New FDCPA Guidelines Are Now in Impact: Is Your Firm Compliant? | SmithAmundsen LLC
The Consumer Financial Protection Bureau (CFPB) recently introduced a new set of rules for debt collection agencies and others who qualify as “debt collection agencies” for the purposes of the FDCPA. These rules, contained in the federal register’s amended “Rule F”, have modernized the way collection agencies can interact with debtors and revised the rules for debt validation notifications. The regulations came into force on November 30, 2021. These are just three of the most notable changes:
First, the regulation seeks to modernize the FDCPA by setting new rules for collectors’ use of text messaging, email and direct messaging through social media. In short, collectors can now reach debtors through social media platforms as long as those messages are private – for example, a direct message is fine while posting on a cork board is not. The rules also put putative limits on the number of times collection agencies can call or text a consumer, and require that all electronic messages contain instructions on how debtors can “decline” future communications. You can read more about these new rules in our previous warning.
Second, the regulations allow creditors greater flexibility in contacting debtors without creating onerous disclosure requirements. Prior to the amendment to Regulation F, collectors were reluctant to leave voicemails to debtors so that these voicemails would not be viewed as “communications” for the purposes of the FDCPA, which would require additional, onerous disclosures. Voicemails left behind for debtors can now be regarded as “Limited Content Messages”, which do not trigger any additional disclosure requirements if the Voicemails only contain the following information: 1) the name of the debt collection company, 2) a callback telephone number, 3) the name of a person who the debtor can reach this number, and 4) the request for a callback. It is important that the message is limited in content not indicate that the call is for collection purposes.
Third, the CFPB also made significant changes to the requirements for the Debt Validation Notice and the disclosures that must be made to debtors. In addition to the disclosures currently required under the FDCPA, Regulation F adds numerous additional required disclosures, including, for example: 1) the name and address and telephone number of the debt collection agency; 2) a list of debts owed; 3) Among other things, the “itemization date” of guilt. The CFPB has provided a “sample” validation notice. In particular, collectors who use the model notices of the CFPB are entitled to a “safe haven” when it comes to compliance with the requirements for debt validation.
Regulation F is hundreds of pages long, meaning there is plenty to digest and review to ensure full compliance. For now, here are some items to consider as business rings in your collection in the New Year:
- Make sure that your validation information corresponds to the new CFPB sample form;
- Conduct a review of your policy regarding telephone calls to debtors to avoid clashing with the new call frequency requirements;
- Think about whether alternative forms of communication (e.g. social media messaging) could strengthen your debt collection business; and
- Make sure your voicemail messages to debtors are classified as “messages of limited content”.