CFPB Issues Final Debt Collection Rule
For the first time in the Fair Debt Collection Practices Act’s (FDCPA) 40-plus-year history, a regulatory agency has issued rules under the statute.
The new rulemaking, issued by the Consumer Financial Protection Bureau (CFPB), focuses on debt collection communications, and it is intended to give consumers more control over how often and through what means debt collectors communicate with them regarding their debts.
The rule also clarifies how the protections of the FDCPA apply to newer communication technologies, such as email and text messages. The CFPB also clearly states that the rule does not apply to first-party debt collectors who are not covered by the FDCPA.
In a change from the proposed rule, no provisions in the final rule are issued under the CFPB’s Dodd-Frank Act section 1031 authority to promulgate rules regarding unfair, deceptive, or abusive acts and practices. This change brings much-needed clarity to the final rule which will benefit consumers and creditors.
Third-party debt collectors and debt buyers differ greatly from creditors collecting their own debt. The two have completely different business models with very different incentives. Limiting the rule’s application means efficient, expeditious resolution by creditors, which in turn benefits their customers. Communication between creditors and their customers is critical to help customers stay current or work with them if they face a hardship. AFSA addressed this in its comment on the proposed rule.
“AFSA and its members appreciate the time and consideration put forward by the CFPB in developing its debt collection rules under the Fair Debt Collection Practices Act (FDCPA). Key to this rulemaking was ensuring that creditors would have the ability to contact their customers and work with them to remain current or to assist them if they faced hardships,” said Celia Winslow, AFSA Senior Vice President. “We have seen how crucial this flexibility can be over the past seven months, and focusing on third-party debt collectors in this rulemaking both protects consumers and means efficient, expeditious resolution by creditors, which in turn also benefits their customers.”
October 30th, 2020
