CFPB Releases Rulemaking on Debt Collection

The Consumer Financial Protection Bureau (CFPB) released today a notice of proposed rulemaking that would establish new rules on debt collection, primarily for third-party debt collectors. If finalized, it would amend the Fair Debt Collection Practices Act (FDCPA), which hasn’t been modified since 1977.

The CFPB proposal would make several important changes to FDCPA, including the introduction of new restrictions on communications between debt collectors and consumers. Under the proposal, collectors would only be able to make seven attempts per week to reach consumers by telephone. If the collector and consumer communicate by telephone, the debt collector would not be able to contact the consumer again for seven days.

The rule also clarifies that debt collectors can use modern technology (i.e. voicemails, emails, text messages, or social media platforms) to communicate with consumers, but they must follow the same rules listed for telephones. Moreover, consumers would have the option to unsubscribe from electronic forms of communication and restrict which phone numbers or platforms that debt collectors use to contact them.

The rule would require debt collectors to send a disclosure form to consumers, which would include debt information and language on how the consumer can respond to a debt collection attempt.

Another important provision of the rule would prohibit debt collectors from suing or threatening to sue consumers to collect a debt if the statute of limitations has expired. It would also prevent debt collects from reporting an unpaid debt to a credit reporting agency without first notifying the consumer.

Kathy Kraninger, director of the CFPB, has said that the proposed rule may change depending on public comments. “The Bureau is taking the next step in the rulemaking process to ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations,” said Kraninger. “As the CFPB moves to modernize the legal regime for debt collection, we are keenly interested in hearing all views so that we can develop a final rule that takes into account the feedback received.”

The CFPB will seek comments for 90 days once published in the Federal Register.