New Debt Collection Regulations Give Consumers Additional Protections, But Create New Issues
A final rule was issued on October 30, 2020 prohibiting a variety of abusive, false, deceptive, and unfair debt collection practices under the Fair Debt Collection Practices Act (FDCPA). The new debt collection rule was issued by the Consumer Financial Protection Bureau, the federal agency in charge of most consumer financial protection regulations. Though unfair and deceptive practices have always been broadly prohibited as to debt collectors, the rule provides more details about what the FDCPA deems as illegal debt-collection practices.
The final debt collection rule is 653 pages long and is sure to inspire comment by consumers and their advocates. Some of the main components of the rule apply to electronic communications, repeat phone calls, and record retention.
The debt collection rule modernizes communication with consumer debtors, expressly permitting by phone, email, text, or other electronic means. Fewer and fewer people rely on the mail as a means of communication, so the rule brings the FDCPA into the 21st Century. Consumers are nevertheless provided with protection against unwanted electronic debt-collection communications. Collectors must offer consumers a clear way to opt out of communication at a specific email address or phone number.
Furthermore, debt collectors have always been required to stop communication completely if requested to do so by consumers. Doing this sometimes causes a collector to file a collection lawsuit in court, however. (Consumers should also be aware that the FDCPA prohibits collectors from suing them anywhere except where the account was opened or whether the consumer presently lives.)
Another issue the new debt collection regulations address is how often consumers may be contacted, an issue that has frequently been litigated. A collector now is assumed to have violated the FDCPA if the consumer is called more than seven times in any seven-day period. In an era when some consumers have complained of being bombarded with debt-collection calls day and night, this regulation limits such unwanted intrusions.
Record retention is another requirement that has been imposed on debt collectors. Whereas collectors previously had no hard-and-fast rule about whether they must retain copies of letters, phone recordings, and so on, they now must keep accurate files of all communications with consumers. This is especially important for when a consumer files a lawsuit under the FDCPA for illegal debt collection – a common refrain our office has heard from them is that the records are no longer in existence.
Another rule that, in a surprise victory for consumers, was not adopted, relates to attorney debt collectors. Under the FDCPA, an attorney who signs a collection letter must have “meaningful involvement” in the drafting of the letter. This is to prevent collectors from trying to intimidate consumers with an attorney’s signature when the attorney actually had no involvement with the collection. The debt-collection industry had pushed for an exception to this rule that would have eliminated the requirement of meaningful attorney involvement, but the exception ultimately failed, and the requirement stands.
In conclusion, the new FDCPA debt collection rule is certain to cause disputes, disagreements, and lawsuits, but it is also a well-intentioned modernization of the old collection rules.
DYE CULIK PC is a law firm with offices in Charlotte, North Carolina and Boston, Massachusetts. Our attorneys handle consumer financial protection issues for consumers and small businesses, including defending debt collection lawsuits, stopping harassment and unfair practices of debt collectors, and other issues related to debt collection. If you are having an issue with a collector, contact us to see how we can help.