We are awaiting the final adoption and implementation by the CFPB of its new rule on debt collection. Well the wait is over. To see 12 CFR Part 1006 – Fair Debt Collection Practices Act (Regulation F) | Consumer Financial Protection Bureau (consumerfinance.gov).
The adopted rule, known as Regulation F, is actually in two parts: first, the rule focuses on debt collection communications and clarifies the Fair Debt Collection Practices Act (FDCPA) prohibitions on harassment and abuse, false or misleading representations and the practices of debt collectors. This part of the rule closely follows the FDCPA language itself.
The second part of the Rule clarifies certain information that third party debt collectors must provide to consumers at the start of collection communications.
So what does all of this mean for original creditors, and not for third party debt collectors? Several things.
- Remember that the original creditors recover their debt are indeed treated as third party debt collectors if they use a fictitious name during collection. This factor has long been part of the FDCPA. But, Regulation F now adds another such example: that is, if the original collection agents attempt to assert a security interest through interstate commerce (mail, telephone, etc.), they are subject to the law and to settlement if the obligee (i) has no present right to possession of the relevant collateral, (ii) does not presently intend to take possession of the collateral, or (iii) the collateral is exempt from dispossession by the law.
- In addition to my long-standing advice to original creditors to follow the FDCPA Section 806 (harassment or abuse), 807 (false or misleading representations) and 808 (unfair practices) prohibitions, original creditors may also now want (i) limit recovery of appeals to the time allowed in Section 1006.14 (b) (2) of Regulation F, (ii) comply with the requirement that collection agents grant debtors “waiver” rights with respect to e-mails and text messages in section 1006.6 (e), and (iii) comply with the prohibition on collecting debts prescribed in section 1006.26.
- It is certain that several provisions of the Rule can seriously disrupt the collection process of an original creditor; and, for this reason, the original obligee may choose not to follow the Rule in all cases. For example, the notice of validation of debts and providing the required information may constitute too much of a bridge for original creditors.
In my opinion, the key to success continues to be to conduct the collection activity in such a way that original creditors never have to argue with a consumer lawyer as to why the creditor is not a “collector”. of debts ”under the FDCPA and this new regulation. F.