(Jan. 14, 2022) A reminder to debt collectors of their obligations when collecting medical debts to comply with federal prohibitions on misrepresentations and unfair practices was issued Thursday by the CFPB.
The bureau said its Compliance Bulletin noted the Fair Debt Collection Practices Act’s (FDCPA) prohibition on misrepresentations and unfair practices, including when collecting medical debts covered by the No Surprises Act (NSA). The bulletin also reminds consumer reporting agencies and information furnishers to comply with the Fair Credit Reporting Act’s (FCRA) accuracy and dispute resolution requirements, including when furnishing information about or reporting medical debts covered by the NSA.
Enacted last year, the NSA is aimed at protecting people covered under group and individual health plans from facing surprise medical bills when they receive most emergency services, non-emergency services from out-of-network providers at in-network facilities and services from out-of-network air ambulance service providers, among others.
The bulletin advises credit bureaus that the accuracy and dispute obligations imposed by the FCRA apply with respect to debts stemming from charges that exceed the amount permitted by the NSA.
“The CFPB will investigate claims and take action against companies that attempt to collect or report or furnish consumer information about debts stemming from charges that exceed the amounts permitted under the NSA,” the bulletin states.
The bulletin also includes several other reminders to debt collectors, information furnishers and credit bureaus:
- Consumer financial protection law prohibits debt collectors from misrepresenting the character, amount, or legal status of any debt.
- Furnishers of information to debt collectors must have reasonable written policies and procedures regarding the accuracy and integrity of consumer information provided to credit bureaus.
- The accuracy and dispute obligations imposed by federal consumer financial protection law apply with respect to debts stemming from charges that exceed the amount permitted by the NSA.
LINK:
CFPB Issues Bulletin to Prevent Unlawful Medical Debt Collection and Credit Reporting
(Dec. 3, 2021) Mountain West Credit Union Association President and CEO Scott Earl announced his retirement this week, saying he will step down at the end of June next year. He has been leader of the association, which represents Arizona, Colorado and Wyoming, since 2011 … While inflation is expected to ease off, a chance of persistently high inflation could lead Federal Reserve policymakers to increase interest rates, placing credit unions in the position of paying closer attention to interest-rate risk, NCUA Board Chairman Todd Harper said this week. Speaking to state association/league leaders via a remote broadcast, Harper said that – although the yield curve is expected to steepen — a flat yield curve would put downward pressure on credit union net interest margins. “The ability to manage interest rate risk will remain a crucial determinant of credit union performance going forward,” Harper said. “To remain on a sound footing, credit unions will also need to continue to pay careful attention to capital, asset quality, earnings, and liquidity” … New debt collection rules adopted by CFPB earlier this year went into effect this week, the agency noted in a blog entry, laying out key points to know about the regulation. According to bureau, the new rules clarify how debt collectors can communicate with borrowers, including what information they’re required to provide at the outset of collection about the debt. The agency said the rules also outline rights of borrowers in debt collection, and how they can exercise those rights … Don’t forget next week’s (Dec. 9 at 2 p.m. ET) NASCUS 101 — a free, short webinar where participants learn from the NASCUS team how to make the most of an association membership. Among the topics addressed: What NASCUS is, how NASCUS contributes to the entire credit union industry, how to engage in the regulatory and legislative processes, collaboration with peers, committee and working group involvement, customized communications and more. The webinar is open to all members and prospective members. While it is free to participate, registration is required … Welcome to NASCUS membership Michigan State University Federal Credit Union of East Lansing; led by president & CEO April Clobes; the credit union holds $6.5 billion in assets.
LINK:
Understand how the CFPB’s Debt Collection Rule impacts you
Register here for NASCUS 101, Dec. 9, 2 p.m. ET.
(April 9, 2021) Two debt collection rules – which had been slated to take effect Nov. 30 – will now have a delayed compliance deadline of Jan. 29, 2022, under yet another proposal issued this week by the bureau, with the intent of giving those affected more implementation time amid the ongoing challenges of the COVID-19 pandemic.
CFPB issued the final rules late last year (in October and December) under the Fair Debt Collection Practices Act (FDCPA). The October final rule focuses on the use of communications related to debt collection and clarifies prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.
The December rule clarifies disclosures debt collectors must provide to consumers at the beginning of collection communications. It also prohibits debt collectors from making threats to sue, or from suing, consumers on time-barred debt; and requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency.
“Since the Debt Collection Final Rules were published, the global COVID-19 pandemic has continued to cause widespread societal disruption, with effects extending into 2021,” the bureau said in a notice scheduled for publication in the Federal Register. “In light of that disruption, the Bureau believes that providing additional time for stakeholders to review and, if applicable, to implement the final rules may be warranted.”
