(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
(Aug. 6, 2021) After finding that an effective date extension of two final rules under fair debt collection laws is unnecessary, the CFPB late last week said the rules would take effect, as originally planned, on Nov. 30.
In a release, the bureau said an extension to Jan. 29 of two rules under the Fair Debt Collection Practices Act (FDCPA), as proposed in April, was not necessarily supported by commenters. The agency said it had proposed the extension to allow stakeholders affected by the COVID-19 pandemic additional time to review and implement the rules. Most commenters said that they were ready to comply by the Nov. 30 date, and did not, CFPB said, focus on whether more time was needed to put the rules into effect).
(However, the agency noted, some commenters recommended, in the alternative to an extension, that the rules be reconsidered. The bureau rejected that view, noting that approach “was beyond the scope of the NPRM and could raise concerns under the Administrative Procedure Act.” There is some wiggle room, apparently: the agency said “nothing in this decision precludes the CFPB from reconsidering the debt collection rules at a later date.”)
The two rules now set to take effect Nov. 30 are:
- One adopted in October of last year that focuses on debt collection communications and clarifies the FDCPA’s prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.
- One adopted in December 2020 that aims to clarify disclosures debt collectors must provide to consumers at the beginning of collection communications. It also prohibits, the agency pointed out, debt collectors from suing or threatening to sue consumers on time-barred debt. The second rule also 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, CFPB stated.
“The CFPB will consider additional guidance for debt collectors, including those that service mortgage loans, as necessary,” the agency noted, adding that it “recognizes that mortgage servicers are expected to receive a potentially historically high number of loss mitigation inquiries in the fall as large numbers of borrowers exit forbearance and that, as a result, mortgage servicers in particular may face capacity constraints.”
LINK:
CFPB Confirms Effective Date for Debt Collection Final Rules
(May 14, 2021) The small-dollar loan program of the Treasury’s Community Development Financial Institution (CDFI) Fund related to credit unions is the subject of a webinar planned for May 27 by the CDFI and NCUA. The one-hour event will describe the program and discuss eligibility of permissible uses of funds through the program, NCUA said in a release. It added that credit unions that are not certified as CDFIs may still be eligible for the program through partnerships with CDFIs or any federally insured depository institution whose primary mission is serving targeted investment areas … Federal financial institution regulators – including NCUA (likely Board Chairman Todd Harper) — are due to testify next Wednesday (May 19) before the House Financial Services Committee in an oversight hearing; the session gets underway at 10 a.m. (and will be streamed, live, via the Internet) … Credit union and banking trade associations this week wrote in opposition to legislation aimed at reversing a Supreme Court decision clarifying that a business engaged in non-judicial foreclosure proceedings is not a debt collector. The Non-Judicial Foreclosure Debt Collection Clarification Act (H.R. 2547), a bill that would reverse the 2019 decision in Obduskey v. McCarthy and Holthus LLP, which clarified that entities enforcing a security interest, without also seeking repayment or deficiency judgement, generally do not qualify as debt collectors under the Fair Debt Collection Practices Act (FDCPA). The groups contend that the bill would “disrupt the choices states have made in structuring their foreclosure regimes, imposing unnecessary costs and delay to the enforcement of real property interests and subsequently increasing the cost of credit.”
LINKS:
NCUA, CDFI Fund to Cohost Webinar on Small-Dollar Loan Program
(April 30, 2021) The proposed delayed compliance dates for two debt collection rules from CFPB issued under the Fair Debt Collection Practices Act (FDCPA) has been summarized by NASCUS and is now posted on the association’s website.
This latest summary, like all of those developed and published by NASCUS, is available to members only.
Under the proposal, the two debt collection rules (which had been slated to take effect Nov. 30) will now have a delayed compliance deadline of Jan. 29, 2022. The bureau, when it issued the proposal, said the delay is intended to give those affected more implementation time amid the ongoing challenges of the COVID-19 pandemic.
Late last year, the bureau issued two final (in October and December) under the FDCPA. The October final rule focused on the use of communications related to debt collection and clarified prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt. The December rule clarified disclosures debt collectors must provide to consumers at the beginning of collection communications. It also prohibited 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.
But the bureau, earlier this month, determined that the COVID-19 pandemic had caused “widespread societal disruption, with effects extending into 2021.” In light of that disruption, the agency said, providing additional time for review – and implementation – of the new 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 noted, in proposing the delay, said 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 due May 19.
(Jan. 22, 2021) A new rule codifying that supervisory guidance does not have the force of law, and that enforcement actions are not based on the guidance, was finalized Tuesday by the CFPB, NCUA and two of the three federal banking agencies.
The rule codifies a 2018 interagency statement on the role of supervisory guidance that was intended to clarify the differences between regulations and guidance. The final rule also states that the statement is binding on the agency that adopted it. (The Federal Reserve, as of Thursday, had not yet finalized the rule, but is expected to.)
In their individual final rules, the agencies, noted that supervisory guidance does not create binding, enforceable legal obligations; that each agency does not issue supervisory criticisms for “violations” of or “non-compliance” with supervisory guidance; and describes the appropriate use of supervisory guidance.
In other action this week, the bureau released a small entity compliance guide that summarizes the October 2020 debt collection rule regarding communications between collectors and debtors. (That rule Regulation F to implement most of the Fair Debt Collection Practices Act’s (FDCPA) most substantive provisions.) Those include provisions, the bureau said, that generally restate the FDCPA’s prohibitions and requirements. “Section 2 provides a summary that highlights the October 2020 Final Rule’s key interpretations and clarifications of the FDCPA,” the bureau stated.
The debt collection rule takes effect Nov. 30, 2021, the guide notes. It applies to attempts to communicate, communications, and other conduct by debt collectors occurring on or after that date, regardless of when the underlying debt was incurred.
LINK:
Debt Collection Rule Small Entity Compliance Guide
(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)