In May 2019, the Consumer Finance Protection Bureau (CFPB) addressed debt collection practices by announcing a long-awaited notice of the proposed Fair Debt Collection Practices Act (FDCPA) and ESIGN Act rulemaking that was authorized by Dodd-Frank. The proposed rulemaking represents the first meaningful regulation to issue into a space that has been a creature of periodic case law with at times divergent views.
The CFPB states that it does not intend to generally codify existing case law. When issuing the 500-plus page notice, the agency emphasized that the proposed rulemaking would establish some bright lines regarding limitations on call attempts and telephone conversations, and clarify required disclosures and how debt collectors can communicate with consumers. The CFPB also noted provisions to address time-barred debt and impose a prerequisite of communication with a consumer prior to a debt collector furnishing information about a debt to credit reporting agencies.
Less emphasis was placed on other important topics, such as whether the judicially created “least sophisticated consumer” standard will be employed under the FDCPA—the CFPB agrees with an “objective” standard and proposes the use of the term “unsophisticated” while citing “least sophisticated consumer” case law with approval. Also receiving less emphasis was a provision that “generally would prohibit a debt collector from selling, transferring or placing for collection a debt if the debt collector knows or should know that the debt has been paid or settled, discharged in bankruptcy, or that an identity theft report has been filed with respect to the debt.”
Undoubtedly the proposed rule will be closely examined by those who attempt to collect debts on behalf of others, and thus fit within the definition of a debt collector under the FDCPA. But the proposed rule may be of significant interest to those seeking payments upon debts owed to themselves. Indeed, financial institutions have looked to FDCPA case law as providing some practical guidance as to what collection behavior might run afoul of general principles of unfair or deceptive conduct—even before the CFPB’s 2013 guidance that originating creditors must refrain from unfair, deceptive and abusive acts or practices (UDAAP) when collecting their own debts. Thus, elements of the proposed rule, such as a cap of the number of calls per week and a cooling off period after an actual conversation, may be worthy of comment. Other elements of the proposed rule worthy of note include requiring opt-out instructions in every email and text to a consumer, a prohibition against using a work email address without prior consent and limitations on the use of social media platforms.
The comment period is open and any comments must be received by August 19, 2019.