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Debt Collection Practices (Regulation Practices by Debt Collectors (November Subparts A, B, and D

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Debt Collection Practices (Regulation Practices by Debt Collectors (November Subparts A, B, and D 5766 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations BUREAU OF CONSUMER FINANCIAL reporting agency before communicating applicable provisions, such as PROTECTION with the consumer about the debt) and definitions that apply throughout the the collection of debt that is beyond the regulation. Subpart B contains rules for 12 CFR Part 1006 statute of limitations (i.e., time-barred FDCPA debt collectors. Subpart C is [Docket No. CFPB–2019–0022] debt). On November 30, 2020, the reserved for any future debt collection Bureau published a final rule in the rulemakings. Subpart D contains certain RIN 3170–AA41 Federal Register that focused on debt miscellaneous provisions. This final collection communications and related rule adds additional provisions in Debt Collection Practices (Regulation practices by debt collectors (November subparts A, B, and D. F) 2020 Final Rule). The November 2020 B. Scope of the Final Rule AGENCY: Bureau of Consumer Financial Final Rule reserved certain sections of Regulation F in anticipation of this final Protection. FDCPA section 809(a) requires that a ACTION: Final rule; official rule. As discussed in the November 2020 debt collector send a written notice interpretation. Final Rule, in 1977, Congress passed the containing certain information about the debt and actions the consumer may take SUMMARY: The Bureau of Consumer FDCPA to eliminate abusive debt in response (the validation notice) to a Financial Protection (Bureau) is issuing collection practices by debt collectors, consumer within five days of the initial this final rule to revise Regulation F, to ensure that those debt collectors who communication, unless such validation which implements the Fair Debt refrain from using abusive debt information was provided in the initial Collection Practices Act (FDCPA). The collection practices are not communication or the consumer has final rule governs certain activities by competitively disadvantaged, and to paid the debt.5 The final rule clarifies debt collectors, as that term is defined promote consistent State action to the information about the debt and the in the FDCPA. Among other things, the protect consumers against debt consumer’s rights with respect to the final rule clarifies the information that collection abuses.2 The statute was a a debt collector must provide to a response to ‘‘abundant evidence of the debt that a debt collector must provide consumer at the outset of debt collection use of abusive, deceptive, and unfair to a consumer at the outset of debt communications, prohibits debt debt collection practices by many debt collection communications, including collectors from bringing or threatening collectors.’’ 3 According to Congress, (if applicable) on a validation notice. to bring a legal action against a these practices ‘‘contribute to the The final rule also requires a debt consumer to collect a time-barred debt, number of personal bankruptcies, to collector to provide prompts that a and requires debt collectors to take marital instability, to the loss of jobs, consumer can use to dispute the debt, certain actions before furnishing and to invasions of individual request information about the original information about a consumer’s debt to privacy.’’ 4 creditor, or take certain other actions. a consumer reporting agency. The FDCPA established specific The final rule provides a safe harbor for compliance with these disclosure DATES: This rule is effective on consumer protections, enabling requirements for debt collectors who November 30, 2021. consumers to establish controls on when and how debt collectors contact use the model validation notice or FOR FURTHER INFORMATION CONTACT: Joel them, establishing privacy protections certain variations of the notice. Singerman, Counsel, or Dania Ayoubi, surrounding the collection of debts, and Joseph Baressi, Seth Caffrey, Brandy The final rule also prohibits a debt protecting consumers from certain Hood, David Jacobs, Courtney Jean, collector from suing or threatening to collection practices. The FDCPA also Adam Mayle, Kristin McPartland, sue a consumer to collect time-barred established broad consumer protections, Michael Silver, Senior Counsels, Office debt. In addition, the final rule prohibits prohibiting harassment or abuse, false or of Regulations, at 202–435–7700. If you a debt collector from furnishing misleading representations, and unfair require this document in an alternative information about a debt to a consumer practices. In the Dodd-Frank Wall Street electronic format, please contact CFPB_ reporting agency before engaging in Reform and Consumer Protection