On April 7, 2021, the Consumer Financial Protection Bureau (“CFPB”) issued a notice of proposed rulemaking (NPRM) that would extend the effective date by 60 days of two final rules under the Fair Debt Collection Practices Act (FDCPA). The debt collection rules (Part I and II) are slated to take effect on November 30, 2021. However, considering the disruption of the COVID-19 pandemic, the CFPB has proposed delaying the effective date. If the proposal is finalized, the effective date for the rules would shift to January 29, 2022. This is to give all the parties time to comply with the new rules. “The proposed delay would give stakeholders more time to review and implement the rules,” the CFPB said. The proposal will be open for comment for 30 days following publication in the Federal Register. In addition to requesting comment on whether to extend the final rules’ effective date, the CFPB requested comment on whether they would facilitate implementation to retain the November 30 effective date for some or all the final rules’ safe harbors. Read about the proposed delay here.
The first debt collection rule, Part I, issued on October 30, 2020, clarifies the use of communications related to debt collection and prohibits harassment or abuse, false or misleading representations, and unfair practices by debt collectors. The first rule outlines certain disclosures and limitations for covered debt collectors. The rule also addresses the use of newer communication technologies such as emails and text messages for collecting debt and establishes record retention requirements. The FDCPA and the CFPB’s final rule will regulate the activities and conducts of third-party debt collectors and not institutions collecting their own debts.
The second debt collection rule, Part II, issued on December 18, 2020, clarifies disclosures debt collectors must provide to consumers at the beginning of the collection communication process. The second rule requires debt collectors to provide readily understandable disclosures about consumer’s debt and rights at the outset of collection communications and to provide a model validation notice to disclose the existence of a debt to consumers, orally, in writing, or electronically, before reporting such information about the debt to a consumer reporting agency. Additionally, the rule focuses on the prohibition of filing a suit to collect, or threatening suite to collect time-barred debt. For consumer disclosures, debt collectors must provide disclosures when they begin to communicate with the consumer to collect the debt. The disclosures must include details about the debt and the disclosures must include a statement that indicates the communication is from a debt collector. Prior to reporting a debt to a consumer reporting agency, the rule requires the debt collector to contact the consumer about the debt before they deliver information about a debt to a consumer reporting agency.
At Compliance Alliance, we will keep our members abreast of what is taking place and all the developments that will ensue. We will keep you updated of what will transpire and to develop the necessary summaries and tools to inform and make you better bankers.