The Consumer Financial Protection Bureau (CFPB) has released major updates to the rules that affect creditors and those who collect their debts by amending Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA). Businesses covered by the new rules should consider preparing for the changes as soon as possible before the changes take effect on November 30, 2021.
As a threshold issue, it should be noted that the Bureau has broadened the definition of a covered “consumer” to now include both living and deceased persons in the settlement’s coverage. The estate of a deceased consumer is now entitled to FDCPA protections, a change that can have significant consequences for debt collectors, who will now be required to provide validation information to an estate representative when seeking. to recover the estate of a deceased person.
In addition to modernizing guidelines for dealing with collection-related communications via email, text messaging and social media, the CFPB has also imposed new rules for consumer-focused disclosures, reporting of credit information to agencies and agencies. Consumers Information (CRA) and Prescribed Debt Lawsuits, as outlined below.
Specifically, the regulation extends the existing requirements to provide consumers with debt validation information when they first communicate with the consumer about a debt. The regulations now state that a debt collector can provide a written or electronic validation notice either during the initial communication with the consumer or within 5 days. The validation notice must be “clear and visible” and meet specific content requirements, including a statement that the communication is from a debt collector; the name and postal address of the collection agent, the consumer and the actual creditor; the itemized amount of the debt; and consumer response information that a consumer can use to take certain action, such as disputing debt. The CFPB made it possible to include optional content with the validation notice, provided the additional information was no more important than the required content.
The amended regulations include a validation notice template, which provides a safe harbor for compliance with the new content guidelines. A debt collector may be protected by using the model form, specified variations of the form, or a substantially similar form. The Safe Harbor does not apply to the delivery method and timing requirements of the settlement.
The regulation now also offers debt collectors the option of sending the consumer a translated validation notice in any language, provided that the debt collector also provides an English notice in the same communication as the notice. translated.
Before providing collection information to a CRA, collectors will now need to:
1. Speak with the consumer about debt in person or over the phone; Where,
2. Send the consumer a letter about debt or send the consumer a message about the debt by email.
In addition, debt collectors must also wait a “reasonable time” to ensure that letters or emails sent to the consumer are not undeliverable. The regulations provide for a 14-day security period from the date the letter or email is sent to the consumer before providing information to the CRA. Subsequently, the debt collector can provide the debt information to a CRA if he does not receive a non-deliverability notice.
Finally, the amended regulation prohibits debt collectors from bringing or threatening to take legal action against a consumer to collect a prescribed debt. Once the statute of limitations has expired for a particular debt, no further legal action can be taken, although exceptions apply for filing proof of claim in bankruptcy proceedings.