understands that few debt Communications Commission (FCC), interest, fees, payments, and credits.751 collectors currently communicate with affects some debt collection activities by These debt collectors would have to consumers using electronic means. For restricting the use of automatic update their systems to track these debt collectors who do communicate telephone dialing systems and artificial fields. The Bureau understands that with consumers electronically, the or prerecorded voice messages.757 In such system updates would be likely to proposal would require them to provide addition, the Servicemembers Civil cost less than $1,000 for each debt 758 752 a method for opting out of such Relief Act (SCRA) provides certain collector. protections from civil actions against If debt collectors adjust their systems communications and, if providing servicemembers in active duty. The to produce notices including the new required disclosures electronically, to SCRA restricts or limits actions against validation information, the Bureau provide certain information about the these personnel in a variety of areas would not expect there would be an account in the subject line. The Bureau related to financial management, increase in the ongoing costs of printing understands that these requirements are common features of services that including rental agreements, security and sending validation notices. deposits, evictions, credit card interest However, there could be ongoing costs provide the ability to send email to consumers. The Bureau therefore does rates, judicial proceedings, and income related to the validation information tax payments.759 requirements if the required data are not not anticipate that these requirements would impose significant costs on small The Bureau requests comment on the always available to debt collectors. The intersection between the proposed rule Bureau understands that some creditors entities that choose to communicate with consumers using electronic means. and other Federal laws and regulations. do not currently track post-default The Bureau specifically requests charges and credits in a way that can be E. Identification, to the Extent readily transferred to debt collectors. Practicable, of All Relevant Federal 754 See the section-by-section analysis of Rules That May Duplicate, Overlap, or proposed § 1006.6(a)(5). 748 See CFPB Debt Collection Operations Study, Conflict With the Proposed Rule 755 15 U.S.C. 1681m(f). supra note 45, at 33. 756 47 U.S.C. 227. 749 In the Operations Survey, over 85 percent of Certain other Federal laws and 757 See ACA Int’l v. Fed. Commc’ns Comm’n, 885 debt collectors surveyed by the Bureau reported regulations include requirements that F.3d 687 (DC Cir. 2018). using letter vendors. Id. at 32. 758 50 U.S.C. 3901–4043. 750 Id. at 33. 753 For example, the Bureau understands that 759 The Bureau also recognizes that other Federal 751 In the Operations Survey, 52 of 58 after New York began requiring itemization of post- regulations, including those issued by the respondents reported receiving itemization of post- charge-off fees and credits, some creditors were at Department of Education, may relate to debt charge-off fees on at least some of their accounts. least initially unable to provide this information collection. The Bureau will consult again with other Id. at table 8. and therefore did not place New York accounts for Federal agencies whose regulations may be related 752 See id. at 26. collection. to this rulemaking prior to issuing a final rule.

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comment on conflicts that may arise when consumers have multiple identified in consultation with the Chief between the proposed rule and other telephone numbers. The Bureau decided Counsel through the SBREFA process Federal laws and regulations and to propose an aggregate approach concerning any projected impact and methods to minimize such conflicts to because of concerns that a more the proposed rule on the cost of credit the extent they exist. prescriptive, per-telephone number for small entities. The Bureau sought to approach could less effectively carry out collect the advice and recommendations F. Description of Any Significant the consumer protection purposes of the of the small entity representatives Alternatives to the Proposed Rule That FDCPA—some consumers could receive during the Small Business Review Panel Accomplish the Stated Objectives of the (and some debt collectors could place) meeting regarding the potential impact Applicable Statutes and Minimize Any more telephone calls simply based on on the cost of business credit because, Significant Economic Impact of the the number of telephone numbers that as small debt collectors with credit Proposed Rule on Small Entities certain consumers happened to have needs, the small entity representatives Section 603(c) of the RFA requires the (and that debt collectors happened to could provide valuable input on any Bureau to describe in the IRFA any know about). Such an approach also such impact related to the proposed significant alternatives to the proposed could create incentives for debt rule. rule that accomplish the stated collectors to, for example, place The Bureau’s Small Business Review objectives of applicable statutes and that telephone calls to less convenient Panel Outline asked small entity minimize any significant economic telephone numbers after exhausting representatives to comment on how impact of the proposed rule on small their telephone calls to consumers’ proposed provisions will affect cost of entities.760 In developing the proposed preferred numbers. credit to small entities. The Bureau rule, the Bureau has considered The Bureau also considered believes that the proposed rule will alternative provisions and believes that alternatives to the proposal’s bright-line have little impact on the cost of credit. none of the alternatives considered limit on call frequency. One alternative However, it does recognize that would be as effective at accomplishing would be a rebuttable presumption of a consumer credit may become more the stated objectives of the FDCPA and violation when debt collectors call more expensive and less available as a result the applicable provisions of title X of frequently than the proposed limits, of some of these provisions, although the Dodd-Frank Act while minimizing paired with a rebuttable presumption of the Romeo-Sandler Study indicates that the impact of the proposed rule on small compliance when debt collectors call the magnitude of the cost and entities. less frequently. The presumptions could availability of consumer credit from In developing the proposal, the be rebutted based on the facts and recent changes to State debt collection Bureau considered a number of circumstances of a particular situation. laws is small. Many small entities alternatives, including those considered Another alternative would be to provide affected by the proposed rule use as part of the SBREFA process. Many of only a safe harbor for telephone calls consumer credit as a source of credit the alternatives considered would have below the frequency limits, with no and may, therefore, see costs rise if resulted in greater costs to small entities provision for telephone calls above the consumer credit availability decreases. than would the proposal. For example, frequency limits. Such an approach The Bureau does not expect this to be the Bureau considered limiting the would provide certainty to both debt a large effect and does not anticipate frequency of contacts or contact collectors and consumers about a per se measurable impact.762 attempts by any media, rather than by permissible level of calling, but it would During the SBREFA process, several telephone calls only, and the Bureau leave open the question of how many small entity representatives said that the considered requiring debt collectors to telephone calls is too many under the proposals under consideration at that provide validation notices in Spanish FDCPA and the Dodd-Frank Act. The time could have an impact on the cost under certain circumstances. Because Bureau decided not to propose such an of credit for them and for their small such alternatives would result in a approach because it appears that it business clients. Some small entity greater economic impact on small would not provide the clarity that debt representatives said that they use lines entities than the proposal, they are not collectors and consumers have sought, of credit in their business and that discussed here. The Bureau also nor would it appear to provide the same regulations that raise their costs or considered alternatives that might have degree of consumer protection as a per reduce their revenue could mean they resulted in a smaller economic impact se prohibition against telephone calls in are unable to meet covenants in their on small entities than the proposal. excess of a specified frequency. loan agreements, causing lenders to Certain of these alternatives are briefly However, the proposal solicits comment reduce access to capital or increase their described and their impacts relative to on these and other alternatives. borrowing costs. the proposed provisions are discussed VIII. Paperwork Reduction Act below. G. Discussion of Impact on Cost of Limitations on call frequency. The Credit for Small Entities Under the Paperwork Reduction Act Bureau also considered a proposal that Section 603(d) of the RFA requires the of 1995 (PRA),763 Federal agencies are would have limited the number of calls Bureau to consult with small entities generally required to seek approval from permitted to any particular telephone regarding the potential impact of the the Office of Management and Budget number (e.g., at most two calls to each proposed rule on the cost of credit for (OMB) for information collection of a consumer’s landline, mobile, and small entities and related matters.761 To requirements prior to implementation. work telephone numbers). The Bureau satisfy these statutory requirements, the Under the PRA, the Bureau may not considered such a limit either instead of Bureau provided notification to the conduct or sponsor, and, or in addition to an overall limit on the Chief Counsel for Advocacy of the Small notwithstanding any other provision of frequency of telephone calls to one Business Administration (Chief law, a person is not required to respond consumer. Such an alternative could Counsel) that the Bureau would collect potentially reduce the effect on debt the advice and recommendations of the 762 Charles Romeo & Ryan Sandler, The Effect of Debt Collection Laws on Access to Credit, (Bureau collector calls if it permitted more calls same small entity representatives of Consumer Fin. Prot., Off. of Research, Working Paper No. 2018–01, 2018). 760 5 U.S.C. 603(c). 761 5 U.S.C. 603(d). 763 44 U.S.C. 3501 et seq.

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to, an information collection unless the of confidentiality arises. The likely approval. All comments will become a information collection displays a valid respondents would be for-profit matter of public record. control number assigned by OMB. businesses that are FDCPA-covered debt If applicable, the notice of final rule As part of its continuing effort to collectors, including contingency debt will display the control number reduce paperwork and respondent collection agencies, debt buyers, law assigned by OMB to any information burden, the Bureau conducts a firms, and loan servicers, or State collection requirements proposed herein preclearance consultation program to governments in the case of applications and adopted in the final rule. provide the general public and Federal under § 1006.2 (proposed § 1006.108). List of Subjects in 12 CFR Part 1006 agencies with an opportunity to The collections of information comment on the information collection contained in this proposed rule, and Administrative practice and requirements in accordance with the identified as such, have been submitted procedure, Consumer protection, Credit, PRA. This helps ensure that the public to OMB for review under section Debt collection, Intergovernmental understands the Bureau’s requirements 3507(d) of the PRA. A complete relations. or instructions, respondents can provide description of the information collection Authority and Issuance the requested data in the desired format, requirements, including the burden reporting burden (time and financial estimate methods, is provided in the ■ For the reasons set forth above, the resources) is minimized, collection information collection request (ICR) that Bureau proposes to revise Regulation F, instruments are clearly understood, and the Bureau has submitted to OMB under 12 CFR part 1006, to read as follows: the Bureau can properly assess the the requirements of the PRA. Please PART 1006—DEBT COLLECTION impact of collection requirements on send your comments to the Office of PRACTICES (REGULATION F) respondents. Information and Regulatory Affairs, The proposed rule would amend 12 OMB, Attention: Desk Officer for the Sec. CFR part 1006 (Regulation F), which Bureau of Consumer Financial Subpart A—General implements the FDCPA. The Bureau’s Protection. Send these comments by OMB control number for Regulation F is email to [email protected] 1006.1 Authority, purpose, and coverage. 3170–0056. This proposed rule would or by fax to 202–395–6974. If you wish 1006.2 Definitions. revise the information collection to share your comments with the Subpart B—Rules for FDCPA Debt Collectors requirements contained in Regulation F Bureau, please send a copy of these 1006.6 Communications in connection with that OMB has approved under that OMB comments as described in the debt collection. control number. ADDRESSES section above. The ICR 1006.10 Acquisition of location Under the proposal, the Bureau would submitted to OMB requesting approval information. require nine information collection under the PRA for the information 1006.14 Harassing, oppressive, or abusive requirements in Regulation F: collection requirements contained conduct. 1. State application for exemption 1006.18 False, deceptive, or misleading herein is available at representations or means. (current § 1006.2, proposed § 1006.108). www.regulations.gov as well as on 2. Opt-out notice for electronic 1006.22 Unfair or unconscionable means. OMB’s public-facing docket at 1006.26 Collection of time-barred debts. communications or attempts to www.reginfo.gov. 1006.30 Other prohibited practices. communicate (proposed § 1006.6(e)). Title of Collection: Regulation F: Fair 1006.34 Notice for validation of debts. 3. Communication with consumers Debt Collection Practices Act. 1006.38 Disputes and requests for original- prior to furnishing information OMB Control Number: 3170–0056. creditor information. (proposed § 1006.30(a)). 1006.42 Providing required disclosures. 4. Validation notices (proposed Type of Review: Revision of a Subpart C—[Reserved] § 1006.34). currently approved collection. 5. Responses to requests for original- Affected Public: Private Sector; State Subpart D—Miscellaneous Governments. creditor information (proposed 1006. 100 Record retention. § 1006.38(c)). Estimated Number of Respondents: 1006.104 Relation to State laws. 6. Responses to disputes (proposed 12,027. 1006.108 Exemption for State regulation. § 1006.38(d)(2)(ii)). Estimated Total Annual Burden Appendix A to Part 1006—Procedures for 7. Subject-line information Hours: 1,029,500. State application for exemption From the requirements when required disclosures Comments are invited on: (a) Whether provisions of the Act are delivered electronically (proposed the collection of information is Appendix B to Part 1006—Model forms and clauses § 1006.42(b)(2)). necessary for the proper performance of the functions of the Bureau, including Appendix C to Part 1006—Issuance of 8. Notice and opt-out requirements for advisory opinions certain types of electronic delivery whether the information will have Supplement I to Part 1006—Official (proposed § 1006.42(c)(3)). practical utility; (b) the accuracy of the interpretations 9. Record retention (proposed Bureau’s estimate of the burden of the collection of information, including the Authority: 12 U.S.C. 5512, 5514(b), 5531, § 1006.100). 5532; 15 U.S.C. 1692l(d), 1692o, 7004. The first collection, the State validity of the methods and the application for an exemption, is assumptions used; (c) ways to enhance Subpart A—General required to obtain a benefit and its the quality, utility, and clarity of the respondents are exclusively State information to be collected; and (d) § 1006.1 Authority, purpose, and coverage. governments. The information collected ways to minimize the burden of the (a) Authority. This part, known as under this collection regards State law, collection of information on Regulation F, is issued by the Bureau of and so no issue of confidentiality arises. respondents, including through the use Consumer Financial Protection pursuant The remaining collections would be to of automated collection techniques or to sections 814(d) and 817 of the Fair provide protection for consumers and other forms of information technology. Debt Collection Practices Act (FDCPA or would be mandatory. Because the Comments submitted in response to this Act), 15 U.S.C. 1692l(d), 1692o; title X Bureau does not collect any information proposal will be summarized and/or of the Dodd-Frank Wall Street Reform in these remaining collections, no issue included in the request for OMB and Consumer Protection Act (Dodd-

