On May 7, 2019, the Consumer Financial Protection Bureau (CFPB) issued a Notice of Proposed Rulemaking (the Proposed Rulemaking) to implement portions of the Fair Debt Collection Practices Act (FDCPA). The CFPB’s proposals will certainly modernize debt collection practices, but they are likely to bring added challenges for businesses and consumers. Among other things, the CFPB’s Proposed Rulemaking would limit the number of calls debt collectors may place per week, define how debt collectors can use voicemail, email, and text messages, and potentially limit liability for debt collectors who attempt to collect so-called “stale” debts. While the proposed rules are not yet binding law, industry players who may be subject to regulation under the FDCPA should be aware of the big changes in debt collection law.
The FDCPA applies to debt collectors, who are defined broadly as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” Congress passed the FDCPA in 1977, but it was not until passage of the Dodd Frank Act in 2010 that Congress delegated rulemaking authority to a federal agency, the CFPB. It has taken almost another nine years for the CFPB to propose rules implementing the FDCPA.
According to the CFPB, the highly anticipated Proposed Rulemaking accomplishes four big goals:
Industry groups have cheered some parts of the Proposed Rulemaking as advancing the FDCPA, a 1970s-era statute, into the digital age of the 21stcentury. Indeed, allowing electronic communications like text messages, social media, and instant messaging may benefit consumers by reducing the number of calls that debt collectors make and providing more clear guidance. Consumer groups, on the other hand, have raised concerns about this portion of the Proposed Rulemaking. In particular, consumer groups have raised privacy concerns related to use of social media sites like Facebook and LinkedIn to help collect debts. The industry has also been critical of the limit on the number of calls and the disclosure requirements. Further, some consumer advocates have decried what they see as loopholes in the Proposed Rulemaking that would allow debt collectors to potentially escape liability for suing a consumer on a stale debt.
Given the tumult in present-day Washington, D.C., nothing about the Proposed Rulemaking is settled. And, given the loud voices from industry and consumer groups, it is likely that courts will decide whether more controversial proposals in the Proposed Rulemaking make it into law. Until then, however, businesses that collect consumer debts should consider whether to submit comments on the Proposed Rulemaking and closely monitor the administrative status to ensure they are ready to adapt to the changes.