In 1977, gas cost 62 cents per gallon; the first Apple II computers became available for sale; even the most primitive mobile phones were half a decade away from being released to the public; and debt collectors relied on landline phones, the US mail or in-person conversations to collect the debts assigned to them. When Congress passed the Fair Debt Collection Practices Act (“FDCPA”) that year, it could not have envisioned a world where consumers communicate instantly using cellphones, text messages, emails and social media.
No federal agencies promulgated any significant regulations under the FDCPA in the 40 subsequent years. Until the Dodd-Frank Act became effective, no federal agency even had the authority to do so. In the absence of any controlling regulations, courts were free to fashion their own standards and interpretations of the FDCPA. Given the voluminous amount of FDCPA litigation, courts across the country quickly created inconsistent standards and a maze of differing interpretations. Fortunately for entities seeking simple, practical and uniform standards for FDCPA compliance in the modern age, the Consumer Financial Protection Bureau (the “CFPB” or “the Bureau”) issued its proposed Regulation F under the FDCPA (the “Proposed Rule”) on May 7, 2019.
In this Legal Update, we summarize the CFPB’s proposed debt collection rulemaking and describe the consequences for entities engaged in collecting consumer-purpose debts. We do not rehash all 538 pages of the Bureau’s proposal but instead summarize some of the most significant developments that FDCPA-regulated entities should review when considering whether to provide comments to the Bureau regarding the Proposed Rule.
Overview of the FDCPA
Before we discuss the content of the Proposed Rule, we briefly remind our readers of the basic structure of the FDCPA. Congress passed the FDCPA in 1977 in order to combat “[d]isruptive dinnertime calls, downright deceit, and more.”1 The FDCPA applies to “debt collectors,” who are generally third-party entities (i.e., not original creditors) who either (i) regularly collect debts on behalf of others or (ii) obtained defaulted debts, but only if the entity’s “principal purpose” is the collection of debts.2 In general, the FDCPA prohibits a debt collector from using unlawful, abusive, deceptive, or unfair collection tactics in connection with the collection of debts. The FDCPA contains an extensive (but not exclusive) list of practices that are prohibited under this standard. They include tactics such