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Frank Act), 12 U.S.C. 5481 et seq.; and any person through any medium. A debt whom the person acting as a debt paragraphs (b)(1) and (d)(1) of section collector does not convey information collector is related by common 104 of the Electronic Signatures in regarding a debt directly or indirectly to ownership or affiliated by corporate Global and National Commerce Act (E- any person if the debt collector provides control; and SIGN Act), 15 U.S.C. 7004. only a limited-content message, as (B) The principal business of the (b) Purpose. This part carries out the defined in paragraph (j) of this section. person acting as a debt collector is not purposes of the FDCPA, which include (e) Consumer means any natural the collection of debts; eliminating abusive debt collection person, whether living or deceased, (iii) Any officer or employee of the practices by debt collectors, ensuring obligated or allegedly obligated to pay United States or any State to the extent that debt collectors who refrain from any debt. For purposes of §§ 1006.6 and that collecting or attempting to collect using abusive debt collection practices 1006.14(h), the term consumer includes any debt is in the performance of the are not competitively disadvantaged, the persons described in § 1006.6(a). officer’s or employee’s official duties; and promoting consistent State action to (f) Consumer financial product or (iv) Any person while serving or protect consumers against debt service debt means any debt related to attempting to serve legal process on any collection abuses. This part also any consumer financial product or other person in connection with the prescribes requirements to ensure that service, as that term is defined in judicial enforcement of any debt; certain features of debt collection are section 1002(5) of the Dodd-Frank Act (v) Any nonprofit organization that, at disclosed fully, accurately, and (12 U.S.C. 5481(5)). the request of consumers, performs bona effectively to consumers in a manner (g) Creditor means any person who fide consumer credit counseling and that permits consumers to understand offers or extends credit creating a debt assists consumers in liquidating their the costs, benefits, and risks associated or to whom a debt is owed. The term debts by receiving payment from such with debt collection, in light of the facts creditor does not, however, include any consumers and distributing such and circumstances. Finally, this part person to the extent that such person amounts to creditors; sets record retention requirements to receives an assignment or transfer of a (vi) Any person collecting or enable the Bureau to administer and debt in default solely to facilitate attempting to collect any debt owed or carry out the purposes of the FDCPA, collection of the debt for another. due, or asserted to be owed or due to the Dodd-Frank Act, and this part, as (h) Debt, except for the purpose of another, to the extent such debt well as to prevent evasions thereof. The paragraph (f) of this section, means any collection activity: record retention requirements also will obligation or alleged obligation of a (A) Is incidental to a bona fide facilitate supervision of debt collectors consumer to pay money arising out of a fiduciary obligation or a bona fide and the assessment and detection of transaction in which the money, escrow arrangement; risks to consumers. property, insurance, or services that are (B) Concerns a debt that such person (c) Coverage. (1) Except as provided in the subject of the transaction are originated; § 1006.108 and appendix A of this part primarily for personal, family, or (C) Concerns a debt that was not in regarding applications for State household purposes, whether or not the default at the time such person obtained exemptions from the FDCPA, this part obligation has been reduced to it; or applies to debt collectors, as defined in judgment. For the purpose of paragraph (D) Concerns a debt that such person § 1006.2(i), other than a person (f) of this section, debt means debt as obtained as a secured party in a excluded from coverage by section that term is used in the Dodd-Frank Act. commercial credit transaction involving 1029(a) of the Consumer Financial (i)(1) Debt collector means any person the creditor; and Protection Act of 2010, title X of the who uses any instrumentality of (vii) A private entity, to the extent Dodd-Frank Act (12 U.S.C. 5519(a)). interstate commerce or mail in any such private entity is operating a bad (2) Certain provisions of this part business the principal purpose of which check enforcement program that apply to debt collectors only when they is the collection of debts, or who complies with section 818 of the Act. are collecting consumer financial regularly collects or attempts to collect, (j) Limited-content message means a product or service debt as defined in directly or indirectly, debts owed or message for a consumer that includes all § 1006.2(f). These provisions are due, or asserted to be owed or due, to of the content described in paragraph §§ 1006.14(b)(1)(ii), 1006.34(c)(2)(iv) another. Notwithstanding paragraph (j)(1) of this section, that may include and (3)(iv), and 1006.30(b)(1)(ii). (h)(2)(vi) of this section, the term debt any of the content described in collector includes any creditor that, in paragraph (j)(2) of this section, and that § 1006.2 Definitions. the process of collecting its own debts, includes no other content. For purposes of this part, the uses any name other than its own that (1) Required content. A limited- following definitions apply: would indicate that a third person is content message is a message for a (a) Act or FDCPA means the Fair Debt collecting or attempting to collect such consumer that includes all of the Collection Practices Act (15 U.S.C. 1692 debts. For the purpose of § 1006.22(e), following: et seq.). the term also includes any person who (i) The consumer’s name; (b) Attempt to communicate means uses any instrumentality of interstate (ii) A request that the consumer reply any act to initiate a communication or commerce or mail in any business the to the message; other contact with any person through principal purpose of which is the (iii) The name or names of one or any medium, including by soliciting a enforcement of security interests. more natural persons whom the response from such person. An attempt (2) The term debt collector excludes: consumer can contact to reply to the to communicate includes providing a (i) Any officer or employee of a debt collector; limited-content message, as defined in creditor while the officer or employee is (iv) A telephone number that the paragraph (j) of this section. collecting debts for the creditor in the consumer can use to reply to the debt (c) Bureau means the Bureau of creditor’s name; collector; and Consumer Financial Protection. (ii) Any person while acting as a debt (v) If applicable, the disclosure (d) Communicate or communication collector for another person if: required by § 1006.6(e). means the conveying of information (A) The person acting as a debt (2) Optional content. In addition to regarding a debt directly or indirectly to collector does so only for persons with the content described in paragraph (j)(1)

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of this section, a limited-content collection of any debt if the debt creditor intends to invoke a specified message may include one or more of the collector knows the consumer is remedy. following: represented by an attorney with respect (d) Communications with third (i) A salutation; to the debt and knows, or can readily parties. (1) Prohibitions. Except as (ii) The date and time of the message; ascertain, the attorney’s name and provided in paragraph (d)(2) of this (iii) A generic statement that the address, unless the attorney: section, a debt collector must not message relates to an account; and (i) Fails to respond within a communicate, in connection with the (iv) Suggested dates and times for the reasonable period of time to a collection of any debt, with any person consumer to reply to the message. communication from the debt collector; other than: (k) Person includes natural persons, or (i) The consumer; corporations, companies, associations, (ii) Consents to the debt collector (ii) The consumer’s attorney; firms, partnerships, societies, and joint communicating directly with the (iii) A consumer reporting agency, if stock companies. consumer. otherwise permitted by law; (l) State means any State, territory, or (3) Prohibitions regarding consumer’s (iv) The creditor; possession of the United States, the place of employment. A debt collector (v) The creditor’s attorney; or District of Columbia, the must not communicate or attempt to (vi) The debt collector’s attorney. Commonwealth of Puerto Rico, or any communicate with a consumer in (2) Exceptions. The prohibition in political subdivision of any of the connection with the collection of any paragraph (d)(1) of this section does not foregoing. debt at the consumer’s place of apply when a debt collector employment, if the debt collector knows communicates, in connection with the Subpart B—Rules for FDCPA Debt or has reason to know that the collection of any debt, with a person: Collectors consumer’s employer prohibits the (i) For the purpose of acquiring consumer from receiving such location information, as provided in § 1006.6 Communications in connection § 1006.10; with debt collection. communication. (4) Exceptions. The prohibitions in (ii) With the prior consent of the (a) Definition. For purposes of this paragraphs (b)(1) through (3) of this consumer given directly to the debt section, the term consumer includes: section do not apply when a debt collector; (1) The consumer’s spouse; collector communicates or attempts to (iii) With the express permission of a (2) The consumer’s parent, if the communicate with a consumer in court of competent jurisdiction; or consumer is a minor; connection with the collection of any (iv) As reasonably necessary to (3) The consumer’s legal guardian; debt with: effectuate a postjudgment judicial (4) The executor or administrator of (i) The prior consent of the consumer, remedy. the consumer’s estate, if the consumer is given directly to the debt collector (3) Reasonable procedures for email deceased; and during a communication that does not and text message communications. A (5) A confirmed successor in interest, violate paragraphs (b)(1) through (3) of debt collector maintains procedures that as defined in Regulation X, 12 CFR this section; or are reasonably adapted, for purposes of 1024.31, and Regulation Z, 12 CFR (ii) The express permission of a court FDCPA section 813(c), to avoid a bona 1026.2(a)(27)(ii). of competent jurisdiction. fide error in sending an email or text (b) Communications with a (c) Communications with a message communication that would consumer—in general. Except as consumer—after refusal to pay or cease result in a violation of paragraph (d)(1) provided in paragraph (b)(4) of this communication notice. (1) Prohibitions. of this section if the debt collector, section, a debt collector must not Except as provided in paragraph (c)(2) when communicating with a consumer communicate or attempt to of this section, a debt collector must not using an email address or, in the case of communicate with a consumer in communicate or attempt to a text message, a telephone number, connection with the collection of any communicate further with a consumer maintains procedures that include steps debt as prohibited by paragraphs (b)(1) with respect to a debt if the consumer to reasonably confirm and document through (3) of this section. notifies the debt collector in writing that: (1) Prohibitions regarding unusual or that: (i) The debt collector communicated inconvenient times or places. A debt (i) The consumer refuses to pay the with the consumer using: collector must not communicate or debt; or (A) An email address or, in the case attempt to communicate with a (ii) The consumer wants the debt of a text message, a telephone number consumer in connection with the collector to cease further that the consumer recently used to collection of any debt: communication with the consumer. contact the debt collector for purposes (i) At any unusual time, or at a time (2) Exceptions. The prohibitions in other than opting out of electronic that the debt collector knows or should paragraph (c)(1) of this section do not communications; know is inconvenient to the consumer. apply when a debt collector (B) A non-work email address or, in In the absence of the debt collector’s communicates or attempts to the case of a text message, a non-work knowledge of circumstances to the communicate further with a consumer telephone number, if: contrary, a time before 8:00 a.m. and with respect to the debt: (1) The creditor or the debt collector after 9:00 p.m. local time at the (i) To advise the consumer that the notified the consumer clearly and consumer’s location is inconvenient; or debt collector’s further efforts are being conspicuously, other than through the (ii) At any unusual place, or at a place terminated; specific non-work email address or non- that the debt collector knows or should (ii) To notify the consumer that the work telephone number, that the debt know is inconvenient to the consumer. debt collector or creditor may invoke collector might use that non-work email (2) Prohibitions regarding consumer specified remedies that the debt address or non-work telephone number represented by an attorney. A debt collector or creditor ordinarily invokes; for debt collection communications by collector must not communicate or or email or text message, where the attempt to communicate with a (iii) Where applicable, to notify the creditor or debt collector provided the consumer in connection with the consumer that the debt collector or notification no more than 30 days before

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the debt collector’s first such § 1006.10 Acquisition of location telephone calls or engage any person in communication, and the notification information. telephone conversation repeatedly or identified the legal name of the debt (a) Definition. The term location continuously with intent to annoy, collector and the non-work email information means a consumer’s: abuse, or harass any person at the called address or non-work telephone number (1) Place of abode and telephone number. the debt collector proposed to use, number at such place; or (ii) Identification and prevention of described one or more ways the (2) Place of employment. Dodd-Frank Act unfair act or practice. consumer could opt out of such (b) Form and content of location With respect to a debt collector who is communications, and provided the communications. A debt collector collecting a consumer financial product consumer with a specified reasonable communicating with a person other or service debt, as defined in § 1006.2(f), period in which to opt out before than the consumer for the purpose of it is an unfair act or practice under beginning such communications; and acquiring location information must: section 1031 of the Dodd-Frank Act to (1) Identify himself or herself (2) The opt-out period specified in the place telephone calls or engage any individually by name, state that he or notice described in paragraph person in telephone conversation she is confirming or correcting the (d)(3)(i)(B)(1) of this section has expired repeatedly or continuously in consumer’s location information, and, and the consumer has not opted out of connection with the collection of such only if expressly requested, identify his receiving debt collection debt, such that the natural consequence or her employer; communications at the specific non- is to harass, oppress, or abuse any (2) Not state that the consumer owes person at the called number. To prevent work email address or non-work any debt; telephone number, as applicable; or this unfair act or practice, such a debt (3) Not communicate by postcard; collector must not exceed the frequency (C) A non-work email address or, in (4) Not use any language or symbol on limits in paragraph (b)(2) of this section. the case of a text message, a non-work any envelope or in the contents of any (2) Frequency limits. Subject to telephone number that the creditor or a communication by mail indicating that paragraph (b)(3) of this section, a debt prior debt collector obtained from the the debt collector is in the debt collector violates paragraphs (b)(1)(i) consumer to communicate about the collection business or that the and (ii) of this section, as applicable, by debt if, before the debt was placed with communication relates to the collection placing a telephone call to a particular the debt collector, the creditor or the of a debt; and person in connection with the collection prior debt collector recently sent (5) After the debt collector knows the of a particular debt either: communications about the debt to that consumer is represented by an attorney (i) More than seven times within non-work email address or non-work with regard to the subject debt and has seven consecutive days; or telephone number, and the consumer knowledge of, or can readily ascertain, (ii) Within a period of seven did not request the creditor or the prior such attorney’s name and address, not consecutive days after having had a debt collector to stop using that non- communicate with any person other telephone conversation with the person work email address or non-work than that attorney, unless the attorney in connection with the collection of telephone number to communicate fails to respond to the debt collector’s such debt. The date of the telephone about the debt; and communication within a reasonable conversation is the first day of the (ii) The debt collector took additional period of time. seven-consecutive-day period. steps to prevent communications using (c) Frequency of location (3) Certain telephone calls excluded an email address or telephone number communications. In addition to from the frequency limits. Telephone that the debt collector knows has led to complying with the frequency limits in calls placed to a person do not count a disclosure prohibited by paragraph § 1006.14(b), a debt collector toward, and are permitted in excess of, (d)(1) of this section. communicating with any person other the frequency limits in paragraph (b)(2) than the consumer for the purpose of of this section if they are: (e) Opt-out notice for electronic acquiring location information about the (i) Made to respond to a request for communications or attempts to consumer must not communicate more information from such person; communicate. A debt collector who than once with such person unless (ii) Made with such person’s prior communicates or attempts to requested to do so by such person, or consent given directly to the debt communicate with a consumer unless the debt collector reasonably collector; electronically in connection with the believes that the earlier response of such (iii) Not connected to the dialed collection of a debt using a specific person is erroneous or incomplete and number; or email address, telephone number for that such person now has correct or (iv) With the persons described in text messages, or other electronic- complete location information. § 1006.6(d)(1)(ii) through (vi). medium address must include in such (4) Effect of complying with frequency communication or attempt to § 1006.14 Harassing, oppressive, or limits. A debt collector who does not communicate a clear and conspicuous abusive conduct. exceed the frequency limits in statement describing one or more ways (a) In general. A debt collector must paragraph (b)(2) of this section complies the consumer can opt out of further not engage in any conduct the natural with paragraph (b)(1) of this section and electronic communications or attempts consequence of which is to harass, section 806(5) of the FDCPA (15 U.S.C. to communicate by the debt collector to oppress, or abuse any person in 1692d(5)), and does not, based on the that address or telephone number. The connection with the collection of any frequency of its telephone calls, violate debt collector may not require, directly debt, including, but not limited to, the paragraph (a) of this section, section 806 or indirectly, that the consumer, in conduct described in paragraphs (b) of the FDCPA (15 U.S.C. 1692d), or order to opt out, pay any fee to the debt through (h) of this section. sections 1031 or 1036(a)(1)(B) of the collector or provide any information (b) Repeated or continuous telephone Dodd-Frank Act (12 U.S.C. 5531 or other than the email address, telephone calls or telephone conversations. (1) In 5536(a)(1)(B)). number for text messages, or other general. (i) FDCPA prohibition. In (5) Definition. For purposes of this electronic-medium address subject to connection with the collection of a debt, paragraph (b), particular debt means the opt out. a debt collector must not place each of a consumer’s debts in collection.

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However, in the case of student loan respond once to that consumer-initiated information that the debt collector debts, the term particular debt means all communication. knows or should know is false, student loan debts that a consumer owes including the failure to communicate or allegedly owes that were serviced § 1006.18 False, deceptive, or misleading that a disputed debt is disputed. representations or means. under a single account number at the (3) Use or distribute any written time the debts were obtained by the debt (a) In general. A debt collector must communication that simulates or that collector. not use any false, deceptive, or the debt collector falsely represents to (c) Violence or other criminal means. misleading representation or means in be a document authorized, issued, or In connection with the collection of a connection with the collection of any approved by any court, official, or debt, a debt collector must not use or debt, including, but not limited to, the agency of the United States or any State, threaten to use violence or other conduct described in paragraphs (b) or that creates a false impression about criminal means to harm the physical through (d) of this section. its source, authorization, or approval. person, reputation, or property of any (b) False, deceptive, or misleading (4) Use any business, company, or person. representations. (1) A debt collector organization name other than the true (d) Obscene or profane language. In must not falsely represent or imply that: name of the debt collector’s business, connection with the collection of a debt, (i) The debt collector is vouched for, company, or organization. a debt collector must not use obscene or bonded by, or affiliated with the United (d) False representations or deceptive profane language, or language the States or any State, including through means. A debt collector must not use natural consequence of which is to the use of any badge, uniform, or any false representation or deceptive abuse the hearer or reader. facsimile thereof. means to collect or attempt to collect (ii) The debt collector operates or is (e) Debtor’s list. In connection with any debt or to obtain information employed by a consumer reporting the collection of a debt, a debt collector concerning a consumer. agency, as defined by section 603(f) of must not publish a list of consumers (e) Disclosures required. (1) Initial the Fair Credit Reporting Act (15 U.S.C. who allegedly refuse to pay debts, communications. A debt collector must 1681a(f)). except to a consumer reporting agency disclose in its initial communication (iii) Any individual is an attorney or or to persons meeting the requirements with a consumer that the debt collector that any communication is from an of sections 603(f) or 604(a)(3) of the Fair is attempting to collect a debt and that attorney. Credit Reporting Act (15 U.S.C. 1681a(f) (iv) The consumer committed any any information obtained will be used or 1681b(a)(3)). crime or other conduct in order to for that purpose. If the debt collector’s (f) Coercive advertisements. In disgrace the consumer. initial communication with the connection with the collection of a debt, (v) A sale, referral, or other transfer of consumer is oral, the debt collector a debt collector must not advertise for any interest in a debt causes or will must make the disclosure required by sale any debt to coerce payment of the cause the consumer to: this paragraph again in its initial written debt. (A) Lose any claim or defense to communication with the consumer. (g) Meaningful disclosure of identity. payment of the debt; or (2) Subsequent communications. In In connection with the collection of a (B) Become subject to any practice each communication with the consumer debt, a debt collector must not place prohibited by this part. subsequent to the communications telephone calls without meaningfully (vi) Accounts have been turned over described in paragraph (e)(1) of this disclosing the caller’s identity, except as to innocent purchasers for value. section, the debt collector must disclose provided in § 1006.10. (vii) Documents are legal process. that the communication is from a debt (h) Prohibited communication media. (viii) Documents are not legal process collector. (1) In general. In connection with the forms or do not require action by the (3) Exception. Disclosures under collection of any debt, a debt collector consumer. paragraphs (e)(1) and (2) of this section must not communicate or attempt to (2) A debt collector must not falsely are not required in a formal pleading communicate with a consumer through represent: made in connection with a legal action. a medium of communication if the (i) The character, amount, or legal (f) Assumed names. This section does consumer has requested that the debt status of any debt. not prohibit a debt collector’s employee collector not use that medium to (ii) Any services rendered, or from using an assumed name when communicate with the consumer. For compensation that may be lawfully communicating or attempting to purposes of this paragraph, the term received, by any debt collector for the communicate with a person, provided ‘‘consumer’’ has the meaning given to it collection of a debt. that the employee uses the assumed in § 1006.6(a). (3) A debt collector must not name consistently and that the (2) Exceptions. Notwithstanding the represent or imply that nonpayment of employer can readily identify any prohibition in paragraph (h)(1) of this any debt will result in the arrest or employee using an assumed name. section: imprisonment of any person or the (g) Safe harbor for meaningful (i) If a consumer opts out in writing seizure, garnishment, attachment, or attorney involvement in debt collection of receiving electronic communications sale of any property or wages of any litigation submissions. A debt collector from a debt collector, a debt collector person unless such action is lawful and that is a law firm or who is an attorney may reply once to confirm the the debt collector or creditor intends to complies with § 1006.18 when consumer’s request to opt out, provided take such action. submitting a pleading, written motion, that the reply contains no information (c) False, deceptive, or misleading or other paper submitted to the court other than a statement confirming the collection means. A debt collector must during debt collection litigation if an consumer’s request; or not: attorney personally: (ii) If a consumer initiates contact (1) Threaten to take any action that (1) Drafts or reviews the pleading, with a debt collector using an address cannot legally be taken or that is not written motion, or other paper; and or a telephone number that the intended to be taken. (2) Reviews information supporting consumer previously requested the debt (2) Communicate or threaten to such pleading, written motion, or other collector not use, the debt collector may communicate to any person credit paper and determines, to the best of the