The rules adopted last year permit debt collectors to choose to comply with the rules’ requirements and prohibitions ahead of their effective date. However, the CFPB notes that the FDCPA and other applicable law would continue to govern debt collectors’ conduct, with safe harbors and presumptions implemented only as of the rules’ effective date. Comments are sought on this aspect of Wednesday’s proposed delay.
“The Bureau requests comment on, for example, the costs and benefits of permitting debt collectors to obtain a safe harbor for using the Bureau’s model validation notice as of November 30, 2021, even if the Debt Collection Final Rules do not otherwise take effect until January 29, 2022,” it said.
Comments on the proposed delay will be due 30 days after their publication in the Register.
LINK:
CFPB Proposes Delay of Effective Date for Recent Debt Collection Rules
(Jan. 29, 2021) In addition to the three summaries of NCUA actions, NASCUS this week also posted a new summary of CFPB recent actions – this one on the bureau’s final rule on debt collection practices related to time-barred debts. The summary is available to members only.
Under the final rule, debt collectors are banned from making calls or taking other “non-litigation means” to collect on debt that is beyond the statute of limitations unless it is disclosed during an initial contact that the debt is, in fact, past the time limit. The final rule also requires the debt collector to inform the consumer that the statute of limitations on the debt has expired during any required validation.
The bureau has said that its own research has found that a time-barred debt disclosure helps consumers understand that they cannot be sued if they do not pay, which it noted can help consumers make better-informed decisions whether to pay the debt or not.
LINK:
NASCUS Summary: CFPB Rule on Debt Collection Practices (Time-Barred Debts)
(Jan. 22, 2021) The latest summary from NASCUS focuses on the new rule from CFPB on debt collection practice, which revises Regulation F (which, in turn, implements the Fair Debt Collection Practices Act, FDCPA). The summary is available to members only.
The bureau said the final rule, issued late last year, is intended to “restate and clarify” prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt. It revises the bureau’s Regulation F, focusing on the timing and means of communications between consumers and debt collectors and clarifying how the protections of the FDCPA, enacted in 1977, apply to newer communication technologies, such as email and text messages.
Not included in the final rule is a safe harbor for debt collectors against claims that an attorney falsely represented the attorney’s involvement in the preparation of a litigation submission, the bureau said. “That provision was proposed to bring greater clarity to this issue but, after receiving questions and comments from many stakeholders concerning the proposal, the Bureau has decided not to finalize that provision,” the bureau said.
However, the final rule summary does note inclusion of a safe harbor for debt collectors from civil liability “for an unintentional third-party disclosure if the debt collector follows the procedures identified in the rule when communicating with a consumer by email or text message.”
LINK:
NASCUS Summary: CFPB Final rule, debt collection practices (members only)
(Dec. 23, 2020) Debt collectors must provide, at the outset of collection communications, detailed disclosures about the consumer’s debt and rights in debt collection, along with information to help consumers respond, under a final rule issued late last week by the CFPB.
The rule, the CFPB said, requires debt collectors to take specific steps to disclose the existence of a debt to consumers, orally, in writing, or electronically, before reporting information about the debt to a consumer reporting agency (CRA).
It also prohibits debt collectors from making threats to sue, or from suing, consumers on time-barred debt.
“Before a collector furnishes information about a debt to a consumer reporting agency, the final rule generally requires the collector to take one of several actions to contact the consumer about the debt,” the bureau said of its new rule in a release. The actions, the bureau said, include speaking with consumers about their debts by telephone, mailing a letter to the consumer, or sending an electronic message about the debt to the consumer.
“If mailing a letter or sending an electronic message to the consumer, the collector must wait a reasonable period of time to receive a notice of undeliverability, such as 14 days, before furnishing information to a CRA and must not furnish if a notice of undeliverability is received unless the collector takes additional steps,” the bureau said. “Collectors are also prohibited from, and will be strictly liable for, suing or threatening to sue a consumer to collect a time-barred debt, which is defined as a debt for which the applicable statute of limitations has passed.”
According to CFPB, the final rule is the product of a seven-year process that included a notice of proposed rulemaking (NPRM) in 2019, a supplemental NPRM in February and what the agency described as “extensive consumer disclosure testing.” It also follows a CFPB regulation issued in October focusing on communications between consumers and debt collectors under the Fair Debt Collection Practices Act (FDCPA). The bureau said that rule was intended to “restate and clarify” prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.
Regarding the rule issued Friday, CFPB said that, under it, debt collectors will be also be required to provide “readily understandable” disclosures that contain more information than consumers now receive when the collector first begins to communicate with the consumer to collect the debt.