CFPB Summary re: Debt Collection Practices (Time-Barred Debts)
12 CFR Part 1006
Prepared by the Legislative and Regulatory Affairs Division
January 25, 2021
The Consumer Financial Protection Bureau (CFPB) issued this final rule to revise Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA.) The rule governs certain activities by debt collectors (as defined by the FDCPA). Among other things, the final rule clarifies the information that a debt collector must provide a consumer at the outset of debt collection communications, prohibits debt collectors from bringing or threatening to bring a legal action against a consumer to collect a time-barred debt, and requires debt collectors to take certain actions before furnishing information about a consumer’s debt to a consumer reporting agency.
The rule becomes effective on November 30, 2021 and can be accessed here.
Summary
The final rule clarifies the information that a debt collector must provide to a consumer at the outset of debt collection communications and provides a model validation notice containing such information. The final rule also addresses consumer protection concerns related to passive collections (i.e., the practice of furnishing information about a debt to a consumer reporting agency before communicating with the consumer about the debt) and the collection of debt tha tis beyond the statute of limitations (i.e., time-barred debt). On November 30, 2020, the Bureau published a final rule that focused on debt collection communications and related practices by debt collectors (November 2020 Final Rule). The November 2020 Final Rule reserved certain sections of Regulation F in anticipation of this final rule.
The final rule is based primarily on the Bureau’s authority to issue rules to implement the FDCPA and covers debt collectors, as defined in the FDCPA. Regulation F contains four subparts. Subpart A contains generally applicable provisions, such as definitions that apply throughout the regulation. Subpart B contains rules for FDCPA debt collectors. Subpart C is reserved for any future debt collection rulemakings. Subpart D contains certain miscellaneous provisions. This final rule adds additional provisions in subparts A, B and D.
Scope of the final rule
FDCPA Section 809(a) requires that a debt collector send a written notice containing certain information about the debt and actions the consumer may take in response (the validation notice) to a consumer within five days of the initial communication, unless such validation information was provided in the initial communication or the consumer has paid the debt. The final rule:
- Clarifies the information about the debt and the consumer’s rights with respect to the debt that a debt collector must provide to a consumer at the outset of debt collection communications, including (if applicable) on a validation notice.
- Requires a debt collector to provide prompts that a consumer can use to dispute the debt, request information about the original creditor, or take certain other actions.
- Provides a safe harbor for compliance with these disclosure requirements for debt collectors who use the model validation notice or certain variations of the notice.
- Prohibits a debt collector from suing or threatening to sue a consumer to collect time-barred debt.
- Prohibits a debt from furnishing information about a debt to a consumer reporting agency before engaging in specific outreach to the consumer about the debt.
- Addresses certain other disclosure-focused provisions such as clarifying how a debt collector may response to a consumer’s request for original-creditor information if the original creditor is the same as the current creditor.
- Interprets the definition of consumer under the FDCPA to include deceased natural persons and (relatedly) provides that, if a debt collector knows or should know that a consumer is deceased, and the debt collector has not previously provided the validation information to the deceased consumer, the debt collector must provide that information to a person who is authorized to act ono behalf of the deceased consumer’s estate.