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attorney’s knowledge, information, and (f) Restrictions on use of certain (b) Prohibition on the sale, transfer, or belief, that, as applicable: media. A debt collector must not: placement of certain debts. (1) In (i) The claims, defenses, and other (1) Communicate with a consumer general. (i) FDCPA prohibition. Except legal contentions are warranted by regarding a debt by postcard. as provided in paragraph (b)(2) of this existing law; (2) Use any language or symbol, other section, a debt collector must not sell, (ii) The factual contentions have than the debt collector’s address, on any transfer, or place for collection a debt if evidentiary support; and envelope when communicating with a the debt collector knows or should (iii) The denials of factual contentions consumer by mail, except that a debt know that: are warranted on the evidence or, if collector may use the debt collector’s (A) The debt has been paid or settled; specifically so identified, are reasonably business name on an envelope if such (B) The debt has been discharged in based on belief or lack of information. name does not indicate that the debt bankruptcy; or collector is in the debt collection (C) An identity theft report, as defined § 1006.22 Unfair or unconscionable business. in section 603(q)(4) of the Fair Credit means. (3) Communicate or attempt to Reporting Act (15 U.S.C. 1681a(q)(4)), (a) In general. A debt collector must communicate with a consumer using an was filed with respect to the debt. not use unfair or unconscionable means email address that the debt collector (ii) Identification of Dodd-Frank Act to collect or attempt to collect any debt, knows or should know is provided to unfair act or practice. With respect to a including, but not limited to, the the consumer by the consumer’s debt collector who is collecting a conduct described in paragraphs (b) employer, unless the debt collector has consumer financial product or service through (f) of this section. received directly from the consumer debt, as defined in § 1006.2(f), it is an (b) Collection of unauthorized either prior consent to use that email unfair act or practice under section 1031 amounts. A debt collector must not address or an email from that email of the Dodd-Frank Act to sell, transfer, collect any amount unless such amount address. or place for collection a debt described is expressly authorized by the (4) Communicate or attempt to in paragraph (b)(1)(i) of this section. agreement creating the debt or permitted communicate with a consumer in (2) Exceptions. A debt collector may by law. For purposes of this paragraph, connection with the collection of a debt sell, transfer, or place for collection a the term ‘‘any amount’’ includes any by a social media platform that is debt described in paragraph (b)(1)(i) of interest, fee, charge, or expense viewable by a person other than the this section if the debt collector: incidental to the principal obligation. persons described in § 1006.6(d)(1)(i) (i) Transfers the debt to the debt’s (c) Postdated payment instruments. A through (vi). owner; debt collector must not: (g) Safe harbor for certain emails and (ii) Transfers the debt to a previous (1) Accept from any person a check or text messages relating to the collection owner of the debt if transfer is other payment instrument postdated by of a debt. A debt collector who authorized under the terms of the more than five days unless such person communicates with a consumer using original contract between the debt is notified in writing of the debt an email address or telephone number collector and the previous owner; collector’s intent to deposit such check and following the procedures described (iii) Securitizes the debt or pledges a or instrument not more than ten, nor in § 1006.6(d)(3) does not violate portfolio of such debt as collateral in less than three, days (excluding legal paragraph (a) of this section by revealing connection with a borrowing; or public holidays, Saturdays, and in the email or text message the debt (iv) Transfers the debt as a result of a Sundays) prior to such deposit. collector’s name or other information merger, acquisition, purchase and (2) Solicit any postdated check or indicating that the communication assumption transaction, or transfer of other postdated payment instrument for relates to the collection of a debt. substantially all of the debt collector’s the purpose of threatening or instituting § 1006.26 Collection of time-barred debts. assets. criminal prosecution. (c) Multiple debts. If a consumer (a) Definitions. For purposes of this (3) Deposit or threaten to deposit any makes any single payment to a debt section: postdated check or other postdated collector with respect to multiple debts (1) Statute of limitations means the payment instrument prior to the date on period prescribed by applicable law for owed by the consumer, the debt such check or instrument. bringing a legal action against the collector: (d) Charges resulting from (1) Must apply the payment in consumer to collect a debt. concealment of purpose. A debt (2) Time-barred debt means a debt for accordance with the directions given by collector must not cause charges to be which the applicable statute of the consumer, if any; and made to any person for communications limitations has expired. (2) Must not apply the payment to any by concealment of the true purpose of (b) Suits and threats of suit debt that is disputed by the consumer. the communication. Such charges prohibited. A debt collector must not (d) Legal actions by debt collectors. (1) include, but are not limited to, collect bring or threaten to bring a legal action Action to enforce interest in real telephone calls and telegram fees. against a consumer to collect a debt that property. A debt collector who brings a (e) Nonjudicial action regarding the debt collector knows or should legal action against a consumer to property. A debt collector must not take know is a time-barred debt. enforce an interest in real property or threaten to take any nonjudicial (c) [Reserved] securing the consumer’s debt must bring action to effect dispossession or the action only in a judicial district or disablement of property if: § 1006.30 Other prohibited practices. similar legal entity in which such real (1) There is no present right to (a) Communication prior to furnishing property is located. possession of the property claimed as information. A debt collector must not (2) Other legal actions. A debt collateral through an enforceable furnish to a consumer reporting agency, collector who brings a legal action security interest; as defined in section 603(f) of the Fair against a consumer other than to enforce (2) There is no present intention to Credit Reporting Act (15 U.S.C. an interest in real property securing the take possession of the property; or 1681a(f)), information regarding a debt consumer’s debt must bring such action (3) The property is exempt by law before communicating with the only in the judicial district or similar from such dispossession or disablement. consumer about the debt. legal entity in which the consumer:

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(i) Signed the contract sued upon; or (iii) Any provision of Federal or State (x) The current amount of the debt. (ii) Resides at the commencement of law or regulation mandating notice of a (3) Information about consumer the action. data security breach or privacy risk. protections. (i) A statement that (3) Authorization of actions. Nothing (3) Itemization date means any one of specifies what date the debt collector in this part authorizes debt collectors to the following four reference dates for will consider the end date of the bring legal actions. which a debt collector can ascertain the validation period and states that, if the (e) Furnishing certain deceptive amount of the debt: consumer notifies the debt collector in forms. A debt collector must not design, (i) The last statement date, which is writing before the end of the validation compile, and furnish any form that the the date of the last periodic statement or period that the debt, or any portion of debt collector knows would be used to written account statement or invoice the debt, is disputed, the debt collector cause a consumer falsely to believe that provided to the consumer; must cease collection of the debt, or the a person other than the consumer’s (ii) The charge-off date, which is the disputed portion of the debt, until the creditor is participating in collecting or date the debt was charged off; debt collector sends the consumer either (iii) The last payment date, which is attempting to collect a debt that the the verification of the debt or a copy of the date the last payment was applied consumer allegedly owes to the creditor. a judgment. to the debt; or (ii) A statement that specifies what § 1006.34 Notice for validation of debts. (iv) The transaction date, which is the date the debt collector will consider the (a)(1) Validation information date of the transaction that gave rise to end date of the validation period and the debt. required. Except as provided in states that, if the consumer requests in (4) Validation notice means a written paragraph (a)(2) of this section, a debt writing before the end of the validation or electronic notice that provides the collector must provide a consumer with period the name and address of the validation information described in original creditor, the debt collector must the validation information described in paragraph (c) of this section. paragraph (c) of this section either: cease collection of the debt until the (5) Validation period means the debt collector sends the consumer the (i) By sending the consumer a period starting on the date that a debt validation notice in a manner permitted name and address of the original collector provides the validation creditor, if different from the current by § 1006.42: information described in paragraph (c) (A) In the initial communication, as creditor. of this section and ending 30 days after (iii) A statement that specifies what defined in paragraph (b)(2) of this the consumer receives or is assumed to section; or date the debt collector will consider the receive the validation information. For end date of the validation period and (B) Within five days of that initial purposes of determining the end of the communication; or states that, unless the consumer contacts validation period, the debt collector the debt collector to dispute the validity (ii) By providing the validation may assume that a consumer receives of the debt, or any portion of the debt, information orally in the initial the validation information on any date before the end of the validation period, communication. that is at least five days (excluding legal the debt collector will assume that the (2) Exception. A debt collector who public holidays, Saturdays, and debt is valid. otherwise would be required to send a Sundays) after the debt collector (iv) If the debt collector is collecting validation notice pursuant to paragraph provides it. consumer financial product or service (c) Validation information. (1) Debt (a)(1)(i)(B) of this section is not required debt as defined in § 1006.2(f), a collector communication disclosure. to do so if the consumer has paid the statement that informs the consumer The statement required by § 1006.18(e). debt prior to the time that paragraph that additional information regarding (a)(1)(i)(B) of this section would require (2) Information about the debt. Except as provided in paragraph (c)(5) of this consumer protections in debt collection the validation notice to be sent. is available on the Bureau’s website at (b) Definitions. For purposes of this section: (i) The debt collector’s name and https://www.consumerfinance.gov. section: (v) A statement explaining how a (1) Clear and conspicuous means mailing address. (ii) The consumer’s name and mailing consumer can take the actions described disclosures that are readily in paragraphs (c)(4) and (d)(3), as understandable. In the case of written address. (iii) If the debt is a credit card debt, applicable, of this section electronically, and electronic disclosures, the location the merchant brand, if any, associated if the debt collector sends a validation and type size also must be readily with the debt, to the extent available to notice electronically. noticeable to consumers. In the case of the debt collector. (vi) For a validation notice delivered oral disclosures, the disclosures also (iv) If the debt collector is collecting in the body of an email pursuant to must be given at a volume and speed consumer financial product or service § 1006.42(b)(1) or (c)(2)(i), the opt-out sufficient for the consumer to hear and debt as defined in § 1006.2(f), the name statement required by § 1006.6(e). comprehend them. of the creditor to whom the debt was (4) Consumer response information. (2) Initial communication means the owed on the itemization date. The following information, segregated first time that, in connection with the (v) The account number, if any, from the validation information collection of a debt, a debt collector associated with the debt on the described in paragraphs (c)(1) through conveys information, directly or itemization date, or a truncated version (3) of this section and from any optional indirectly, regarding the debt to the of that number. information included pursuant to consumer, other than a communication (vi) The name of the creditor to whom paragraphs (d)(3)(i), (ii), (iv), and (v) of in the form of a formal pleading in a the debt currently is owed. this section, and, if provided in a civil action, or any form or notice that (vii) The itemization date. validation notice, located at the bottom does not relate to the collection of the (viii) The amount of the debt on the of the notice under the headings, ‘‘How debt and is expressly required by: itemization date. do you want to respond?’’ and ‘‘Check (i) The Internal Revenue Code of 1986 (ix) An itemization of the current all that apply:’’: (26 U.S.C. 1 et seq.); amount of the debt in a tabular format (i) Dispute prompts. The following (ii) Title V of the Gramm-Leach-Bliley reflecting interest, fees, payments, and statements, listed in the following order, Act (15 U.S.C. 6801 through 6827); or credits since the itemization date. and using the following phrasing or

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substantially similar phrasing, each next a substantially similar phrase. The (i) Prompts. Any prompt described in to a prompt: optional payment disclosure permitted paragraphs (c)(4)(i) or (ii) or paragraphs (A) ‘‘I want to dispute the debt by this paragraph must be no more (d)(3)(iii)(B) or (vi)(B) of this section because I think:;’’ prominent than any of the validation may be displayed electronically as a (B) ‘‘This is not my debt;’’ information described in paragraph (c) fillable field. (C) ‘‘The amount is wrong;’’ and of this section; and (ii) Hyperlinks. Hyperlinks may be (D) ‘‘Other (please describe on reverse (B) With the consumer response embedded that, when clicked: or attach additional information).’’ information described in paragraph (A) Connect consumers to the debt (ii) Original-creditor information (c)(4) of this section, the statement ‘‘I collector’s website; or prompt. The statement, ‘‘I want you to enclosed this amount,’’ using that (B) Permit consumers to respond to send me the name and address of the phrase or a substantially similar phrase, the dispute and original-creditor original creditor,’’ using that phrase or payment instructions after that information prompts described in a substantially similar phrase, next to a statement, and a prompt. The optional paragraphs (c)(4)(i) and (ii) of this prompt. payment disclosure permitted by this section. (iii) Mailing addresses. Mailing paragraph must be no more prominent (e) Translation into other languages. addresses for the consumer and the debt than the validation information A debt collector may send the consumer collector, which include the debt described in paragraph (c) of this a validation notice completely and collector’s and the consumer’s names. section. accurately translated into any language (5) Special rule for certain residential (iv) Disclosures required by applicable if the debt collector also sends an mortgage debt. For residential mortgage law. On the front of a validation notice, English-language validation notice in debt subject to Regulation Z, 12 CFR a statement that other disclosures the same communication that satisfies 1026.41, a debt collector need not required by applicable law appear on paragraph (a)(1) of this section. If a debt provide the validation information the reverse of the validation notice and, collector has already provided an described in paragraphs (c)(2)(vii) on the reverse of the validation notice, English-language validation notice that through (ix) of this section if the debt any such required disclosures. satisfies paragraph (a)(1) of this section collector: (v) Information about electronic and subsequently provides the (i) Provides the consumer at the same communications. The following consumer a validation notice translated time as the validation notice, a copy of information: into any another language, the debt the most recent periodic statement (A) The debt collector’s website and collector need not provide an additional provided to the consumer under email address. copy of the English-language notice. Regulation Z, 12 CFR 1026.41(b); and (ii) Refers to that periodic statement (B) If validation information is not § 1006.38 Disputes and requests for in the validation notice. provided electronically, the statement original-creditor information. (d) Form of validation information. (1) described in paragraph (c)(3)(v) of this (a) Definitions. For purposes of this In general. (i) The validation section explaining how a consumer can section, the following definitions apply: information described in paragraph (c) take the actions described in paragraphs (1) Duplicative dispute means a of this section must be clear and (c)(4) and (d)(3) of this section dispute submitted by the consumer in conspicuous. electronically. writing within the validation period (ii) If provided in a validation notice, (vi) Spanish-language translation that: the content, format, and placement of disclosures. The following disclosures (i) Is substantially the same as a the validation information described in regarding a consumer’s ability to request dispute previously submitted by the § 1006.34(c) and of the optional a Spanish-language translation of a consumer in writing within the disclosures permitted by paragraph validation notice: validation period for which the debt (d)(3) of this section must be (A) The statement, ‘‘Po´ngase en collector already has satisfied the substantially similar to Model Form B– contacto con nosotros para solicitar una requirements of paragraph (d)(2)(i) of 3 in appendix B of this part. copia de este formulario en espan˜ ol’’ this section; and (2) Safe harbor. A debt collector who (which means ‘‘Contact us to request a (ii) Does not include new and material uses Model Form B–3 in appendix B of copy of the form in Spanish’’), using information to support the dispute. this part complies with the that phrase or a substantially similar (2) Validation period has the same requirements of paragraphs (a)(1)(i) and phrase in Spanish. If providing this meaning given to it in § 1006.34(b)(5). (d)(1) of this section. optional disclosure, a debt collector may (b) Overshadowing of rights to dispute (3) Optional disclosures. A debt include supplemental information in or request original-creditor information. collector may, at its option, include any Spanish that specifies how a consumer During the validation period, a debt of the following information if may request a Spanish-language collector must not engage in any providing the validation information validation notice. collection activities or communications required by paragraph (a)(1) of this (B) With the consumer response that overshadow or are inconsistent section. information described in paragraph with the disclosure of the consumer’s (i) Telephone contact information. (c)(4) of this section, the statement rights to dispute the debt and to request The debt collector’s telephone contact ‘‘Quiero esta forma en espan˜ ol’’ (which the name and address of the original information, including telephone means ‘‘I want this form in Spanish’’), creditor. number and the times that the debt using that phrase or a substantially (c) Requests for original-creditor collector accepts consumer telephone similar phrase in Spanish, next to a information. Upon receipt of a request calls. prompt. for the name and address of the original (ii) Reference code. A number or code (4) Validation notices delivered creditor submitted by the consumer in that the debt collector uses to identify electronically. If a debt collector writing within the validation period, a the debt or the consumer. delivers a validation notice debt collector must cease collection of (iii) Payment disclosures. (A) The electronically pursuant to § 1006.42, a the debt until the debt collector statement, ‘‘Contact us about your debt collector may, at its option, format provides the name and address of the payment options,’’ using that phrase or the validation notice as follows: original creditor to the consumer in

