In May 2019, the Consumer Financial Protection Bureau (CFPB) proposed new rules to amend and expand Regulation F, to further regulate the debt collection industry and those connected to it. It was meant to supplement the federal Fair Debt Collection Practices Act (FDCPA).
These rules are now final and scheduled to go into effect on November 30, 2021.
The changes to Regulation F address communications in connection with debt collection, prohibitions on abusive or false representations, and unfair debt collection practices.
Below is a summary of the key provisions of Regulation F, along with some guideposts on their potential impact.
Limited Content Messages
Regulation F creates a new type of communication under the FDCPA: the limited content message. This new type of communication would permit a debt collector to leave a voicemail message for a consumer without communicating, as defined by the FDCPA, with a person other than the consumer.
For years, debt collectors have faced a Catch-22 when trying to communicate with consumers via voicemail—a collector could elect to leave a message and risk violating the FDCPA if that message was heard by a third party, or a collector could simply not leave a message and fail to communicate with the consumer whatsoever.
To qualify as a limited content message, a voicemail message must include:
- the consumer’s name;
- a request that the consumer reply to the message;
- the name(s) of one or more natural persons whom the consumer can contact to reply to the debt collector;
- a telephone number that the consumer can use to contact the debt collector; and
- if applicable, the opt-out disclosure required by § 1006.6(e) of the FDCPA.
This limited content message allows debt collectors to leave voicemail messages when they are unable to speak to the consumer directly, without running afoul of the FDCPA.
Regulation F also attempts to modernize the somewhat-outdated FDCPA by recognizing that debt collectors frequently utilize electronic communications when contacting a consumer. Gone are the days when debt collectors only communicated with consumers by posted mail.
Indeed, Regulation F explicitly acknowledges that debt collectors may contact a consumer via text message, and even creates a bona fide error exception concerning text message and email communications.
But if your debt collection agency does opt to utilize electronic communications, take care to ensure that the communication includes a clear and conspicuous unsubscribe options. Consumers who do elect to opt-out of electronic communications may not be assessed a fee or required to provide any information other than the email address or telephone number that is subject to the opt-out.
The amendments also take aim at updating the FDCPA’s requirements for Validation Notices, which inform consumers of certain rights under the FDCPA and must be sent within five days of a debt collector’s first communication with a consumer.
Regulation F now requires Validation Notices to include:
(1) the debt collector’s name and mailing address;
(2) the consumer’s name and mailing address;
(3) the account number, or a truncated version of that number;
(4) the name of the creditor to whom the debt currently is owed;
(5) the itemization date, and amount of the debt as of that date;
(6) an itemization of the current amount of the debt in a tabular format reflecting interest, fees, payments, and credits since the itemization date; and
(7) the current amount of the debt.
Validation Notices must also include the FDCPA’s “Mini-Miranda” warning (which informs a consumer that a communication is tied to an attempt to collect a debt and any information obtained will be used for that purpose) and a debt dispute section that allows consumers to indicate why they are disputing a debt.
Debt collectors should take particular note of one of the most important changes: new call restrictions.
- Regulation F deems a debt collector to have violated the FDCPA if it places a telephone call to a particular person in connection with the collection of a particular debt more than seven times within seven consecutive days, or if it calls within seven days after having a telephone conversation with a consumer or reaching the consumer’s voicemail (even if no voicemail message was left).
- Debt collectors may only place calls to a consumer between the hours 8:00 a.m. and 9:00 p.m. in the consumer’s time zone.
- And debt collectors should immediately cease from contacting a consumer’s place of employment unless a consumer gives the collector permission or a court permits the communication.
Expansion of Unfair and Unconscionable Conduct
Finally, the amendments to Regulation F greatly expand upon the FDCPA’s prohibition of unfair and unconscionable conduct. While some of the new prohibited acts are seemingly straightforward—such as the prohibition against the use of coercive advertisements, the use of obscene or profane language, and the use or threatened use of violence against a consumer—others are not so clear.
For example, debt collectors are prohibited using language or symbols, other than the debt collector’s address, on any envelope when communicating with a consumer by mail unless the debt collector’s name does not indicate that the debt collector is in the debt collection business. Debt collectors should be especially vigilant as to what information may be viewable through a glassine envelope.
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Considering the sweeping changes to Regulation F that take effect on November 30, debt collectors should be reassessing collection strategies and be preparing to face an abundance of fresh lawsuits filed in both state and federal court. We expect legal activity to be brisk on this front well into 2022 and beyond.
Dykema’s work with debt collectors and the financial services industry informs our ability to maneuver complex FDCPA and creditor rights litigation.
A more detailed discussion of Regulation F will be available in the chapter dedicated to the FDCPA in the 2022 Edition of the PLI Consumer Financial Services Answer Book, set to be released for publication before the end of this year.
For more information, reach out to the authors.