On November 30, 2021, two new rules established by the Consumer Financial Protection Bureau (CFPB) go into effect. The rules focus on debt collection communications, consumer protections, and debt collection practices. Consumers, creditors, and collection agents benefit from reviewing and taking heed of the new laws surrounding debt collection. Here’s a breakdown of what comes this fall.
New rules limit debt collection communications, including phone calls, texts, and emails. Consumers have the right to limit ways bill collectors contact them. If a consumer asks a collector to stop using a specific method of communication, including phone calls, emails, or texts, the collector is required to comply. Debt collectors cannot make excessive calls to the debtor. Collectors will be allowed to call a particular person regarding a debt no more than seven times in a week.
If the debt collector uses electronic communications, such as text or emails, they must provide a reasonable and simple method for the consumer to unsubscribe. The customer needs to be given a specific email address or phone number to opt out. In addition, the debtor may use the same medium of electronic communications (email or text) to place a cease communication request or notify the debt collector that they refuse to pay the debt. Debt collectors cannot harass or abuse a consumer through text or email.
Collectors also have limits on what they can share with third parties about a consumer’s debt. In general, a collector can contact other people to locate the debtor but usually can’t contact them more than once, and cannot disclose that the individual owes a debt.
At the outset of collection communications, debt collectors must provide the consumer with detailed disclosures about the debt owed, the consumer’s rights in debt collection, and information on how to respond to the collection request. Some of the disclosures that debt collectors must make include:
- details about the debt (the balance of the debt as of a specific date, a breakdown of charges, the name of the creditor owed, and the original creditor);
- the consumer’s right to dispute the debt and to request information about the original creditor;
- a statement that indicates the communication is from a collector and is about a debt.
Collectors must take specific steps to disclose the debt to the consumer over the phone, by mail, or through electronic message (email or text) before reporting the debt to a consumer reporting agency. If the collector is mailing a letter or sending an electronic message to the consumer, they must wait a reasonable period of time (such as 14 days) to receive a notice of non-deliverability, before reporting the debt to a consumer reporting agency.
The rule prohibits debt collectors from threatening to sue or bring legal action against a consumer to collect a time-barred debt (debt that is beyond the statute of limitations).
Fair Debt Collection Rules
The Fair Debt Collection Practices Act (FDCPA) prohibits a debt collector from using unfair practices to collect a debt. It is illegal for any debt collector to misrepresent who they are, such as falsely claiming to be an attorney or government agency. They also are prohibited from using threats, harassment, or deception when attempting to collect a debt. Collectors are not allowed to making false, deceptive, or misleading representations or act in an unfair or unconscionable manner.
Debt collectors may not:
- Harass the consumer, threaten harm, or use obscene/profane language;
- Tell the debtor they will be arrested if payment is not made;
- Try to collect any interest, fee, or other charge on top of the amount owed unless the contract that created the debt–or state law–allows the charge;
- Deposit a post-dated check early;
- Threaten legal action will be taken if they do not intend to take that action or if it is illegal;
- Take or threaten to take property unless it can be done legally;
- Use any language or symbol on an envelope for correspondence with the debtor (other than the debtor’s address) that indicates it is a debt collection; or
- Contact the debtor by postcard.
Debt collectors are prohibited from contacting individuals at inconvenient times or places (e.g., before 8:00 a.m. or after 9:00 p.m.), unless the consumer agree to it. They may not contact the consumer at work if they are told collection calls are not allowed.
In addition to federal regulations, there are also state laws that generally prohibit actions that may be considered unfair, deceptive, and abusive. Debt collectors can visit the CFPB’s Debt Collection Rule Guide for more information on debt collection compliance.
Violations can be reported to the CFPB, the Federal Trade Commission, or the state attorney general. Business Consumer Alliance also processes complaints alleging unfair debt collection practices. Debt collectors may be sued for breaking the law.
Check out “How to Deal with a Collection Agency” for additional resources. Don’t forget to share this article and follow BCA’s Facebook page for scam warnings, alerts, and tips.