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writing or electronically in a manner (2) Identify the purpose of the (1) Communication by the debt permitted by § 1006.42. communication by including, in the collector. Inform the consumer, in a (d) Disputes. (1) Failure to dispute. subject line of an email or in the first communication with the consumer, of: The failure of a consumer to dispute the line of a text message transmitting the (i) The name of the consumer who validity of a debt does not constitute a disclosure, the name of the creditor to owes or allegedly owes the debt; legal admission of liability by the whom the debt currently is owed or (ii) The name of the creditor to whom consumer. allegedly is owed and one additional the debt currently is owed or allegedly (2) Response to disputes. Upon piece of information identifying the owed; receipt of a dispute submitted by the debt, other than the amount; (iii) The email address or telephone consumer in writing within the (3) Permit receipt of notifications of number from which the debt collector validation period, a debt collector must undeliverability from communications intends to send the electronic cease collection of the debt, or any providers, monitor for any such communication containing the disputed portion of the debt, until the notifications, and treat any such hyperlink to the disclosure; debt collector: notifications as precluding a reasonable (iv) The email address or telephone (i) Provides a copy either of expectation of actual notice for that number to which the debt collector verification of the debt or of a judgment delivery attempt; and intends to send the electronic to the consumer in writing or (4) When providing the validation communication containing the electronically in a manner permitted by notice described in § 1006.34(a)(1)(i)(B), hyperlink to the disclosure; (v) The consumer’s ability to opt out § 1006.42; or provide the disclosure in a responsive of hyperlinked delivery of disclosures to (ii) In the case of a dispute that the format that is reasonably expected to be such email address or telephone debt collector reasonably determines is accessible on a screen of any number; and a duplicative dispute, either: commercially available size and via commercially available screen readers. (vi) Instructions for opting out, (A) Notifies the consumer in writing including a reasonable period within (c) Alternative procedures for or electronically in a manner permitted which to opt out; or providing certain disclosures by § 1006.42 that the dispute is (2) Communication by the creditor. electronically. A debt collector who duplicative, provides a brief statement Confirm that, no more than 30 days provides the validation notice described of the reasons for the determination, and before the debt collector’s electronic in § 1006.34(a)(1)(i)(B), or the refers the consumer to the debt communication containing the disclosures described in § 1006.38(c) or collector’s response to the earlier hyperlink to the disclosure, the creditor (d)(2), electronically need not comply dispute; or communicated with the consumer using with paragraph (b)(1) of this section if (B) Satisfies paragraph (d)(2)(i) of this the email address or, in the case of a text the debt collector: section. message, the telephone number to (1) Provides the disclosure by sending which the debt collector intends to send § 1006.42 Providing required disclosures. an electronic communication to an the electronic communication and (a) Providing required disclosures. (1) email address or, in the case of a text informed the consumer of: In general. A debt collector who message, a telephone number that the (i) The placement or sale of the debt provides disclosures required by this creditor or a prior debt collector could to the debt collector; part in writing or electronically must do have used to provide electronic (ii) The name the debt collector uses so in a manner that is reasonably disclosures related to that debt in when collecting debts; expected to provide actual notice and in accordance with section 101(c) of the E- (iii) The debt collector’s option to use a form that the consumer may keep and SIGN Act; and the consumer’s email address or, in the access later. (2) Places the disclosure either: case of a text message, the consumer’s (2) Exceptions. A debt collector need (i) In the body of an email sent to an telephone number to provide any legally not comply with paragraph (a)(1) of this email address described in paragraph required debt collection disclosures in a section when providing the disclosure (c)(1) of this section; or manner that is consistent with Federal required by § 1006.6(e) or § 1006.18(e) (ii) On a secure website that is law; and in writing or electronically, unless the accessible by clicking on a clear and (iv) The information in paragraphs disclosure is included on a notice conspicuous hyperlink included within (d)(1)(iii), (v), and (vi) of this section. required by § 1006.34(a)(1)(i) or an electronic communication sent to an (e) Safe harbors. (1) Disclosures § 1006.38(c) or (d)(2), or in an electronic email address or a telephone number provided by mail. A debt collector communication containing a hyperlink described in paragraph (c)(1) of this satisfies paragraph (a) of this section if to such notice. section, provided that: the debt collector mails a printed copy (b) Requirements for certain (A) The disclosure is accessible on the of a disclosure to the consumer’s disclosures provided electronically. To website for a reasonable period of time residential address, unless the debt comply with paragraph (a) of this and can be saved or printed; collector receives a notification from the section, a debt collector who provides (B) The consumer receives notice and entity or person responsible for delivery the validation notice described in an opportunity to opt out of hyperlinked that the disclosure was not delivered. § 1006.34(a)(1)(i)(B), or the disclosures delivery as described in paragraph (d) of (2) Validation notice contained in the described in § 1006.38(c) or (d)(2), this section; and initial communication. A debt collector electronically must: (C) The consumer, during the opt-out who provides the validation notice (1) Except as provided in paragraph period, has not opted out. described in § 1006.34(a)(1)(i)(A) within (c) of this section, provide the (d) Notice and opportunity to opt out the body of an email that is the initial disclosure in accordance with section of hyperlinked delivery. For a consumer communication with the consumer 101(c) of the Electronic Signatures in to receive notice and an opportunity to satisfies paragraph (a)(1) of this section Global and National Commerce Act (E- opt out of hyperlinked delivery as if the debt collector satisfies the SIGN Act) (15 U.S.C. 7001(c)) after the required by paragraph (c)(2)(ii)(B) of this requirements of paragraph (b) of this consumer provides affirmative consent section, the debt collector must, before section for validation notices described directly to the debt collector; providing the disclosure, either: in § 1006.34(a)(1)(i)(B). If such a debt

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collector follows the procedures may apply to the Bureau for exemption provisions of the applicant State law, described in paragraph (c) of this of a class of debt collection practices together with reasons supporting the claim section, the debt collector may, in lieu within the applying State from the that the corresponding provisions of the applicant State law are substantially similar of sending the validation notice to an provisions of the Act and the to, or provide greater protection to consumers email address that the creditor or a prior corresponding provisions of this part as than, the provisions of relevant Federal law debt collector could use for delivery of provided in section 817 of the Act (15 and an explanation as to why any differences electronic disclosures in accordance U.S.C. 1692o) are set forth in appendix between the State statute or regulation and with section 101(c) of the E-SIGN Act A of this part. Federal law are not inconsistent with the (as described in paragraph (c)(1) of this provisions of relevant Federal law and do not Appendix A to Part 1006—Procedures section), send the validation notice to an result in a diminution in the protection for State Application for Exemption email address selected through the otherwise afforded consumers; and a from the Provisions of the Act statement that no other State laws (including procedures described in § 1006.6(d)(3). administrative or judicial interpretations) are I. Purpose and Definitions related to, or would have an effect upon, the Subpart C—[Reserved] (a) This appendix establishes procedures State law that is being considered by the and criteria whereby States may apply to the Bureau in making its determination. Subpart D—Miscellaneous Bureau for exemption of a class of debt (c) A comparison of the provisions of the collection practices within the applying State State law that provide for enforcement with § 1006.100 Record retention. from the provisions of the Act and the the provisions of section 814 of the Act (15 (a) A debt collector must retain corresponding provisions of this part as U.S.C. 1692l), together with reasons evidence of compliance with this part provided in section 817 of the Act (15 U.S.C. supporting the claim that the applicant State starting on the date that the debt 1692o). law provides for adequate administrative enforcement. collector begins collection activity on a (b) For purposes of this appendix: (1) Applicant State law means the State (d) A statement identifying the office debt until three years after: law that, for a class of debt collection designated or to be designated to enforce the (1) The debt collector’s last practices within that State, is claimed to applicant State law. The statement must communication or attempted contain requirements that are substantially show how the office provides for adequate communication in connection with the similar to the requirements that relevant enforcement of the applicant State law, collection of the debt; or Federal law imposes on that class of debt including by showing that the office has (2) The debt is settled, discharged, or collection practices, and that contains necessary facilities, personnel, and funding. transferred to the debt owner or to adequate provision for State enforcement. The statement must include, for example, complete information regarding the fiscal another debt collector. (2) Class of debt collection practices includes one or more such classes of debt arrangements for administrative enforcement § 1006.104 Relation to State laws. collection practices referred to in paragraph (including the amount of funds available or I(b)(1) of this appendix. to be provided), the number and Neither the Act nor the corresponding (3) Relevant Federal law means sections qualifications of personnel engaged or to be provisions of this part annul, alter, 803 through 812 of the Act (15 U.S.C. 1692a engaged in enforcement, and a description of affect, or exempt any person subject to through 1692j) and the corresponding the procedures under which the applicant the provisions of the Act or the provisions of this part. State law is to be enforced by the State. (4) State law includes State statutes, any corresponding provisions of this part IV. Criteria for Determination from complying with the laws of any regulations that implement State statutes, and formal interpretations of State statutes or The Bureau will consider the criteria set State with respect to debt collection forth below, and any other relevant practices, except to the extent that those regulations by a court of competent jurisdiction or duly authorized State agency. information, in determining whether laws are inconsistent with any provision applicant State law is substantially similar to, of the Act or the corresponding II. Application or provides greater protection to consumers provisions of this part, and then only to Any State may apply to the Bureau than, relevant Federal law and whether there the extent of the inconsistency. For pursuant to the terms of this appendix for a is adequate provision for enforcement of the purposes of this section, a State law is determination that the applicant State law applicant State law. In making that not inconsistent with the Act or the contains requirements that, for a class of debt determination, the Bureau primarily will consider each provision of the applicant corresponding provisions of this part if collection practices within that State, are substantially similar to, or provide greater State law in comparison with each the protection such law affords any protection for consumers than, the corresponding provision in relevant Federal consumer is greater than the protection requirements that relevant Federal law law, and not the State law as a whole in provided by the Act or the imposes on that class of debt collection comparison with the Act as a whole. corresponding provisions of this part. practices, and that contains adequate (a)(1) In order for the applicant State law provision for State enforcement. The to be substantially similar to relevant Federal § 1006.108 Exemption for State regulation. application must be in writing, addressed to law, the applicant State law at least must (a) Exemption for State regulation. the Assistant Director, Office of Regulations, provide that: Any State may apply to the Bureau for Division of Research, Markets, and (i) Definitions and rules of construction, as a determination that, under the laws of Regulations, Bureau of Consumer Financial applicable, import a meaning and have an application that are substantially similar to, that State, any class of debt collection Protection, 1700 G Street NW, Washington, DC 20552, signed by the Governor, Attorney or more protective of consumers than, those practices within that State is subject to General, or State official having primary prescribed by relevant Federal law. requirements that are substantially enforcement responsibility under the State (ii) Debt collectors provide all of the similar to, or provide greater protection law that applies to the class of debt collection applicable notices required by relevant for consumers than, those imposed practices, and must be supported by the Federal law, with the content and in the under sections 803 through 812 of the documents specified in this appendix. terminology, form, and time periods prescribed pursuant to relevant Federal law. Act (15 U.S.C. 1692a through 1692j) and III. Supporting Documents the corresponding provisions of this The Bureau may determine whether The application must be accompanied by additional notice requirements under the part, and that there is adequate the following, which may be submitted in applicant State law affect a determination provision for State enforcement of such paper or electronic form: that the applicant State law is substantially requirements. (a) A copy of the applicant State law. similar to relevant Federal law. (b) Procedures and criteria. The (b) A comparison of each provision of (iii) Debt collectors take all affirmative procedures and criteria whereby States relevant Federal law with the corresponding actions and abide by obligations substantially

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similar to, or more protective of consumers class of debt collection practices in that State the basis for granting an exemption, the than, those prescribed by relevant Federal from the requirements of relevant Federal Bureau finds on the basis of the information law under substantially similar or more law and section 814 of the Act in the before it that it still cannot make a favorable protective conditions and within the following manner and subject to the determination in connection with the substantially similar or more protective time following conditions: application, the Bureau will publish in the periods as are prescribed under relevant (a) A final rule granting the exemption will Federal Register a final rule containing its Federal law; be published in the Federal Register, and the determination regarding the application and (iv) Debt collectors abide by prohibitions Bureau will furnish a copy of such rule to the will furnish a copy of such rule to the State that are substantially similar to or more State official who made application for such official who made application for such protective of consumers than those exemption, to each Federal authority exemption. prescribed by relevant Federal law; responsible for administrative enforcement of (v) Consumers’ obligations or the requirements of relevant Federal law, and VIII. Revocation of Exemption responsibilities are no more costly, lengthy, to the Attorney General of the United States. (a) The Bureau reserves the right to revoke or burdensome than consumers’ Any exemption granted will be effective 90 any exemption granted under the provisions corresponding obligations or responsibilities days after the date of publication of such rule of the Act or this part, if at any time it under relevant Federal law; and in the Federal Register. determines that the State law does not, in (vi) Consumers’ rights and protections are (b) Any State that receives an exemption fact, impose requirements that are substantially similar to, or more protective of must, through its appropriate official, take substantially similar to, or that provide consumers than, those provided by relevant the following steps: greater protection to consumers than, Federal law under conditions or within time (i) Inform the Assistant Director, Office of relevant Federal law or that there is not, in periods that are substantially similar to, or Regulations, Division of Research, Markets, fact, adequate provision for State more protective of consumers than, those and Regulations, Bureau of Consumer enforcement. prescribed by relevant Federal law. Financial Protection, 1700 G Street NW, (b) Before revoking any such exemption, (2) In applying the criteria set forth in Washington, DC 20552 in writing within 30 the Bureau will notify the State of the facts paragraph IV(a)(1) of this appendix, the days of any change in the applicant State or conduct that, in the Bureau’s opinion, Bureau will not consider adversely any law. The report of any such change must warrant such revocation, and will afford that additional requirements of State law that are contain copies of the full text of that change, not inconsistent with the purpose of the Act together with statements setting forth the State such opportunity as the Bureau deems or the requirements imposed under relevant information and opinions regarding that appropriate in the circumstances to Federal law. change that are specified in paragraph III. demonstrate continued eligibility for an (b) In determining whether provisions for (ii) Provide, not later than two years after exemption. enforcement of the applicant State law are the date the exemption is granted, and every (c) If, after having been afforded the adequate, consideration will be given to the two years thereafter, a report to the Bureau opportunity to demonstrate or achieve extent to which, under the applicant State in writing concerning the manner in which compliance, the Bureau determines that the law, provision is made for administrative the State has enforced the applicant State law State has not done so, a proposed rule to enforcement, including necessary facilities, in the preceding two years and an update of revoke such exemption will be published in personnel, and funding. the information required under paragraph the Federal Register. A comment period will III(d) of this appendix. be allowed from the date of such publication V. Public Comment (c) The Bureau will inform any State that for interested persons to submit written In connection with any application that receives such an exemption, through its comments to the Bureau regarding the has been filed in accordance with the appropriate official, of any subsequent intention to revoke. requirements of parts II and III of this amendments of the Act or this part that might (d) If such exemption is revoked, a final appendix and following initial review of the necessitate the amendment of State law for rule revoking the exemption will be application, a proposed rule concerning the the exemption to continue. published by the Bureau in the Federal application for exemption will be published (d) After an exemption is granted, the Register, and a copy of such rule will be by the Bureau in the Federal Register, and requirements of the applicable State law furnished to the State, to the Federal a copy of such application will be made constitute the requirements of relevant authorities responsible for enforcement of the available for examination by interested Federal law, except to the extent such State requirements of the Act, and to the Attorney persons during business hours at the Bureau law imposes requirements not imposed by General of the United States. The revocation of Consumer Financial Protection, 1700 G the Act or this part. becomes effective, and the class of debt Street, NW, Washington, DC 20552. A collection practices affected within that State VII. Adverse Determination comment period will be allowed from the become subject to the requirements of date of such publication for interested parties (a) If, after publication of a proposed rule sections 803 through 812 of the Act and the to submit written comments to the Bureau in the Federal Register as provided under corresponding provisions of this part, 90 regarding that application. part V of this appendix, the Bureau finds on days after the date of publication of the final the basis of the information before it that it rule in the Federal Register. VI. Exemption From Requirements cannot make a favorable determination in If the Bureau determines on the basis of the connection with the application, the Bureau Appendix B to Part 1006—Model Forms information before it that, under the will notify the appropriate State official of and Clauses applicant State law, a class of debt collection the facts upon which such findings are based B–1 [Reserved] practices is subject to requirements and will afford that State authority a substantially similar to, or that provide reasonable opportunity to submit additional B–2 [Reserved] greater protection to consumers than, those materials that demonstrate the basis for imposed under relevant Federal law and that granting an exemption. B–3 Model Form for Validation Notice there is adequate provision for State (b) If, after having afforded the State § 1006.34 enforcement, the Bureau will exempt the authority such opportunity to demonstrate BILLING CODE 4810–AM–P

