CFPB Finalizes Partial Fair Debt Collection Practices Act Rulemaking

The CFPB today published a portion of its long-awaited Fair Debt Collection Practices Act rulemaking to modernize and clarify rules around third-party debt collection. The rule will take effect one year after publication in the Federal Register.

The FDCPA does not generally apply to creditors collecting their own debts and thus does not generally apply to banks. However, when the initial proposal was issued in May 2019, it included proposed limitations on consumer contact subject to the bureau’s Dodd-Frank authority to restrict unfair, deceptive, or abusive acts or practices.

In response to advocacy from ABA and other industry stakeholders, the bureau refrained from implementing these consumer contact restrictions that would have applied to banks and other first-party creditors. These restrictions would have introduced considerable legal uncertainty to banks’ ability to contact consumers in the critical stages of early delinquency.

The final rule also covers the use of text messaging and email to contact consumers regarding debts and provides for consumer opt-out of these contact methods. Additionally, it includes provisions on disputes as well as record retention requirements for FDCPA debt collectors. The CFPB said it will release another iteration of the rulemaking in December 2020 that will focus on consumer disclosures.