Part 2 of the CFPB Debt Collection Final Rule (Reg F) is here
Part 2 is here and, finally, we now have the complete Debt Collections Final Rule – Regulation F – from the Consumer Financial Protection Bureau (CFPB or Bureau). This part of the rule concerns validation notices, prescribed debts and the passive collection of debts. How was the final rule established on these matters? Keep reading to find out.
Notice of validation – Essentially what was proposed
If you were hoping for a wild change to the model validation notice presented in the proposed rule, you will be disappointed. The Bureau’s final rule on the validation notice is largely the same as the proposal – tear and all. If a debt collector wants to take advantage of the safe harbor, they largely need to ensure that their collection notice mirrors the notice template. If a state requires its disclosures to be on the first page of a collection letter, that is permitted. Otherwise, state disclosures are permitted on the back of the letter.
Prescribed debts — Major deviation from proposal
It is in this section that the Bureau departed the most from the proposal. Specifically, the Bureau has decided not to require a prescribed debt disclosure, which means that business is business as usual in this regard. The Bureau, however, went ahead with its ban on pursuing statute-barred debt.
Debt parking/delayed credit reports
The Bureau has finalized its proposal against parking debt, or the credit process reporting debt before contacting the consumer. The final rule requires debt collectors to send a debt communication to the consumer. If this communication is in writing, the debt collector should wait a reasonable time – to ensure that there are no deliverability issues – before being allowed to credit the account. The Bureau has defined “reasonable time” as 14 days for traditional mail. Unfortunately, it appears that the Bureau has also applied a “reasonable time” of 14 days to electronic communications, which is odd considering that notices that a system cannot deliver an electronic message are almost instantaneous. On the bright side, the Bureau is open to receiving data as the rule is implemented and potentially revising some of these elements.
Effective date — aligned for parts 1 and 2
The complete final rule will have an effective date of November 30, 2021.
You can download part 2 here: Debt Collection Practices (Regulation F) Part II