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The CFPB has been working on a debt collection rule for more years than I can remember.  There was a serious effort to adopt a rule just before the last change of administrations in 2016.  Loud and outraged objections to the proposal caused the CFPB to stop in its tracks.

The Fair Debt Collection Practices Act (FDCPA) was passed in 1977. This Act, which regulates third-party debt collectors, has become part of the fabric of consumer protection; and, over the last 40+ years, third-party debt collectors have adopted practices consistent with the law.   This is one of the few federal consumer credit protection laws that has not had an accompanying regulation to help delineate the obligations imposed by the law. And, in my judgment, the FDCPA didn’t need a regulation as its language is exacting and easy to understand.

Nevertheless, consumer advocates have long sought an end-run around the limitation of the law to third-party debt collection.  They have been trying for years to expand the reach of the FDCPA to original creditors.

Now, the CFPB has issued anew its “final” debt collection rule.  It clarifies some of the sections of the FDCPA with respect to unfair, deceptive, and abusive acts and practices (UDAAPs).  It outlines the process for obtaining consent to use the most current forms of contacting consumers—i.e., via email and text messaging.   The final rule adds more specificity as to what may constitute a violation of the FDCPA with respect to harassing conduct by providing a “safe harbor” of seven or fewer calls within a seven-day period.  The final rule also contains an opt-out method for a consumer to stop email and text collection communications from a third-party debt collector. Accordingly, there will be new rules that third-party debt collectors must learn in order to avoid violating the FDCPA.

So, why have I said that first-party debt collectors have caught a break?  Well, that is because of the “authority” that the CFPB referenced in adopting the rule.  The CFPB relied on the authority under the FDCPA itself, rather than relying on the authority of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The FDCPA is clearly applicable to third-party debt collectors rather than original, first-party debt collectors (with very limited exceptions).  Not so Dodd-Frank.  Had the CFPB relied on Dodd-Frank for its authority in adopting the final rule, then its discussion of UDAAP in collections, could more easily have application to first-party collectors as well as third-party debt collectors.  

This is one of those “technicalities” that can determine the difference between success and failure in defending one’s alleged liability for committing a UDAAP while collecting debt.

Practice Pointer: While adoption of this final rule will help preserve the distinction between third-party debt collectors and first-party debt collectors, it is still a good practice for first-party debt collectors to observe those parts of the FDCPA that spell out UDAAPs in collection.