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BILLING CODE 4810–AM–C periodically to incorporate references to will review and respond to requests for advisory opinions that the Bureau issues. advisory opinions. Appendix C to Part 1006—Issuance of 2. Requests for issuance of advisory 3. Bureau-issued advisory opinions. The Advisory Opinions opinions. A request for an advisory opinion Bureau has issued the following advisory 1. Advisory opinions. Any act done or should be in writing and addressed to the opinions: omitted in good faith in conformity with any Associate Director, Research, Markets, and a. Safe Harbors from Liability under the Regulations, Bureau of Consumer Financial Fair Debt Collection Practices Act for Certain advisory opinion issued by the Bureau, Protection, 1700 G Street NW, Washington, Actions Taken in Compliance with Mortgage including advisory opinions referenced in DC 20552. The request should contain a Servicing Rules under the Real Estate this appendix, provides the protection complete statement of all relevant facts Settlement Procedures Act (Regulation X) afforded under section 813(e) of the Act. The concerning the issue, including copies of all and the Truth in Lending Act (Regulation Z), Bureau will amend this appendix pertinent documents. Designated officials 81 FR 71977 (Oct. 19, 2016).

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Supplement I to Part 1006—Official 1. Any medium. Section 1006.2(d) collector. A voicemail or text message that Interpretations provides, in relevant part, that a spells out, rather than enumerates communication can occur through any numerically, a vanity telephone number is Introduction medium. ‘‘Any medium’’ includes any oral, not a limited-content message. written, electronic, or other medium. For 1. Official status. This commentary is the Subpart B—Rules for FDCPA Debt Collectors vehicle by which the Bureau of Consumer example, a communication may occur in Financial Protection supplements Regulation person or by telephone, audio recording, Section 1006.6—Communications in F, 12 CFR part 1006, and has been issued paper document, mail, email, text message, Connection With Debt Collection under the Bureau’s authority to prescribe social media, or other electronic media. 6(a) Consumer. rules under 15 U.S.C. 1692l(d) in accordance 2(j) Limited-content message. Paragraph 6(a)(1). with the notice-and-comment procedures for 1. In general. Section 1006.2(j) provides 1. Spouse. Section 1006.6(a)(1) provides informal rulemaking under the that a limited-content message is a message that, for purposes of § 1006.6, the term Administrative Procedure Act. Unless for a consumer that includes all of the consumer includes a consumer’s spouse. The specified otherwise, references in this content described in § 1006.2(j)(1), that may surviving spouse of a deceased consumer is commentary are to sections of Regulation F include any of the content described in a spouse as that term is used in or the Fair Debt Collection Practices Act, 15 § 1006.2(j)(2), and that includes no other § 1006.6(a)(1). U.S.C. 1692 et seq. No commentary is content. Any other message is not a limited- Paragraph 6(a)(2). expected to be issued other than by means of content message. If a message includes 1. Parent. Section 1006.6(a)(2) provides this Supplement I. content other than the specific items that, for purposes of § 1006.6, the term 2. Procedure for requesting interpretations. described in § 1006.2(j)(1) and (2), and such consumer includes a consumer’s parent, if Anyone may request that an official other content directly or indirectly conveys the consumer is a minor. A parent of a interpretation of the regulation be added to any information about a debt, including but deceased minor consumer is a parent as that this commentary. A request for such an not limited to any information that indicates term is used in § 1006.6(a)(2). official interpretation must be in writing and that the message relates to the collection of Paragraph 6(a)(4). addressed to the Associate Director, a debt, the message is a communication, as 1. Personal representative. Section Research, Markets, and Regulations, Bureau defined in § 1006.2(d). For example, a 1006.6(a)(4) provides that, for purposes of of Consumer Financial Protection, 1700 G message that includes the consumer’s § 1006.6, the term consumer includes the Street NW, Washington, DC 20552. The account number is not a limited-content executor or administrator of the consumer’s request must contain a complete statement of message because it includes more than a estate, if the consumer is deceased. The terms all relevant facts concerning the issue, generic statement that the message relates to executor or administrator include the including copies of all pertinent documents. an account. personal representative of the consumer’s Interpretations that are adopted will be 2. Examples. i. The following example estate. A personal representative is any incorporated in this commentary following illustrates a limited-content message that person who is authorized to act on behalf of publication in the Federal Register. includes only the content described in the deceased consumer’s estate. Persons with 3. Comment designations. Each comment § 1006.6(j)(1): ‘‘This is Robin Smith calling such authority may include personal in the commentary is identified by a number for Sam Jones. Sam, please contact me at 1– representatives under the informal probate and the regulatory section or paragraph that 800–555–1212.’’ and summary administration procedures of it interprets. The comments are designated ii. The following example illustrates a many States, persons appointed as universal with as much specificity as possible limited-content message that includes the successors, persons who sign declarations or according to the particular regulatory content described in both § 1006.6(j)(1) and affidavits to effectuate the transfer of estate provision addressed. For example, comments (2): ‘‘Hi, this message is for Sam Jones. Sam, assets, and persons who dispose of the to § 1006.34(b)(3) are further divided by this is Robin Smith. I’m calling to discuss an deceased consumer’s assets extrajudicially. subparagraph, such as comment 34(b)(3)(i)–1 account. It is 4:15 p.m. on Wednesday, 6(b) Communications with a consumer—in and comment 34(b)(3)(iv)–1. Comments that September 1. You can reach me or, Jordan general. have more general application are Johnson, at 1–800–555–1212 today until 6:00 6(b)(1) Prohibitions regarding unusual or designated, for example, as comments 38–1 p.m. eastern, or weekdays from 8:00 a.m. to inconvenient times or places. and 38–2. This introduction may be cited as 6:00 p.m. eastern.’’ 1. Designation of inconvenience. Section comments I–1, I–2, and I–3. 3. Message for a consumer. A debt collector 1006.6(b)(1) prohibits a debt collector from, Subpart A—General may transmit a limited-content message to a among other things, communicating or consumer by, for example, leaving a attempting to communicate with a consumer Section 1006.2—Definitions voicemail at the consumer’s telephone in connection with the collection of any debt 2(b) Attempt to communicate. number, sending a text message to the at a time or place that the debt collector 1. Examples. Section 1006.2(b) defines an consumer’s mobile telephone number, or knows or should know is inconvenient to the attempt to communicate as any act to initiate leaving a message orally with a third party consumer. The debt collector may know, or a communication or other contact with any who answers the consumer’s home or mobile should know, that a time or place is person through any medium, including by telephone. Other provisions of this part may, inconvenient if the consumer uses the word soliciting a response from such person. An in certain circumstances, restrict a debt ‘‘inconvenient’’ to notify the debt collector. act to initiate a communication or other collector from transmitting a limited-content In addition, depending on the facts and contact with a person is an attempt to message or otherwise attempting to circumstances, the debt collector may know, communicate regardless of whether the communicate with a consumer. See or should know, that a time or place is attempt, if successful, would be a §§ 1006.6(b) and (c) and 1006.22(f) and their inconvenient even if the consumer does not communication that conveys information related commentary for further guidance use the word ‘‘inconvenient’’ to notify the regarding a debt directly or indirectly to any regarding when a debt collector is prohibited debt collector. Further, if the consumer person. Attempts to communicate include, from attempting to communicate with a initiates a communication with the debt but are not limited to, the following: consumer. collector at a time or from a place that the i. Placing a telephone call to a person, 4. Meaningful disclosure of identity. A debt consumer previously designated as regardless of whether the debt collector collector who places a telephone call and inconvenient, the debt collector may respond speaks to any person at the called number; leaves only a limited-content message for a once to that consumer-initiated or consumer does not violate § 1006.14(g) with communication at that time or place. After ii. Transmitting a limited-content message, respect to that telephone call. that response, the debt collector must not as defined in § 1006.2(j), to a consumer by Paragraph 2(j)(1)(iv). communicate or attempt to communicate voicemail or text message sent directly to the 1. Telephone number that the consumer further with the consumer at that time or consumer or by an oral message left with a can use to respond. Section 1006.2(j)(1)(iv) place until the consumer conveys that the third party who answers the consumer’s provides that a limited-content message time or place is no longer inconvenient. For home or mobile telephone number. includes a telephone number that the example (unless an exception in 2(d) Communicate or communication. consumer can use to reply to the debt § 1006.6(b)(4) applies):

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i. Assume that a consumer tells a debt locations at which the debt collector’s notifies a debt collector in writing or in collector that the consumer ‘‘is busy’’ or information indicates the consumer might be electronic form using a medium of electronic ‘‘cannot talk’’ on weekdays from 3:00 p.m. to located. The following examples, which communication through which a debt 5:00 p.m. Based on these facts, the debt assume that the debt collector has no collector accepts electronic communications collector knows or should know that, on information about times the consumer from consumers, that the consumer either weekdays, the time period between 3:00 p.m. considers inconvenient or other information refuses to pay a debt or wants the debt and 5:00 p.m. is inconvenient to the about the consumer’s location, illustrate the collector to cease further communication consumer and, thereafter, the debt collector rule. with the consumer, notification is complete must not communicate or attempt to i. Assume that a debt collector’s upon the debt collector’s receipt of that communicate with the consumer between information indicates that a consumer has a information. those times. mobile telephone number with an area code 2. Interpretation of the E-SIGN Act. ii. Assume the same facts as in comment associated with the Eastern time zone and a Comment 6(c)(1)–1 constitutes the Bureau’s 6(b)(1)–1.i, except that, after the consumer street address in the Pacific time zone. The interpretation of section 101 of the E-SIGN tells the debt collector that the consumer ‘‘is convenient times to communicate with the Act as applied to FDCPA section 805(c). busy’’ or ‘‘cannot talk’’ on weekdays from consumer are after 11:00 a.m. Eastern time Under this interpretation, section 101(a) of 3:00 p.m. to 5:00 p.m., the consumer initiates (8:00 a.m. Pacific time) and before 9:00 p.m. the E-SIGN Act enables a consumer to satisfy a communication with the debt collector at Eastern time (6:00 p.m. Pacific time). the requirement in FDCPA section 805(c) that 4:30 p.m. on a weekday. Based on these facts, ii. Assume that a debt collector’s the consumer’s notification of the debt § 1006.6(b)(1)(i) does not prohibit the debt information indicates that a consumer has a collector be ‘‘in writing’’ through an collector from responding once to the mobile telephone number with an area code electronic request. Further, section 101(b) of consumer. Unless the consumer otherwise associated with the Eastern time zone and a the E-SIGN Act is not contravened because informs the debt collector, however, landline telephone number with an area code the consumer may only satisfy the writing § 1006.6(b)(1)(i) prohibits the debt collector associated with the Mountain time zone. The requirement using a medium of electronic from future communications or attempts to convenient times to communicate with the communication through which a debt collect communicate with the consumer between consumer are after 10:00 a.m. Eastern time accepts electronic communications from 3:00 p.m. and 5:00 p.m. on weekdays. (8:00 a.m. Mountain time) and before 9:00 consumers. iii. Assume that a consumer tells a debt p.m. Eastern time (7:00 p.m. Mountain time). 6(c)(2) Exceptions. collector not to communicate with the 6(b)(3) Prohibitions regarding consumer’s 1. Written early intervention notice for consumer at school. Based on these facts, the place of employment. mortgage servicers. The Bureau has debt collector knows or should know that 1. Work email. Section 1006.6(b)(3) interpreted the written early intervention communications to the consumer at school prohibits a debt collector from notice required by 12 CFR 1024.39(d)(3) to are inconvenient and, thereafter, the debt communicating or attempting to fall within the exceptions to the cease collector must not communicate or attempt to communicate with a consumer in connection communication provision in FDCPA section communicate with the consumer at that with the collection of any debt at the 805(c)(2) and (3). See 12 CFR 1024.39(d)(3), place. consumer’s place of employment, if the debt its commentary, and the Bureau’s 2016 iv. Assume the same facts as in comment collector knows or has reason to know that FDCPA Interpretive Rule (81 FR 71977 (Oct. 6(b)(1)–1.iii, except that, after the consumer the consumer’s employer prohibits the 19, 2016)). tells the debt collector not to communicate consumer from receiving such 6(d) Communications with third parties. with the consumer at school, the consumer communication. For special rules regarding a 6(d)(1) Prohibitions. initiates a communication with the debt consumer’s work email, see § 1006.22(f)(3). 1. Limited-content message. Section collector from school. Based on these facts, 6(b)(4) Exceptions. 1006.2(j) provides, in part, that a limited- § 1006.6(b)(1)(ii) does not prohibit the debt Paragraph 6(b)(4)(i). content message is not a communication, as collector from responding once to the 1. Prior consent—in general. Section defined in § 1006.2(d). Because a limited- consumer. Unless the consumer otherwise 1006.6(b)(4)(i) provides, in part, that the content message is not a communication, a informs the debt collector, however, prohibitions in § 1006.6(b)(1) on a debt debt collector does not violate § 1006.6(d)(1) § 1006.6(b)(1)(ii) prohibits the debt collector collector communicating or attempting to if the debt collector leaves a limited-content from future communications or attempts to communicate with a consumer in connection message for a consumer with a third party communicate with the consumer at school. with the collection of any debt at a time or who answers the consumer’s home or mobile Paragraph 6(b)(1)(i). place that the debt collector knows or should telephone. Such a message is an attempt to 1. Time of electronic communication. know is inconvenient to the consumer do not communicate, as defined in § 1006.2(b), with Under § 1006.6(b)(1)(i), a debt collector is apply if the debt collector communicates or the consumer. However, if, during the course prohibited from communicating or attempts to communicate with the prior of the interaction with the third party, the attempting to communicate electronically, consent of the consumer. If the debt collector debt collector conveys content other than the such as through email or text message, at a learns during a communication that the debt specific items described in § 1006.2(j)(1) and time the debt collector knows or should collector is communicating with a consumer (2), and such other content directly or know is inconvenient to the consumer. For at an inconvenient time or place, the debt indirectly conveys any information regarding purposes of determining the time of an collector may ask the consumer what time or a debt, the message is a communication, as electronic communication under place would be convenient. However, the defined in § 1006.2(d), subject to the § 1006.6(b)(1)(i), an electronic debt collector cannot during that prohibition on third-party communications communication occurs when the debt communication ask the consumer to consent in § 1006.6(d)(1). See § 1006.2(j) and its collector sends it, not, for example, when the to the continuation of the communication related commentary for further guidance consumer receives or views it. with the consumer at the inconvenient time concerning limited-content messages. 2. Consumer’s location. Under or place. 6(d)(2) Exceptions. § 1006.6(b)(1)(i), in the absence of the debt 2. Directly to the debt collector. Section 1. Prior consent. See the commentary to collector’s knowledge of circumstances to the 1006.6(b)(4)(i) requires the prior consent of § 1006.6(b)(4)(i) for guidance concerning a contrary, an inconvenient time for the consumer to be given directly to the debt consumer giving prior consent directly to a communicating with a consumer is before collector. For example, a debt collector debt collector. 8:00 a.m. and after 9:00 p.m. local time at the cannot rely on the prior consent of the 6(d)(3) Reasonable procedures for email consumer’s location. If a debt collector is consumer given to the original creditor or to and text message communications. unable to determine a consumer’s location, a previous debt collector. Paragraph 6(d)(3)(i). then, in the absence of knowledge of 6(c) Communications with a consumer— 1. Non-work email address and telephone circumstances to the contrary, the debt after refusal to pay or cease communication number. For purposes of § 1006.6(d)(3)(i)(B) collector complies with § 1006.6(b)(1)(i) if the notice. and (C), an email address is a non-work email debt collector communicates or attempts to 6(c)(1) Prohibitions. address unless the debt collector knows or communicate with the consumer at a time 1. Notification complete upon receipt. If, should know that the email address is that would be convenient in all of the pursuant to § 1006.6(c)(1), a consumer provided to the consumer by the consumer’s

