The Consumer Financial Protection Bureau today finalized the second part of its debt collection rule, which covers passive debt collection, time-barred debt, and required validation notices to consumers pursuant to the Fair Debt Collection Practices Act. The 350-page rule is a follow-up to the FDCPA final rule issued in October that modernized and clarified rules around debt collection communications.
Among other things, the rule requires third-party collectors to disclose detailed information about the debt to consumers before reporting to a consumer reporting agency (CRA). The rule also prohibits third-party collectors from suing or threatening to sue consumers to collect a time-barred debt, which is defined as a debt for which the applicable statute of limitations has passed. Based on comments from ABA and other industry stakeholders, the Bureau declined to finalize certain time-barred debt disclosures included in the supplemental proposed rule.
The FDCPA does not generally apply to creditors collecting their own debts, and thus would not generally apply to banks; however, many banks place debt with third-party debt collectors and must monitor vendor compliance with the FDCPA. The final rule takes effect Nov. 30, 2021.