On May 7, 2019, the Consumer Financial Production Bureau (CFPB) issued a proposed rule implementing the Fair Debt Collection Practices Act (FDCPA). The proposed rule seeks to provide clarity to existing rules under the FDCPA. These clarifications are particularly welcomed by debt collectors, many of whom have operated in uncertainty for years and have sought clarifications in many areas covered in the proposal. Much of the uncertainty under the FDCPA came from confusion as to the law’s application to certain communication technologies that did not exist at the time the FDCPA was originally drafted (such as mobile telephones, email, and text messaging). Inconsistent court decisions where judges attempted to interpret the statute resulted in legal uncertainty and additional costs for debt-collecting institutions. Among other areas of clarification, the proposed rule addresses the following topics:
- Electronic Communications: The proposed rule seeks to clarify that newer communication technologies, such as email and text messaging, may be used in collection, with certain limitations to protect consumer privacy and to prevent harassment or abuse, false or misleading representations, or unfair practices. Additionally, the rule proposes procedures that, when followed, would protect a debt collector from liability for unintentional violations of the prohibition against third-party disclosures when communicating with a consumer via email or text message.
- Limited-Content Message: The proposal defines “limited-content message” as a new term related to debt collection communications. The term identifies what information a debt collector must and may include in a message left to consumers for the message to be deemed not to be a communication under the FDCPA.
- Use of Workplace Email Address/Social Media Restrictions: The proposal prohibits a debt collector from contacting a consumer using an email address that the debt collector knows or should know is provided by the consumer’s employer. In addition, debt collectors would be prohibited from contacting consumers through social media platforms except through a private messaging function.
- Telephone Call Frequency Limits: The proposal includes a limit on the number of telephone calls a debt collector may place for a consumer about a particular debt within a seven-day period to seven calls. The proposal would also prohibit a debt collector from engaging in more than one telephone conversation with a consumer about a particular debt within a seven-day period. A debt collector who stays within the proposed limits would not have engaged in repeated or continuous telephone calls or conversations with intent to harass, as prohibited by the FDCPA.
- Providing Required Disclosures Electronically: The proposal would generally require collectors to provide required disclosures in a manner that is reasonably expected to provide actual notice and in a form that the consumer may keep and access later. A debt collector who provides the required disclosures electronically would need to comply with either the E-SIGN Act or a set of alternative procedures. The proposal also includes requirements relating to the delivery and format of required electronic disclosures.
In the marketplace, the new rule is being met with both optimism and reservations from industry and advocacy groups. Generally, the collection industry sees the rule as a step toward modernizing the FDCPA, even if it is not perfect. Consumer advocacy groups generally seem unhappy that collectors will be able to use modern electronic methods to communicate with borrowers, and they will also likely try to convince the CFPB to limit the number of calls collectors can make even further.
A 90-day comment period following the date of the rule’s publication in the Federal Register is likely to produce minor changes to the proposal. Thus, a final rule can likely be expected later this year after the comment period has closed.