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employer. For purposes of § 1006.6(d)(3)(i)(B) communicate a clear and conspicuous telephone conversation repeatedly or and (C), a telephone number is a non-work statement describing one or more ways the continuously with intent to annoy, abuse, or telephone number unless the debt collector consumer can opt out of further electronic harass any person at the called number. knows or should know that the telephone communications or attempts to communicate Section 1006.14(b)(1)(ii) provides that, with number is provided to the consumer by the by the debt collector to that address or respect to a debt collector who is collecting consumer’s employer. See § 1006.22(f)(3) and telephone number. Clear and conspicuous a consumer financial product or service debt, its related commentary for clarification has the same meaning as in § 1006.34(b)(1). as defined in § 1006.2(f), it is an unfair act regarding when a debt collector knows or The following examples illustrate the rule. or practice under section 1031 of the Dodd- should know that an email address is i. Assume that a debt collector sends a text Frank Act to place telephone calls or engage provided by a consumer’s employer. message to a consumer’s mobile telephone any person in telephone conversation Paragraph 6(d)(3)(i)(B). number. Pursuant to § 1006.6(e), the text repeatedly or continuously in connection Paragraph 6(d)(3)(i)(B)(1). message must contain a clear and with the collection of such debt, such that 1. Format of notice. The opt-out notice conspicuous statement describing how the the natural consequence is to harass, oppress, described in § 1006.6(d)(3)(i)(B)(1) may be consumer can opt out of receiving further or abuse any person at the called number. For provided orally, in writing, or electronically. text messages from the debt collector to that purposes of § 1006.14(b)(1)(i) and (ii), placing The notice must be provided clearly and telephone number. For example, a text a telephone call includes conveying a conspicuously, as defined in § 1006.34(b)(1). message would comply with this requirement ringless voicemail but does not include If the notice is provided in writing or by including the following instruction: sending an electronic message (e.g., a text electronically, it must comply with the ‘‘Reply STOP to stop texts to this telephone message or an email) to a mobile telephone. requirements of § 1006.42(a). number.’’ 14(b)(2) Frequency limits. 2. Reasonable period for consumer to opt ii. Assume that a debt collector sends the Paragraph 14(b)(2)(i). out in an oral communication. If a creditor consumer an email message. Pursuant to 1. Examples. Section 1006.14(b)(2)(i) or a debt collector provides the opt-out notice § 1006.6(e), the email message must contain provides that, subject to § 1006.14(b)(3), a described in § 1006.6(d)(3)(i)(B)(1) to the a clear and conspicuous statement describing debt collector must not place a telephone call consumer in an oral communication, such as how the consumer can opt out of receiving to a particular person more than seven times a telephone or in-person conversation, the further email messages from the debt within seven consecutive days in connection creditor or the debt collector may require the collector to that email address. For example, with the collection of a particular debt. The consumer to make an opt-out decision during an email would comply with this following examples illustrate the rule. that same communication. requirement by including instructions in a i. On Wednesday, March 1, a debt collector 3. Combined notice concerning electronic textual format in the email, in a type size no first attempts to communicate with a communications and hyperlinked delivery of smaller than the other text in the email, consumer in connection with the collection notices. A debt collector or a creditor may explaining that the consumer may opt out of of a debt by placing a telephone call and include the opt-out notice described in receiving further email communications from leaving a limited-content message on the § 1006.6(d)(3)(i)(B)(1) in the same the debt collector to that email address by consumer’s voicemail. Between Thursday communication as the opt-out notice replying with the word ‘‘stop’’ in the subject and Sunday, the debt collector places six described in § 1006.42(d)(1) or (2), as line. more telephone calls to the consumer, all of applicable. Section 1006.10—Acquisition of Location which go unanswered. As of Sunday, the Paragraph 6(d)(3)(i)(B)(2). Information debt collector has placed seven telephone 1. Expiration of opt-out period. Pursuant to calls to the consumer in connection with the 10(a) Definition. § 1006.6(d)(3)(i)(B)(2), a debt collector may collection of the credit card debt within the 1. Location information about deceased period of seven consecutive days that started obtain a safe harbor from liability for making consumers. If a consumer obligated or on Wednesday, March 1. Subject to a disclosure that violates § 1006.6(d)(1) if, allegedly obligated to pay any debt is § 1006.14(b)(3), the debt collector may place among other things, the debt collector deceased, location information includes the communicates with a consumer using a information described in § 1006.10(a) for a another telephone call to the consumer in specific non-work email address or non-work person who is authorized to act on behalf of connection with collection of the debt on telephone number after the expiration of a the deceased consumer’s estate. Wednesday, March 8 but not before that date. specified opt-out period, if the consumer has 10(b) Form and content of location ii. On Tuesday, October 5, a debt collector not opted out. However, if the consumer communications. first attempts to communicate with a requests after the expiration of the opt-out Paragraph 10(b)(2). particular third party for the purpose of period that the debt collector not use the 1. Executors, administrators, or personal obtaining location information about a specific non-work email address or non-work representatives of a deceased consumer’s consumer by placing a telephone call to that telephone number, § 1006.14(h) prohibits the estate. Section 1006.10(b)(2) prohibits a debt third party that goes unanswered. Subject to debt collector from communicating or collector who is communicating with any §§ 1006.10 and 1006.14(b)(3), the debt attempting to communicate with the person other than the consumer for the collector may place up to six more telephone consumer using that email address or purpose of acquiring location information calls to that third party for the purpose of telephone number. Likewise, if the consumer about the consumer from stating that the obtaining location information about that requests after the expiration of the opt-out consumer owes any debt. If the consumer consumer through Monday, October 11, period that the debt collector not obligated or allegedly obligated to pay the unless the debt collector engages in a communicate with the consumer by email or debt is deceased and the debt collector is telephone conversation with the third party text message, § 1006.14(h) prohibits the debt attempting to locate the person who is before that day. See § 1006.10(c) for further collector from communicating or attempting authorized to act on behalf of the deceased guidance concerning when a debt collector is to communicate with the consumer by email consumer’s estate, the debt collector does not prohibited from communicating with a or text message, including by using the violate § 1006.10(b)(2) by stating that the debt person other than the consumer for the specific non-work email address or non-work collector is seeking to identify and locate the purpose of acquiring location information. telephone number. See § 1006.14(h). person who is authorized to act on behalf of 2. Misdirected telephone calls. Section 6(e) Opt-out notice for electronic the deceased consumer’s estate. 1006.14(b)(2)(i) limits the number of times a communications or attempts to debt collector may place telephone calls to a communicate. Section 1006.14—Harassing, Oppressive, or particular person within seven consecutive 1. In general. Section 1006.6(e) requires a Abusive Conduct days in connection with the collection of a debt collector who communicates or attempts 14(b) Repeated or continuous telephone particular debt. If, within a period of seven to communicate with a consumer calls or telephone conversations. consecutive days, a debt collector attempts to electronically in connection with the 14(b)(1) In general. communicate with a particular person by collection of a debt using a specific email 1. In general. Section 1006.14(b)(1)(i) placing telephone calls to a particular address, telephone number for text messages, provides that, in connection with the telephone number, and the debt collector or other electronic-medium address to collection of a debt, a debt collector must not then learns that the telephone number is not include in such communication or attempt to place telephone calls or engage any person in that person’s number, the calls that the debt

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collector made to that number are not § 1006.14(b)(3)(i) provides that the debt 14(b)(5) Definition. considered to have been calls to that person collector may place telephone calls to 1. Particular debt. Section 1006.14(b)(2) during that seven-day period for purposes of respond to the consumer’s request for limits the frequency with which a debt § 1006.14(b)(2)(i). For example: information before the following Wednesday. collector may place telephone calls to, or i. Assume that a debt collector attempts to Assume further that the debt collector engage in telephone conversation with, a communicate with a consumer on Monday provides a response to the consumer’s person in connection with the collection of and Wednesday by placing one unanswered request on Friday, October 6. Thereafter, the a particular debt. Section 1006.14(b)(5) telephone call to a particular telephone exception in § 1006.14(b)(3)(i) does not apply provides that, except in the case of student number on each of those days. On Thursday, to subsequent telephone calls placed by the loan debt, the term particular debt means the debt collector learns that the telephone debt collector to the consumer, unless the each of a consumer’s debts in collection. For number belongs to someone else and that the consumer makes another request. student loan debt, § 1006.14(b)(5) provides consumer does not answer calls to that Paragraph 14(b)(3)(ii). that the term particular debt means all number. For purposes of § 1006.14(b)(2)(i), 1. Prior consent. See the commentary to student loan debts that a consumer owes or the debt collector has not yet placed any § 1006.6(b)(4)(i) for guidance concerning a allegedly owes that were serviced under a telephone calls to that consumer during that person giving prior consent directly to a debt single account number at the time the debts seven-day period. collector. were obtained by the debt collector. The Paragraph 14(b)(2)(ii). 2. Example. On Friday, April 5, a debt following examples illustrate the rule. 1. Examples. Section 1006.14(b)(2)(ii) collector places a telephone call to a i. A debt collector is attempting to collect provides that, subject to § 1006.14(b)(3), a consumer. During the ensuing telephone a medical debt and a credit card debt from debt collector must not place a telephone call conversation in connection with the the same consumer. Subject to to a particular person in connection with the collection of a debt, the consumer requests § 1006.14(b)(3), the debt collector may, collection of a particular debt within a period that the debt collector call back at a later within a period of seven consecutive days, of seven consecutive days after having had a time. While § 1006.14(b)(2) otherwise would place seven unanswered telephone calls to telephone conversation with the person in prohibit the debt collector from placing a the consumer in connection with the connection with the collection of such debt. telephone call to the consumer again until collection of the medical debt, and seven Section 1006.14(b)(2)(ii) also states that the Friday, April 12, § 1006.14(b)(3)(ii) provides unanswered telephone calls to the consumer date of the telephone conversation is the first that the debt collector may place telephone in connection with the collection of the day of the seven-consecutive-day period. The calls pursuant to the consumer’s prior credit card debt. following examples illustrate the rule. consent before the following Friday. Assume ii. A debt collector is attempting to collect i. On Tuesday, April 11, a debt collector further that the debt collector calls the a medical debt and a credit card debt from first attempts to communicate with a consumer back on Monday, April 8, and that the same consumer. On Monday, November they have a telephone conversation on that consumer in connection with the collection 9, the debt collector engages in a telephone date. Thereafter, the exception in of a debt by placing a telephone call to the conversation with the consumer solely in § 1006.14(b)(3)(ii) does not apply to consumer that the consumer does not connection with the collection of the medical subsequent telephone calls placed by the answer. On Friday, April 14, the debt debt, but the debt collector does not place debt collector to the consumer, unless the any telephone calls to the consumer in collector again places a telephone call to the consumer again provides prior consent connection with the collection of the credit consumer and has a telephone conversation directly to the debt collector. card debt. Subject to § 1006.14(b)(3), the debt with the consumer in connection with the Paragraph 14(b)(3)(iii). collection of the debt. Subject to 1. Unconnected telephone calls. Section collector may not place a telephone call to § 1006.14(b)(3), the debt collector may not 1006.14(b)(3)(iii) provides that telephone the consumer in connection with the place a telephone call to the consumer in calls placed to a person do not count toward, collection of the medical debt again until connection with the collection of that debt and are permitted in excess of, the frequency Monday, November 16. Subject to again until Friday, April 21. limits in § 1006.14(b)(2) if they do not § 1006.14(b), however, the debt collector may ii. On Thursday, August 13, a consumer connect to the dialed number. A debt place telephone calls to, and engage in a initiates a telephone conversation with a debt collector’s telephone call does not connect to telephone conversation with, the consumer collector regarding a debt. Subject to the dialed number if, for example, the debt in connection with the collection of the § 1006.14(b)(3), the debt collector may not collector receives a busy signal or an credit card debt before Monday, November place a telephone call to the consumer in indication that the dialed number is not in 16. connection with the collection of that debt service. Conversely, a debt collector’s iii. A debt collector is attempting to collect again until Thursday, August 20. telephone call connects to the dialed number three student loan debts that were serviced 14(b)(3) Certain telephone calls excluded if, for example, the call causes a telephone under a single account number at the time from the frequency limits. to ring at the dialed number but no one that they were obtained by the debt collector Paragraph 14(b)(3)(i). answers the call, or the call does not cause and that are owed or allegedly owed by the 1. Responsive calls. Section a telephone to ring but is connected to a same consumer. All three debts are treated as 1006.14(b)(3)(i) provides that telephone calls voicemail or other recorded message. a single debt for purposes of § 1006.14(b)(2). placed to a person to respond to the person’s 2. Example. Section 1006.14(b)(3)(iii) Subject to § 1006.14(b)(3), the debt collector request for information do not count toward, provides that telephone calls placed to a may place seven telephone calls within seven and are permitted in excess of, the frequency person do not count toward, and are days to the consumer in connection with the limits in § 1006.14(b)(2). Once the debt permitted in excess of, the frequency limits collection of the debts. If, however, the debt collector provides a response to a person’s in § 1006.14(b)(2) if they do not connect to collector engages the consumer in a request for information, the exception in the dialed number. For example, on telephone conversation in connection with § 1006.14(b)(3)(i) does not apply to Thursday, February 2, a debt collector places the collection of any of the debts, the debt subsequent telephone calls placed by the a telephone call to a consumer about a credit collector may not place a telephone call to debt collector to the person, unless the card debt in response to which the debt the consumer again during the same seven- person makes another request. collector receives a busy signal or an day period in connection with the collection 2. Example. On Wednesday, October 4, a indication that the dialed number is not in of any of the debts. debt collector places a telephone call to a service. That telephone call does not count 14(h) Prohibited communication media. consumer. During the ensuing telephone toward the frequency limits in 14(h)(1) In general. conversation in connection with the § 1006.14(b)(2). Subject to § 1006.14(b)(3), the 1. Communication media. Section collection of a debt, the consumer requests debt collector may place seven more 1006.14(h) prohibits a debt collector from additional information about the debt that telephone calls to the consumer about that communicating or attempting to the debt collector does not have at the time credit card debt through Wednesday, communicate with a consumer in connection of the call. While § 1006.14(b)(2) otherwise February 8, unless the debt collector engages with the collection of any debt through a would prohibit the debt collector from in a telephone conversation with the medium of communication if the consumer placing a telephone call to the consumer consumer in connection with the collection has requested that the debt collector not use again until Wednesday, October 11, of the debt before that day. that medium to communicate with the

