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Debt collection clarification includes limits and expansions

| Nov 16, 2020 | Collections |

The Consumer Financial Protection Bureau (CFPB) recently released a final debt collection rule that expands the ways in which debt collectors can contact borrowers.

In the 653-page rule, the CFPB dropped its “meaningful involvement” requirement, under which an attorney who sent a letter on the law firm’s letterhead had to be involved in the collection process.

The National Creditors Bar Association – an organization for law firms that defend creditors’ rights – issued a statement thanking the CFPB for its “careful attention to our members’ concerns on regulating attorney conduct and the importance of the independence of the practice of law.”

Seven-call limit

The CFPB’s final rule limits collectors to seven phone calls per week to borrowers, but it also expands other means of establishing contact, allowing collectors to communicate by text messages, email and voice mail.

The rule allows collectors to use modern communications technologies developed since the passage of the Fair Debt Collection Practices Act more than 40 years ago.

Including an opt-out

When making use of the expanded allowed technologies, debt collectors must each time include “a reasonable and simple method” for borrowers to opt out of the communications.

It should be noted that though the CFPB established a seven-call-per-week cap on collector calls to borrowers, collectors who exceed the cap are not in line for automatic punishment. The agency said other factors must be considered, including whether the collector intended “to annoy, abuse, or harass the person at the called number.”

The CFPB plans to issue a second part of the final rule next month. It’ll focus on whether collectors will be required to disclose when debts have exceeded the statute of limitations that bars lawsuits.