On October 30, 2020, the CFPB issued the long-awaited final rules that clarify the FDCPA and that will guide debt collectors’ future efforts. Among other things, the new rule:
- Introduces the concept of a limited-content message and defines what must be included in a limited-content message.
- Provides guidance on when electronic communications such as emails and text messages may be used.
- Requires debt collectors who use electronic communications to provide the consumer with a reasonable and simple method to opt out of additional communications.
- Establishes the conditions for a bona fide error defense when communicating by email or text message.
- Provides a rebuttable presumption for when telephone call frequency is or is not sufficiently frequent to annoy, abuse, or harass any person at the called number.
- Clarifies how the FDCPA’s prohibitions regarding the use of false, deceptive, or misleading representations or means apply to a debt collector’s use of social media to communicate with consumers.
- Bans certain debt transfers.
- Clarifies that required disclosures must be sent in a manner reasonably expected to provide actual notice and in a form the consumer may keep and access later.
- Requires debt collectors to retain evidence of compliance or noncompliance with the rule for three years beginning on the date that of the last collection activity on the debt. Phone call recordings must be retained for three years after the date of the phone call.
There is a lot for the banking and financial services industry to digest in this rule (the document announcing the rule is 653 pages), and changes will be required. The effective date is one year from the date of publication in the Federal Register, which means the new rule will go live at the end of October or early November 2021. We will provide detailed explanations of these changes in upcoming newsletters from Michael Best’s Banking and Financial Services Group.
Additionally, this final rule does not include all of the subjects that were addressed in the notice of proposed rulemaking, so those watching the CFPB expect a second final rule to come out in the future addressing subjects such as a model form validation notice, out-of-statute debt, and other potential disclosures.