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consumer. See comment 2(d)–1 for examples emails at that address using instructions domain name is one commonly associated of communication media. provided by a debt collector pursuant to with a provider of non-work email addresses. 2. Specific address or telephone number. § 1006.6(e), or otherwise request not to Paragraph 22(f)(4). Within a medium of communication, a receive emails at that address pursuant to 1. Social media. Section 1006.22(f)(4) consumer may request that a debt collector § 1006.14(h). See the commentary to prohibits a debt collector from not use a specific address or telephone § 1006.6(b)(4)(i) for additional guidance communicating or attempting to number. For example, if a debt collector has concerning a consumer giving prior consent communicate with a consumer in connection two mobile telephone numbers on file for a directly to a debt collector. with the collection of a debt by a social consumer, the consumer may request that the 2. Receipt of email from employer-provided media platform that is viewable by a person debt collector not use either or both mobile email address. Section 1006.22(f)(3) prohibits other than the persons described in telephone numbers. a debt collector from communicating or § 1006.6(d)(1)(i) through (vi). For example, Section 1006.18—False, Deceptive, or attempting to communicate with a consumer § 1006.22(f)(4) prohibits a debt collector from Misleading Representations or Means using an email address that the debt collector posting, in connection with the collection of knows or should know is provided to the a debt, any message, including a limited- 18(e) Disclosures required. consumer by the consumer’s employer, content message, for a consumer on a social 1. Communication. A limited-content unless the debt collector has received media web page if that web page is viewable message, as defined in § 1006.2(j), is not a directly from the consumer either prior by the general public or the consumer’s communication, as that term is defined in consent to use that email address or an email social media contacts. If a social media § 1006.2(d). Thus, a debt collector who leaves from that email address. A debt collector who platform enables a debt collector to send a a limited-content message for a consumer receives an email directly from a consumer private message to the consumer that is not need not make the disclosures required by from an email address provided by the viewable by a person other than the persons § 1006.18(e)(1) and (2). However, if a debt consumer’s employer may communicate or described in § 1006.6(d)(1)(i) through (vi), collector leaves a voicemail message for a attempt to communicate with the consumer however, § 1006.22(f)(4) does not prohibit a consumer that includes content in addition at that email address, even if the consumer’s debt collector from communicating or to the content described in § 1006.2(j)(1) and email does not provide prior consent to the attempting to communicate with a consumer (2) and which directly or indirectly conveys debt collector. For example, assume a debt in connection with the collection of a debt any information regarding a debt, the collector has provided to a consumer a by sending such a private message to the voicemail message is a communication, and validation notice pursuant to § 1006.34 but consumer, including by sending a limited- the debt collector is required to make the has not otherwise communicated or content message, although §§ 1006.6(b) or § 1006.18(e) disclosures. See the commentary attempted to communicate with the 1006.14(h) nonetheless may prohibit the debt to § 1006.2(d) and (j) for additional consumer. Assume further that the consumer collector from sending such a private clarification regarding the definitions of subsequently sends an email directly to the message if, for example, the consumer has ‘‘communication’’ and ‘‘limited-content debt collector from an email address that the requested that the debt collector not use that messages.’’ debt collector knows or should know is medium to communicate with the consumer. 18(e)(1) Initial communications. provided to the consumer by the consumer’s 1. Example. A debt collector must make Section 1006.30—Other Prohibited Practices employer; that the consumer’s email requests the disclosure required by § 1006.18(e)(1) in 30(a) Communication prior to furnishing additional information about the debt but the debt collector’s initial communication information. does not give prior consent to the debt with a consumer, regardless of whether that 1. Communication. Section 1006.30(a) collector’s use of that email address; and that communication is written or oral, and prohibits a debt collector from furnishing the debt collector neither knows nor has regardless of whether the debt collector or information to a consumer reporting agency reason to know that the consumer’s employer the consumer initiated the communication. about a debt before communicating with the prohibits the consumer from receiving For example, assume that a debt collector consumer about that debt. Pursuant to communications in connection with the who has not previously communicated with § 1006.2(d), a debt collector has a consumer attempts to communicate with collection of a debt. Section 1006.22(f)(3) communicated with the consumer about the the consumer by leaving a limited-content permits the debt collector to communicate or debt if the debt collector conveys information message, as defined in § 1006.2(j), in the attempt to communicate with the consumer regarding a debt directly or indirectly to the consumer’s voicemail. After listening to the using that email address. The consumer consumer through any medium. Pursuant to debt collector’s limited-content message, the could, however, subsequently opt out or § 1006.2(d), a debt collector has not consumer initiates a telephone call to, and request not to receive messages at that email communicated with the consumer about the communicates with, the debt collector. address pursuant to §§ 1006.6(e) or debt if the debt collector attempts to Pursuant to § 1006.18(e)(1), because the 1006.14(h). communicate with the consumer but no consumer-initiated call is the ‘‘initial 3. Knowledge of employer-provided email communication occurs. For example, a debt communication’’ between the debt collector address. For purposes of § 1006.22(f)(3), a collector communicates with the consumer if and the consumer, the debt collector must debt collector knows or should know an the debt collector provides a validation disclose to the consumer during that email address is provided to the consumer by notice to the consumer; a debt collector does telephone call that the debt collector is the consumer’s employer if, for example, the not communicate with the consumer by attempting to collect a debt and that any email address’s top-level domain name is one leaving a limited-content message for the information obtained will be used for that ordinarily associated with work email consumer. For additional clarification on purpose. addresses (e.g., .gov or .mil), the email providing disclosures in a manner that is address’s domain name includes a corporate reasonably expected to provide actual notice Section 1006.22—Unfair or Unconscionable name that is not commonly associated with to consumers, see § 1006.42. Means non-work email addresses (e.g., 30(b) Prohibition on the sale, transfer, or 22(f) Restrictions on use of certain media. springsidemortgage.com), or the debt placement of certain debts. Paragraph 22(f)(3). collector knows the identity of the 30(b)(1) In general. 1. Consent to use employer-provided email consumer’s employer and the email address’s 30(b)(1)(i) FDCPA prohibition. address. Section 1006.22(f)(3) prohibits a domain name includes the employer’s name Paragraph 30(b)(1)(i)(C). debt collector from communicating or or an abbreviation of the employer’s name 1. Identity theft report filed. Under attempting to communicate with a consumer (e.g., the debt collector knows that the § 1006.30(b)(1)(i)(C), a debt collector may not using an email address that the debt collector consumer works at Example Mortgage sell, transfer, or place for collection a debt if knows or should know is provided to the Company and the email address is the debt collector knows or should know that consumer by the consumer’s employer, examplemortgagecompany.com or an identity theft report was filed with respect unless the debt collector has received exmoc.com). In the absence of contrary to the debt. A debt collector knows or should directly from the consumer either prior information, a debt collector neither would know that an identity theft report was filed consent to use that email address or an email know nor should know that an email address if, for example, the debt collector has from that email address. The consumer could is provided to the consumer by the received a copy of the identity theft report. at any time, however, opt out of receiving consumer’s employer if the email address’s 30(b)(2) Exceptions.

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Paragraph 30(b)(2)(i). transaction date is the date that a creditor Paragraph 34(c)(2)(iii). 1. In general. Under § 1006.30(b)(2)(i), a provided, or made available, a good or 1. Merchant brand. Section debt collector who is collecting a debt service to a consumer. For example, the 1006.34(c)(2)(iii) provides that validation described in § 1006.30(b)(1)(i) may transfer transaction date for a debt arising from a information includes the merchant brand, if the debt to the debt’s owner. However, unless medical procedure may be the date the any, associated with a credit card debt, to the another exception under § 1006.30(b)(2) medical procedure was performed, and the extent that such information is available to applies, the debt collector may not transfer transaction date for a consumer’s gym the debt collector. For example, assume that the debt or the right to collect the debt to membership may be the date the membership a debt collector is attempting to collect a another entity on behalf of the debt owner. contract was executed. In some cases, a debt consumer’s credit card debt. The credit card Section 1006.34—Notice for Validation of collector may identify more than one was issued by ABC Bank and was co-branded Debts potential transaction date. For example, a XYZ Store, and this information is available debt may have two transaction dates if a to the debt collector. The debt collector must 34(a)(1) Validation information required. contract for a service is executed on one date provide the ‘‘XYZ Store’’ merchant brand 1. Deceased consumers. Section and the service is performed on another date. information to the consumer. 1006.34(a)(1) generally requires a debt If a debt has more than one transaction date, Paragraph 34(c)(2)(v). collector to provide the validation a debt collector may use any such date as the 1. Account number truncation. Section information described in § 1006.34(c) either transaction date for purposes of 1006.34(c)(2)(v) provides that validation by sending the consumer a validation notice § 1006.34(b)(3)(iv) but must use whichever information includes the account number in a manner that satisfies § 1006.42(a), or by transaction date it selects consistently, as associated with the debt on the itemization providing the information orally in the debt described in comment 34(b)(3)–1. date, or a truncated version of that number. collector’s initial communication. If the debt 34(b)(5) Validation period. If a debt collector uses a truncated account collector knows or should know that the 1. Updated validation period. Section number, the account number must remain consumer is deceased, and if the debt 1006.34(b)(5) defines the validation period as recognizable. For example, a debt collector collector has not previously provided the the period starting on the date that a debt may truncate a credit card account number validation information to the deceased collector provides the validation information so that only the last four digits appear on a consumer, a person who is authorized to act required by § 1006.34(a)(1) and ending 30 validation notice. on behalf of the deceased consumer’s estate days after the consumer receives or is Paragraph 34(c)(2)(viii). operates as the consumer for purposes of assumed to receive those disclosures. Section 1. Amount of the debt on the itemization § 1006.34(a)(1). In such circumstances, to 1006.34(c)(3)(i) through (iii) requires date. Section 1006.34(c)(2)(viii) provides that comply with § 1006.34(a)(1), a debt collector statements that specify the end date of the validation information includes the amount must provide the validation information to validation period. If a debt collector sends a of the debt on the itemization date. The an individual that the debt collector subsequent validation notice to a consumer amount of the debt on the itemization date identifies by name who is authorized to act because the consumer did not receive the includes any fees, interest, or other charges on behalf of the deceased consumer’s estate. original validation notice and the consumer owed as of that date. 34(b) Definitions. has not otherwise received the validation Paragraph 34(c)(2)(ix). 34(b)(3) Itemization date. information described in § 1006.34(c), the 1. Itemization of the debt. Section 1. In general. Section 1006.34(b)(3) defines debt collector must calculate the end date of 1006.34(c)(2)(ix) provides that validation itemization date for purposes of § 1006.34. the validation period specified in the information includes an itemization of the Section 1006.34(b)(3) states that the § 1006.34(c)(3) disclosures based on the date current amount of the debt in a tabular itemization date is any one of four potential the consumer receives or is assumed to references dates for which a debt collector receive the subsequent validation notice. For format reflecting interest, fees, payments, and can ascertain the amount of the debt. The example, assume a debt collector sends a credits since the itemization date. When four potential reference dates are the last consumer a validation notice on January 1, providing a validation notice, a debt collector statement date, the charge-off date, the last and that notice is returned as undeliverable. must include fields in the notice for all of payment date, and the transaction date. A After obtaining accurate location these items even if none of the items have debt collector may select any of these dates information, the debt collector sends the been assessed or applied to the debt since the as the itemization date to comply with consumer a subsequent validation notice on itemization date. A debt collector may § 1006.34. Once a debt collector uses a January 15. Pursuant to § 1006.34(b)(5), the indicate that the value of a required field is reference date for a specific debt in a end date of the validation period specified in ‘‘0’’ or ‘‘N/A,’’ or may state that no interest, communication with an individual the § 1006.34(c)(3) disclosures should be fees, payments, or credits have been assessed consumer, the debt collector must use that based on the date the consumer receives or or applied to the debt. reference date for that debt consistently when is assumed to receive the validation notice Paragraph 34(c)(2)(x). providing disclosures required by § 1006.34 sent on January 15. 1. Current amount of the debt. Section to that consumer. For example, if a debt 34(c) Validation information. 1006.34(c)(2)(x) provides that validation collector uses the last statement date to 34(c)(2) Information about the debt. information includes the current amount of determine and disclose the account number Paragraph 34(c)(2)(ii). the debt (i.e., the amount as of when the associated with the debt pursuant to 1. Consumer’s name. Section validation information is provided). For § 1006.34(c)(2)(v), the debt collector may not 1006.34(c)(2)(ii) provides that validation residential mortgage debt subject to use the charge-off date to determine and information includes the consumer’s name Regulation Z, 12 CFR 1026.41, a debt disclose the amount of the debt pursuant to and mailing address. The consumer’s name is collector may comply with the requirement § 1006.34(c)(2)(viii). what the debt collector reasonably to provide the current amount of the debt by Paragraph 34(b)(3)(i). determines is the most complete version of providing the consumer the total balance of 1. Last statement date. Under the name about which the debt collector has the outstanding mortgage, including § 1006.34(b)(3)(i), the last statement date is knowledge, whether obtained from the principal, interest, fees, and other charges. the date of the last periodic statement or creditor or another source. It would be 34(c)(3) Information about consumer written account statement or invoice unreasonable for a debt collector to protections. provided to the consumer. For purposes of determine the consumer’s name is the most Paragraph 34(c)(3)(v). § 1006.34(b)(3)(i), a statement provided by a complete version of the consumer’s name if 1. Electronic communication media. creditor or a third party acting on the the debt collector has omitted name Section 1006.34(c)(3)(v) provides that creditor’s behalf, including a creditor’s information in a manner that created a false, validation information includes a statement service provider, may constitute the last misleading, or confusing impression about explaining how a consumer can take the statement provided to the consumer. the consumer’s identity. For example, if the actions described in § 1006.34(c)(4) and Paragraph 34(b)(3)(iv). creditor provides the consumer’s first name, (d)(3), as applicable, electronically, if the 1. Transaction date. Section middle name, last name, and name suffix to debt collector provides the validation notice 1006.34(b)(3)(iv) provides that the the debt collector, it would be unreasonable electronically. A debt collector may provide itemization date may be the date of the for the debt collector to not provide all of that the information described by transaction that gave rise to the debt. The information to the consumer. § 1006.34(c)(3)(v) by including the

