On May 7, 2019, the Consumer Financial Protection Bureau issued a notice of proposed rulemaking to amend Regulation F—the implementing regulation for the Fair Debt Collection Practices Act (FDCPA).  The FDCPA was passed in 1977 and has not been updated or amended in the 40 years of its existence.  This is problematic, given how much technology has evolved since the Act was passed.  Debt collection companies have been seeking guidance on whether and how they could lawfully reach people online or via cell phones for years.  The proposed amendments purport to answer these questions and more.

The FDCPA is a consumer protection act aimed at preventing debt collection agencies from using unfair, abusive, or deceptive means to collect debts.  Companies cannot harass any person to that end, and they are further prevented from using fraudulent tactics to attempt to get payment.  For purposes of the FDCPA, a debt collector is anyone using an instrumentality of interstate commerce (telephone, mail, etc.) to collect debt either directly or indirectly for another.  An entity using an alternate name that would appear to indicate that a third party is attempting to collect the debt, rather than the entity itself also falls within the definition.  In contrast, an entity (or its agent or employee) who attempts to collect its own debt in its own name does not fall within the definition of a debt collector.

Previously, there was no guidance in the Act for whether debt collection agencies could use any new forms of technology to contact individuals referred to the agencies over and above mailings or landline calls.  It was uncertain whether text messages, cell phone calls, or email messages were within the bounds of the law.  The proposed amendments provide clarity in this regard and detail four main changes for collection agencies.

First, companies would be limited to seven attempts per week to contact an individual by phone about a specific debt.  This means that if an agency was tasked with collecting more than one debt from a given consumer, it would be limited to seven calls per week per debt.  If the agency makes contact and has a conversation with the individual via phone call, the agency would need to wait at least seven days before it could attempt to call the individual again.  The proposed amendment sets a bright line rule for how many calls per week is appropriate.  Under the current rules, it would certainly be harassment for a company to make 100 calls per week, but it is still generally uncertain as to how many calls is too many.  For instance, it may be appropriate for some agencies to make 50 calls per week, while others may be more limited due to more aggressive tactics or fewer debts attributed to a given consumer.  With the proposed rule, the standard of appropriateness would be set with a hard cap at seven calls per week per debt.

Second, a debt collection agency would need to provide individuals with various disclosures for the debt including related consumer protections in a mailing.  This would contain information about how the individual could dispute the debt, an itemization of what the debt consists of, and easy-to-read information about the individual’s options.  The proposed rule would also require the mailing to include a tear-off or detachable portion that individuals could return to the agency with their response(s) to the collection attempt.  The sheet could enable individuals to dispute the debt, request the name and address of the original creditor, or make payment on the debt.  Overall, the proposed amendment seeks to simplify mailings that companies can send so that consumers are not as overwhelmed and may better understand their options and rights.

Third, and perhaps most importantly, the proposed amendment would clarify how debt collectors can appropriately and lawfully use technological developments to contact consumers.  The rules would allow agencies to give required disclosures electronically to save them from having to send physical mail that consumers might just throw away.  It would broaden communication options to include voicemail, email, and text message to contact consumers.  Prohibitions against harassment and unreasonable forms of collection activity under the original FDCPA still apply, however.  The amendment would provide consumers with options to unsubscribe from the new forms of communication if they were unwanted.  Individuals would also be given the option to limit how debt collectors could contact them.  For instance, they could opt to limit communications to a specific telephone number or to certain hours of the day.  This is one of the most important proposed changes since most consumers use this technology on a daily basis, and some of them have abandoned older means of communication like landlines.

Fourth, the proposed rule would prevent a debt collector from reporting a delinquent individual to a consumer reporting agency before telling the individual that the agency planned to do so.  This prevents unwelcome surprises to consumers who may have been unaware of how outstanding debt affects their credit.  To likewise prevent unwelcome surprises and undue burdens, the proposal would also prevent collection agencies from both suing and threatening to sue on debt collection efforts if the agency knows or should know that the statute of limitations for collection has expired.  Pennsylvania, for instance, has a six-year statute of limitations to collect typical consumer debts, so collection agencies within the state must act within that time to recover.

The Bureau of Consumer Financial Protection will be accepting comments on the proposed amendments until September 18, 2019.  After that point, the Bureau will review submissions and make a decision on how to proceed with the amendments.  The new proposed rules attempt to reflect changes in technology and societal norms since the FDCPA’s initial enactment, however, now is the time to make any concern heard by submitting comments to the Bureau.  Comments may be submitted, identified by either Docket No. CFPB-2019-0022 or RIN 3170-AA41, via the federal eRulemaking Portal, email, regular mail, or hand delivery/courier.[1]

With contribution from Sarah Rothermel, J.D. Widener Law Commonwealth

[1] Federal eRulemaking Portal: http://www.regulations.gov.  Follow the instructions for submitting comments.
Email: 2019-NPRM-DebtCollection@cfpb.gov.  Include either the docket number or the RIN number in the subject line of the email.
Regular Mail: Comment Intake—Debt Collection, Bureau of Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552.
Hand Delivery/Courier: Comment Intake—Debt Collection, Bureau of Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552.