CFPB Proposes New FDCPA Regulations

On May 7, 2019, the CFPB issued a Notice of Proposed Rulemaking (NPRM) announcing proposed new regulations that would implement various existing provisions of the FDCPA.  The CFPB proposes to make changes and clarifications to issues related to communications, privacy, and disclosures, as well as to certain defined terms under the FDCPA. 

The NPRM requests comments on the proposed rules, including requests for comments on various specific aspects of the rules.  The proposed rules, when finalized, would be placed in the existing Regulation F, which is currently limited to describing certain procedures for states to apply for an exemption from the FDCPA.

The CFPB proposes to expand the allowable means of communication that debt collectors may use to contact debtors.  This would include certain electronic communication methods, such as voicemails, emails, and text messages.  For example, the CFPB proposes to add a new term “limited-content message,” which would allow debt collectors to leave certain voicemail messages for debtors without violating the third-party communication prohibitions under the FDCPA.

The NPRM includes new opt-out options for emails and text messages that must be provided to the borrower.  This includes a requirement that the debt collector provide a clear and conspicuous statement describing one or more ways the debtor can opt out of further electronic communications or attempts to communicate with the specific email address or telephone number. 

The proposal also allows debt collectors to provide FDCPA disclosures by electronic means, but requires the disclosures to be sent in a manner that is “reasonably expected to provide actual notice” and “in a form that the consumer may keep and access later.”  Importantly, the NPRM deems an act to be unfair or unconscionable if the disclosures are not properly provided.

The NPRM also includes a number of new prohibitions.  The proposal allows, among other things, the debtor to restrict the media that the debt collector may use to communicate with the debtor.  Debt collectors are also prohibited from placing telephone calls to a debtor more than seven times within a seven-day period or within seven days after engaging in a telephone conversation with the debtor.  In addition, the NPRM prohibits debt collectors from contacting debtors through social media platforms, except through private messaging, and from contacting debtors using an email address the debt collector knows or should know is provided by the debtor’s employer.  

The NPRM also provides a number of clarifying comments and examples. Take for instance the prohibition on communications at times and places that the debt collector may know, or should know, are inconvenient for the debtor based on facts and circumstances.  The debt collector may know, or should know, that a time or place is inconvenient if the consumer uses the word “inconvenient” to notify the debt collector, but depending on the facts and circumstances, the prohibition may apply even if the consumer does not use the word “inconvenient.”

Further, the CFPB proposes to add and expand certain terms and their definitions.  For example, the CFPB proposes to expand the term “consumer” to include “a deceased natural person who is obligated or allegedly obligated to pay debt,” and to expand the permitted communications to such consumers to include the “confirmed successor-in-interest and the personal representative of a deceased consumer’s estate.” 

As we have previously reported, multiple courts have held that litigation and threats of litigation on time-barred debt violate the FDCPA.  In the NPRM, the CFPB addresses this issue and proposes to prohibit a debt collector from suing or threatening to sue on a time-barred debt under certain circumstances.  In particular, the proposed regulations would prohibit suits and threats of suit on a debt that the debt collector “knows or should know” is time-barred (i.e., for which the applicable statute of limitations has expired).  The debt collector, however, may use non-litigation means to collect a time-barred debt as long as those means do not violate the FDCPA or other laws.  The NPRM acknowledges that in some circumstances, it may be difficult to determine whether a “know or should have known” standard has been met, and thus specifically requests comments on using the “knows or should know” standard with respect to the prohibition of suits and threats of suit on time-barred debts.

Comments regarding the NPRM are due within 90 days of when the NPRM is published in the Federal Register.  Per the NPRM, the regulations will become effective one year after the final version of the regulations is published in the Federal Register.