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statements, ‘‘We accept disputes Paragraph 34(d)(1)(ii). 34(e) Translation into other languages. electronically at,’’ using that phrase or a 1. Permissible changes. A debt collector 1. In general. Section 1006.34(e) permits a substantially similar phrase, followed by an may make certain changes to the content, debt collector to satisfy § 1006.34(a)(1) by email address or website portal that a format, and placement of the validation sending a consumer a validation notice consumer can use to take the action information described in § 1006.34(c) as long accurately translated into any language, if the described in § 1006.34(c)(4)(i), and ‘‘We as the resulting disclosures are substantially debt collector also sends an English-language accept original creditor information requests similar to Model Form B–3 in appendix B of validation notice in the same communication electronically,’’ using that phrase or a this part. Acceptable changes include, for or has already provided an English-language substantially similar phrase, followed by an example: validation notice. The language of a email address or website portal that a i. Modifications to remove language that validation notice a debt collector obtains consumer can use to take the action could suggest liability for the debt if such from the Bureau’s website is considered a described in § 1006.34(c)(4)(ii). If a debt language is not applicable. For example, if a complete and accurate translation, although collector accepts electronic communications debt collector sends a validation notice to a debt collectors are permitted to use other from consumers through more than one person who is authorized to act on behalf of validation notice translations so long as they medium, such as by email and through a the deceased consumer’s estate (see comment are complete and accurate. website portal, the debt collector is only 34(a)(1)–1), and that person is not liable for Section 1006.38—Disputes and Requests for required to provide information regarding the debt, the debt collector may use the name Original-Creditor Information one of these media but may provide of the deceased consumer instead of ‘‘you.’’ information on any additional media. 34(d)(2) Safe harbor. 1. Deceased consumers. Section 1006.38 Paragraph 34(c)(3)(vi). 1. Safe harbor provided by use of model contains requirements related to disputes and 1. In general. Section 1006.34(c)(3)(vi) form. Although the use of Model Form B–3 requests for the name and address of the provides that, for a validation notice in appendix B of this part is not required, a original creditor timely submitted in writing delivered in the body of an email pursuant debt collector who uses the model form, by the consumer. If the debt collector knows to § 1006.42(b)(1) or (c)(2)(i), validation including a debt collector who delivers the or should know that the consumer is information includes the opt-out statement model form electronically, complies with the deceased, and if the consumer has not previously disputed the debt or requested the required by § 1006.6(e). If a validation notice disclosure requirements of § 1006.34(a)(1) name and address of the original creditor, a is delivered on a website pursuant to and (d)(1). A debt collector who uses Model person who is authorized to act on behalf of § 1006.42(c)(2)(ii), the validation notice need Form B–3 and includes the optional the deceased consumer’s estate operates as not contain the opt-out instructions because disclosures described in § 1006.34(d)(3) the consumer for purposes of § 1006.38. In the consumer would have already received continues to be in compliance as long as such circumstances, to comply with the opt-out instructions since those those disclosures are made consistent with § 1006.38(c) or (d)(2), respectively, a debt instructions are required for any email or text the instructions in § 1006.34(d)(3). A debt collector must respond to a request for the message that provides a hyperlink to the collector who uses Model Form B–3 also may name and address of the original creditor or website where the notice is placed. Delivery embed hyperlinks if delivering the form to a dispute timely submitted in writing by of a validation notice that a debt collector electronically and continue to be in a person who is authorized to act on behalf previously provided pursuant to compliance as long as the hyperlinks are of the deceased consumer’s estate. § 1006.42(b)(1) or (c)(2)(i) or (ii) is not included consistent with § 1006.34(d)(4)(ii). 2. In writing. Section 1006.38 contains rendered ineffective because a consumer opts 34(d)(3) Optional disclosures. requirements related to a dispute or request out of future electronic communications. 34(d)(3)(iv) Disclosures required by for the name and address of the original 34(c)(4) Consumer response information. applicable law. creditor timely submitted in writing by the 1. Prompts. If the validation information is 1. Section 1006.34(d)(3)(iv) permits a debt consumer. A consumer has disputed the debt provided in writing or electronically, a collector to include on the front of the or requested the name and address of the prompt described in § 1006.34(c)(4) may be validation notice a statement that other original creditor in writing for purposes of formatted as a checkbox as in Model Form B– disclosures required by applicable law § 1006.38(c) or (d)(2) if the consumer, for 3 in appendix B. appear on the reverse of the validation notice example: 34(c)(5) Special rule for certain residential and, on the reverse of the validation notice, i. Mails the written dispute or request to mortgage debt. any such required disclosures. Disclosures the debt collector; 1. In general. Section 1006.34(c)(5) required by other applicable law may ii. Returns to the debt collector the provides that, for debts subject to Regulation include, for example, disclosure consumer response form that Z, 12 CFR 1026.41, a debt collector need not requirements established by State statutes or § 1006.34(c)(4)(i) requires to appear on the provide the validation information described regulations, as well as disclosures required validation notice and indicates on the form in § 1006.34(c)(2)(vii) through (ix) if the debt by judicial decisions or orders. To comply a dispute or request; collector provides the consumer at the same with § 1006.34(d)(3)(iv), a debt collector may iii. Provides the dispute or request to the time as the validation notice a copy of the include in the validation notice a disclosure debt collector using a medium of electronic most recent periodic statement provided to that is substantially similar to the language communication through which a debt the consumer under 12 CFR 1026.41(b), and about other required disclosures that appears collector accepts electronic communications the debt collector refers to that periodic on Model Form B–3 in appendix B of this from consumers, such as an email address or statement in the validation notice. A debt part and place any such required disclosures a website portal; or collector may comply with the requirement on the reverse of the validation notice, iv. Delivers the written dispute or request to provide a copy of the most recent periodic located above the consumer information in person or by courier to the debt collector. statement and the validation notice at the section described in § 1006.34(c)(4). 3. Interpretation of the E-SIGN Act. same time by, for example, including both 34(d)(3)(vi) Spanish-language translation Comment 38–2.ii constitutes the Bureau’s documents in the same mailing. A debt disclosures. interpretation of section 101 of the E-SIGN collector may comply with the requirement Paragraph 34(d)(3)(vi)(A). Act as applied to section 809(b) of the to refer to the periodic statement in the 1. Customizing Spanish-language FDCPA. Under this interpretation, section validation notice by, for example, including disclosure. Section 1006.34(d)(3)(vi)(A) 101(a) of the E-SIGN Act enables a consumer in the validation notice the statement, ‘‘See permits a debt collector to include to satisfy through an electronic request the the enclosed periodic statement for an supplemental information in Spanish that requirement in section 809(b) of the FDCPA itemization of the debt,’’ situated next to the specifies how a consumer may request a that the consumer’s notification of the debt information about the current amount of the Spanish-language validation notice. For collector be ‘‘in writing.’’ Further, section debt required by § 1006.34(c)(2)(x). For debt example, a debt collector may include a 101(b) of the E-SIGN Act is not contravened subject to § 1006.34(c)(5), a debt collector statement in Spanish that a consumer can because the consumer may only use a need not include the itemization table request a Spanish-language validation notice medium of electronic communication described in § 1006.34(c)(2)(ix). by telephone or email, if the debt collector through which a debt collector accepts 34(d) Form of validation information. chooses to accept consumer requests through electronic communications from consumers. 34(d)(1) In general. those communication media. 38(a) Definitions.

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38(a)(1) Duplicative dispute. dispute and provides the date of that a responsive format that is reasonably 1. Substantially the same. Section response. expected to be accessible on a screen of any 1006.38(a)(1) provides that a dispute is a Section 1006.42—Providing Required commercially available size and via duplicative dispute if, among other things, Disclosures commercially available screen readers. A the dispute is substantially the same as a debt collector provides the validation notice dispute previously submitted by the 1. Deceased consumers. Section 1006.42 in a responsive format accessible on a screen consumer in writing within the validation contains requirements related to providing of any commercially available size if, for period for which the debt collector has certain disclosures required by this part. If a example, the notice adjusts to different already satisfied the requirements of debt collector knows or should know that a screen sizes by stacking elements in a § 1006.38(d)(2)(i). A later dispute can be consumer is deceased, a person who is manner that accommodates consumer substantially the same as an earlier dispute authorized to act on behalf of the deceased viewing on smaller screens while still even if the later dispute does not repeat consumer’s estate operates as the consumer meeting the other applicable formatting verbatim the language of the earlier dispute. for purposes of § 1006.42. requirements in § 1006.34. A debt collector 2. New and material information. Section 42(a) Providing required disclosures. provides the validation notice in a manner § 1006.38(a)(1) provides that a dispute that is 42(a)(1) In general. accessible via commercially available screen substantially the same as a dispute 1. Notice of undeliverability. Under readers if, for example, the validation notice previously submitted by the consumer in § 1006.42(a)(1), a debt collector who provides is machine readable. writing within the validation period for disclosures required by this part in writing or 42(c) Alternative procedures for providing which the debt collector has already satisfied electronically must, among other things, do certain disclosures electronically. the requirements of § 1006.38(d)(2)(i) is not a so in a manner that is reasonably expected Paragraph 42(c)(1). duplicative dispute if the consumer provides to provide actual notice. A debt collector 1. Effect of consumer opt out. If a consumer new and material information to support the who provides a required disclosure in has opted out of debt collection dispute. Information is new if the consumer writing or electronically and who receives a communications to a particular email address did not provide the information when notice that the disclosure was not delivered or telephone number by, for example, submitting an earlier dispute. Information is has not provided the disclosure in a manner following instructions provided pursuant to material if it is reasonably likely to change that is reasonably expected to provide actual § 1006.6(e), then a debt collector cannot use notice under § 1006.42(a)(1). See comment the verification the debt collector provided or that email address or telephone number to 34(b)(5)–1 for how to calculate the updated would have provided in response to the deliver disclosures under § 1006.42(c). validation period when sending a subsequent earlier dispute. The following example Paragraph 42(c)(2). validation notice. illustrates the rule: Paragraph 42(c)(2)(i). 42(b) Requirements for certain disclosures i. ABC debt collector is collecting a debt 1. Body of an email. The alternative provided electronically. from a consumer and sends the consumer a procedures in § 1006.42(c) permit a debt Paragraph 42(b)(1). validation notice. In response, the consumer collector to place a disclosure in the body of 1. Interpretation of the E-SIGN Act. Section submits a written dispute to ABC debt an email. A debt collector places a disclosure 1006.42(b)(1) constitutes the Bureau’s in the body of an email if the disclosure’s collector within the validation period interpretation of section 101 of the E-SIGN content is viewable within the email itself. asserting that the consumer does not owe the Act as applied to section 809 of the FDCPA. 42(d) Notice and opportunity to opt out of debt. The consumer does not include any Under this interpretation, section 101(c) of hyperlinked delivery. information in support of the dispute. the E-SIGN Act enables a debt collector to Pursuant to § 1006.38(d)(2)(i), ABC debt satisfy the requirement in section 809(a) of 1. Communication covering multiple collector provides the consumer a copy of the FDCPA that the debt collector’s notice be disclosures. A debt collector’s or a creditor’s verification of the debt. The consumer then ‘‘written,’’ and to satisfy the requirement in communication with a consumer pursuant to sends a cancelled check showing the section 809(b) of the FDCPA that the debt § 1006.42(d)(1) or (2), respectively, applies to consumer paid the debt. The cancelled check collector mail the consumer a copy of all disclosures covered by § 1006.42(a) that is new and material information. verification or a judgment, or the name and the debt collector thereafter sends regarding 38(d) Disputes. address of the original creditor, through an that debt, unless the consumer later 38(d)(2) Response to disputes. electronic notice if the consumer provides designates that email address or, in the case Paragraph 38(d)(2)(ii). consent in accordance with the E-SIGN Act of text messages, that telephone number, as 1. Duplicative dispute notice. Section directly to the debt collector. unavailable for the debt collector’s use, such 1006.38(d)(2)(ii) provides that, in the case of Paragraph 42(b)(2). as by opting out pursuant to the instructions a dispute that a debt collector reasonably 1. Information identifying the debt. Under required by § 1006.6(e). determines is a duplicative dispute, the debt § 1006.42(b)(2), a debt collector who provides 42(d)(1) Communication by the debt collector must cease collection of the debt, or the validation notice described in collector. any disputed portion of the debt, until the § 1006.34(a)(1)(i)(B), or the disclosures 1. Name of the consumer. For purposes of debt collector notifies the consumer that the described in § 1006.38(c) or (d)(2), a debt collector’s communication with the dispute is duplicative or provides a copy electronically must, among other things, consumer under § 1006.42(d)(1), the term either of verification of the debt or of a identify the purpose of the communication ‘‘name of the consumer’’ has the same judgment to the consumer. If the debt by including, in the subject line of an email meaning as the term ‘‘consumer’s name’’ collector notifies the consumer that the or in the first line of a text message under § 1006.34(c)(2)(ii). See comment dispute is duplicative, § 1006.38(d)(2)(ii) transmitting the disclosure, the name of the 34(c)(2)(ii)–1. requires that the notice provide a brief creditor to whom the debt currently is owed 2. Debt collector communication covering statement of the reasons for the debt or allegedly is owed and one additional piece multiple debts. If a debt collector’s collector’s determination that the dispute is of information identifying the debt, other communication with a consumer under duplicative and refer the consumer to the than the amount. The following are examples § 1006.42(d)(1) applies to multiple debts, debt collector’s response to the earlier of an additional piece of information, other § 1006.42(d)(1)(i) and (ii) require the debt dispute. A debt collector complies with the than amount, identifying a debt: a truncated collector to identify the consumer and the requirement to provide a brief statement of account number; the name of the original creditor for each debt to which the the reasons for its determination if the notice creditor; the name of any store brand communication applies. states that the dispute is substantially the associated with the debt; the date of sale of 3. Form of communication with consumer same as an earlier dispute submitted by the a product or service giving rise to the debt; before hyperlinked delivery. A debt consumer and the consumer has not included the physical address of service; and the collector’s communication with the any new and material information in support billing mailing address on the account. consumer under § 1006.42(d)(1) must inform of the earlier dispute. A debt collector Paragraph 42(b)(4). the consumer of, among other things, the complies with the requirement to refer the 1. Disclosures responsive to smaller consumer’s ability to opt out of hyperlinked consumer to the debt collector’s response to screens. Under § 1006.42(b)(4), a debt delivery of disclosures to an email address the earlier dispute if the notice states that the collector who provides a validation notice or, in the case of text messages, to a debt collector responded to the earlier electronically must provide the disclosure in telephone number, and instructions for

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opting out, including a reasonable period communication containing the hyperlink to evidence of compliance with this part. Thus, within which to opt out. This the disclosure, and the creditor must allow under § 1006.100, a debt collector must retain communication must, among other things, the consumer a reasonable period within evidence that the debt collector performed take place before the debt collector provides which to opt out. In an oral communication the actions and made the disclosures the hyperlinked disclosure, and the debt with the consumer, such as a telephone or in- required by this part. For example, a debt collector must allow the consumer a person conversation, the creditor may require collector could retain: reasonable period within which to opt out. In the consumer to make an opt-out decision an oral communication with the consumer, during that same communication. However, i. Telephone call logs as evidence that the such as a telephone or in-person a written or electronic communication that debt collector complied with the frequency conversation, the debt collector may require requires the consumer to make an opt-out limits in § 1006.14; and the consumer to make an opt-out decision decision within a period of five or fewer days ii. Copies or records of documents during that same communication. However, does not meet these timing criteria. provided to the consumer as evidence that a written or electronic communication that 3. Combined notice concerning electronic the debt collector provided the information requires the consumer to make an opt-out communications and electronic delivery of required by §§ 1006.34 and 1006.38 and met disclosures. An opt-out notice provided by a decision within a period of five or fewer days the delivery requirements of § 1006.42. creditor under § 1006.42(d)(2) may be does not meet these timing criteria. 2. Methods of retaining records. Retaining Therefore, when using hyperlinked delivery combined with an opt-out notice provided by records that are evidence of compliance with for the validation notice required by the creditor under § 1006.6(d)(3)(i)(B)(1). See § 1006.34, an oral communication, such as a comment 6(d)(3)(i)(B)(1)–3. this part does not require retaining actual telephone conversation or in-person 42(e) Safe harbors. paper copies of documents. The records may conversation, is necessary under 42(e)(1) Disclosures provided by mail. be retained by any method that reproduces § 1006.42(d)(1). 1. Consumer’s residential address. Section the records accurately (including computer 4. Combined notice concerning electronic 1006.42(e)(1) provides that a debt collector programs) and that ensures that the debt communications and electronic delivery of satisfies § 1006.42(a) if the debt collector collector can easily access the records mails a printed copy of a disclosure to the disclosures. An opt-out notice provided by a (including a contractual right to access consumer’s residential address, unless the debt collector under § 1006.42(d)(1) may be records possessed by another entity). combined with an opt-out notice provided by debt collector receives a notification from the entity or person responsible for delivery that 3. Recorded telephone calls. Nothing in the debt collector under § 1006.100 requires a debt collector to record § 1006.6(d)(3)(i)(B)(1). See comment the disclosure was not delivered. For telephone calls. However, under § 1006.100, 6(d)(3)(i)(B)(1)–3. purposes of § 1006.42(e)(1), a disclosure is 42(d)(2) Communication by the creditor. not mailed to the consumer’s residential a debt collector who records telephone calls address if the debt collector knows or should 1. Creditor communication covering must retain the recordings if the recordings know at the time of mailing that the multiple debts. A creditor’s communication are evidence of compliance with this part. consumer does not currently reside at that with the consumer under § 1006.42(d)(2) may location. Section 1006.104—Relation to State Laws apply to multiple debts being placed with or 42(e)(2) Validation notice contained in the 1. State law disclosure requirements. A sold to the same debt collector at the same initial communication. time. disclosure required by applicable State law 1. Effect of consumer opt out. If a consumer that describes additional protections under 2. Form of communication with consumer has opted out of debt collection State law does not contradict the before hyperlinked delivery. A creditor’s communications to a particular email address communication with the consumer under by, for example, following the instructions requirements of the Act or the corresponding § 1006.42(d)(2) must inform the consumer of, provided pursuant to § 1006.6(e), then a debt provisions of this part. among other things, the consumer’s ability to collector cannot use that email address to opt out of hyperlinked delivery of disclosures deliver disclosures under § 1006.42(e)(2). Dated: May 6, 2019. to an email address or, in the case of a text Kathleen L. Kraninger, message, to a telephone number, and Subpart C—[Reserved] Director, Bureau of Consumer Financial instructions for opting out, including a Subpart D—Miscellaneous reasonable period within which to opt out. Protection. This communication must, among other Section 1006.100—Record Retention [FR Doc. 2019–09665 Filed 5–20–19; 8:45 am] things, take place no more than 30 days 1. Evidence of required actions. Section BILLING CODE 4810–AM–P before the debt collector’s electronic 1006.100 requires a debt collector to retain

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