The Fair Debt Collection Practices Act (FDCPA) is a proscriptive statute that expressly states what a debt collector cannot do when attempting to or otherwise communicating with a consumer about a debt.
The Consumer Financial Protection Bureau’s (CFPB or Bureau) Notice of Proposed Rule (NPR) for debt collection provides, in certain instances, some specific safe harbors.
For the first time since the statute was enacted in 1977, the debt collection industry will potentially have clear guidance around specific conduct that if executed properly will not violate the FDCPA. This is significant and will provide welcome relief not only for industry participants but for consumers as well.
Samples of safe harbors that focus on consumer communication are listed below. These safe harbors should be reviewed carefully. Some may be disguised as safe harbors but in actuality, they are potential defenses in the event a claim is asserted against the debt collector for a violation of the FDCPA.
The NPR specifically states in § 1006.2(d) that a debt collector does not engage in an FDCPA communication if the debt collector uses a specific limited-content message.
This is a true safe harbor. It would be unwise for debt collectors to stray from this proposed language or the suggested options provided.
Beware: This only applies to phone and text messages.
Debt collectors are well aware that they cannot communicate with consumers at an unusual time or location. The proposed comment to the above section suggests that it would provide a “safe harbor…for conflicting or ambiguous information regarding a consumer’s location” (such as different telephone numbers and area codes), and “if a debt collector is unable to determine a consumer’s location, then, in the absence of knowledge of circumstances to the contrary, the debt collector would comply if the debt collector communicated or attempted to communicate with the consumer at a time that would be convenient in all of the locations at which the debt collector’s information indicated the consumer might be located.”
Therefore, in situations where it is unclear what is the best contact information for a consumer if the debt collector takes specific steps to ensure that it otherwise complied with the requirements of the FDCPA, (by contacting the debtor at all convenient times and locations), the debt collector will not violate the statute.
While not a clear safe harbor, it is a potential defense that would have to be proven by the debt collector.
The FDCPA is in part a privacy statute and thus disclosing information about the debt to third parties is strictly forbidden. However, in light of the CFPB’s proposal to provide a limited-content message (which would not be deemed a communication under the FDCPA), a debt collector does not violate § 1006.6(d)(1) if the debt collector leaves a limited-content message for a consumer orally with a third party who answers the consumer’s home or mobile telephone. This is not a violation because it is an attempt to communicate with a consumer.
Note: However, the debt collector may not convey any other information other than the limited-content message to the third party. This is a true safe harbor.
As the industry knows, communicating using email and or text can be risky because of the likelihood that an email or text can be inadvertently sent to someone other than the consumer. The NPR proposes a safe harbor in these circumstances in which a debt collector would not violate the FDCPA if they communicated with the consumer using an email or text that the consumer recently used to contact the debt collector.
Beware: There is no definition of “recently used,” so pay special attention to the length of time between communications with the consumer, especially if you are communicating with emails and texts.
This may or may not be a safe harbor depending on how the CFPB ultimately defines “recently used.”
§ 1006.14 (b)(2)
The NPR is clear: You can only contact a consumer about a particular debt no more than seven times within a seven day period, or one time within a seven day period after having a telephone conversation with the consumer. Whether or not you support the idea of call caps, the line for the safe harbor is very clear.
When a debt collector uses email or text in compliance with the proposals set forth in § 1006.6(d)(3) (reasonable procedures), a debt collector is not using unfair or unconscionable means to collect a debt if the debt collector’s name or other information indicating the communication relates to the collection of the debt appears in the message.
Therefore, as long as the debt collector has reasonable procedures to ensure that correct emails and texts are sent to the correct consumer, any inclusion of debt-related information in the email is not an unfair or unconscionable act.
This is an important proposal for the industry as it encourages the use of alternative communication channels, such as text and email. However, it may not be a safe harbor if the debt collector will be required to prove they had, in fact, reasonable procedures to ensure accurate email and text information.
One of the most important proposals of the NPR is the model validation notice. The proposal states that if a debt collector uses the Model Form B-3, then the debt collector complies with all the requirements of the validation notice.
This seems like a simple proposition, but in essence, this is a “one-size-fits-all” approach which in some ways does not take into consideration different debt types, different ways that creditors maintain the information, and different state disclosure requirements.
This safe harbor leaves us asking…
This proposal will need to be followed carefully and debt collectors will need to use caution if they have to deviate from the formatting and information as proposed in this Model Form.
About the Author: Attorney and industry advocate Joann Needleman, guest compliance thought leader, continues to bring her experience and insight as a navigator and strategist to assist in the regulatory changes the debt collection industry is facing today.
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