Act [email protected]. specific outreach to the consumer about (Dodd-Frank Act), Congress provided SUPPLEMENTARY INFORMATION: the debt. The final rule also addresses the Bureau with authority under the certain other disclosure-focused I. Summary of the Final Rule FDCPA to prescribe substantive rules provisions, such as clarifying how a with respect to the collection of debts by The Bureau is finalizing amendments debt collector may respond to a debt collectors. The Bureau issues this to Regulation F, 12 CFR part 1006, consumer’s request for original-creditor final rule, like the November 2020 Final which implements the FDCPA.1 The information if the original creditor is the Rule, to implement and interpret the amendments prescribe Federal rules same as the current creditor. FDCPA. governing the activities of debt Additionally, the final rule interprets collectors, as that term is defined in the A. Coverage and Organization of the the definition of consumer under the FDCPA (debt collectors or FDCPA debt Final Rule FDCPA to include deceased natural collectors). The final rule clarifies the The final rule is based primarily on persons and, relatedly, provides that, if information that a debt collector must the Bureau’s authority to issue rules to a debt collector knows or should know provide to a consumer at the outset of implement the FDCPA and, that the a consumer is deceased, and the debt collection communications and consequently, covers debt collectors, as debt collector has not previously provides a model validation notice that term is defined in the FDCPA. provided the validation information to containing such information. The final As revised in the November 2020 the deceased consumer, the debt rule also addresses consumer protection Final Rule, Regulation F contains four collector must provide that information concerns related to passive collections subparts. Subpart A contains generally to a person who is authorized to act on (i.e., the practice of furnishing behalf of the deceased consumer’s information about a debt to a consumer 2 15 U.S.C. 1692(e). estate. 3 15 U.S.C. 1692(a). 1 15 U.S.C. 1692 et seq. 4 Id. 5 15 U.S.C. 1692g(a). VerDate Sep<11>2014 20:52 Jan 17, 2021 Jkt 253001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\19JAR8.SGM 19JAR8 khammond on DSKJM1Z7X2PROD with RULES8 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 5767 II. Background obtained contact information for a and debt type; most limitations periods consumer, the debt collector typically are between three and six years, A. Debt Collection Market Background will seek to communicate with the although some are as long as 15 years. A consumer debt is commonly consumer to obtain payment on some or Currently, in most States, expiration of understood to be a consumer’s all of the debt. the statute of limitations, if raised by the obligation to pay money to another As already noted, FDCPA section consumer as an affirmative defense, person or entity. Sometimes a debt 809(a) generally requires a debt collector precludes the debt collector from arises out of a closed-end loan. Other to provide certain information to a recovering on the debt through times, a debt arises from a consumer’s consumer either at the time that, or litigation, but it does not extinguish the use of an open-end line of credit, shortly after, the debt collector first debt itself. If the debt is not commonly a credit card. And in other communicates with the consumer in extinguished, a debt collector may use cases, a debt arises from a consumer’s connection with the collection of a debt. non-litigation means, such as letters and purchase of goods or services with The required information includes: (1) telephone calls, to collect a time-barred payment due thereafter. Often there is Certain details about the debt, such as debt, as long as those means do not an agreed-upon payment schedule or the amount of the debt and the name of violate the FDCPA or other laws.11 date by which the consumer must repay the creditor to whom the debt is owed; C. Consumer Protection Concerns the debt. and (2) a description of consumer For a variety of reasons, consumers protections, such as the consumer’s As discussed in the November 2020 sometimes are unable or unwilling to rights to dispute the debt and to request Final Rule, each year consumers submit make payments when they are due. information about the original creditor. tens of thousands of complaints about Collection efforts may directly recover A debt collector may send a validation debt collection to Federal regulators.12 some or all of the overdue amounts notice containing the required A significant proportion of those owed to debt owners and thereby may information as the initial complaints involve debts that indirectly help to keep consumer credit communication to the consumer or send consumers believe they do
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