The CFPB recently announced that its two final debt collection rules implementing the Fair Debt Collection Practices Act (FDCPA) will take effect as planned on November 30. The CFPB had previously proposed extending the final rules' effective date by 60 days to allow for additional comments and time for implementation for those affected by COVID-19 (a recent Sheppard Mullin article discussing the COVID-related impact on debt collection was recently covered here). Based on industry feedback, however, the Bureau determined that an extension is unnecessary, explaining that while "consumer advocate commenters generally supported extending the effective date, they did not focus on whether additional time is needed to implement the rules."
The first rule, issued in October 2020, involves debt collection communications and clarifies restrictions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors engaged in collecting a consumer debt. The second rule, issued in December 2020, focuses on disclosures debt collectors must provide to consumers at the onset of collection communications. Notably, debt collectors must take specific steps to disclose to consumers the existence of a debt before reporting information about that debt to a credit reporting agency and may not sue, or threaten to sue, consumers on time-barred debt.
Putting It Into Practice: By leaving the door open to reconsider the debt collection rules at a later date, the CFPB is likely signaling to debt collection firms, and the creditors who utilize them, that the agency will be keeping a watchful eye as hundreds of thousands of borrowers exit mortgage forbearance this fall. Anyone who may be impacted by the CFPB's debt collection rules ought to thoroughly review their processes to ensure that they are in compliance with the final rule, and be moving forward with implementation efforts.
Originally published August 11, 2021
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