What Do the Comments to the NPR Tell Us About the Final Rule

November 21, 2019

What we know

The deadline to submit comments for the Consumer Financial Protection Bureau’s (CFPB or Bureau) Notice of Proposed Rulemaking (NPR) passed on September 18, 2019. Over 12,000 comments were filed. Putting aside the voluminous and duplicative canned comments from individuals, a healthy amount of well thought-out and relevant comments were filed by various stakeholders.

All comments can be viewed and downloaded from www.regulations.gov using the docket number CFPB-2019-0022.

If you do not have the time to read through the comments, below are some high-level themes found among major stakeholder groups that may indicate not only what the final rules may look like, but where the challenges to the Rule may lie.

2019 Joann Needleman Headshot

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.

Consumer Advocates’ Comments   

Generally, consumer advocates overwhelming opposed the NPR. They take great issue with the frequency limits (call caps) of seven call attempts within a seven day period per account. They believe this is an open invitation to harass consumers, especially those consumers who have multiple debts. Consumer advocates are not supportive of the Limited Content Message (LCM) because there are no limitations on how many times a debt collector may text a consumer. 

Advocates also feel that no debt collector should be able to text or email a consumer unless there is direct consent from the consumer. In other words, a consumer must opt-in, rather than opt-out as the Rule currently states, before a debt collector can engage in any communication.

There is also overall disapproval about the use of electronic communication due to privacy issues, risk of third party disclosure and data security. It is no surprise that advocates do not favor the use of a hyperlink when sending a required disclosure, yet they do favor the use of E-SIGN and do not believe that the CFPB has any authority to exempt debt collectors from E-SIGN requirements.

Creditor/First Party Comments

Trade associations that represent banks and first-party creditors had a lot to say about the NPR. Their consistent theme was the disagreement with the CFPB’s use of its UDAAP authority to determine compliance with the FDCPA, especially as it relates to call caps.

Creditors believe that the use of the Bureau’s UDAAP authority opens the door to FDCPA oversight of first parties in the debt collection space. This, they claim, contradicts the text of the FDCPA which completely exempts first parties from its purview.

Industry Comments

Many in the industry believe the CFPB’s proposals could have been a lot worse and generally support the proposals put forth by the CFPB. One area of consensus is the willingness of the Bureau to permit the use of electronic communication to contact consumers, such as through email and text. Although the industry supports the idea of delivering required disclosures electronically, there is a concern that the CFPB’s approach is convoluted and onerous.

Furthermore, many believe that E-SIGN does not apply to validation notices if they are the first communication to the consumer. Surprisingly, there has been a lot of opposition to the Model Form B-3 despite the CFPB’s willingness to permit a safe harbor if the form is used and complies with other aspects of the proposal.

Many industry stakeholders believe that while the form is helpful, failure to use the form should not otherwise denote noncompliance with the FDCPA. Others have expressed concern that certain new requirements, like the inclusion of a validation end date, will create operational challenges.

Finally, the industry is also opposed to the call caps, but the individual reasons differ. Some feel that the statute itself and the courts are equipped to make a determination as to whether the contacts were harassing. Others feel that the CFPB has no statutory authority to implement any call limits and the Bureau’s data to support the call caps is woefully thin.

What could be in the Final Rule?

Comments from both sides suggest call caps, use of electronic communication, notice requirements, limited content message, and validation notices.

The fact that both industry and advocates do not support call caps, albeit for different reasons, suggest that call caps will be part of the final rule. Whether the number will remain at seven attempts within a seven day period remains to be seen.

Joann Needleman, Clark Hill Law

Based on the comments by both sides, it would not be surprising that certain industry stakeholders and advocates challenge the CFPB’s call cap proposal along with creditors and first parties who believe the rule will improperly cover them.

It is also believed that the proposal to permit the use of electronic communication will also make the final rule. It would be unfathomable for the CFPB to not use this opportunity and new-founded authority to promulgate rules to not consider the channels of communication that consumers now prefer. The problem the Bureau will have, however, is reconciling the use of new methods of communication with an outdated statute.

Many of the Bureau’s proposals, as it relates to the use of electronic communication, mandate a heightened notice requirement to ensure the communication was received. While ensuring that consumers receive important information about their debts is vital to the recovery and resolution process, unfortunately, the FDCPA in certain situations makes no such requirement.

Expect the LCM to make the final cut, but it remains to be seen whether the CFPB will permit the use of email.

Finally, some form of validation notice will make the final rule. There has been too much litigation and uncertainty about the best way to communicate with a consumer about their debt and to provide them with appropriate dispute information.

It will take some time for the industry to work through the implementation of the validation notice and to the extent there are challenges, don’t be surprised if the CFPB looks to make necessary tweaks. 

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