With the Consumer Financial Protection Bureau's (CFPB or Bureau) release of its final debt collection rule on Friday, everyone is wondering the same thing: how does the final rule compare to the proposed draft included in the Notice of Proposed Rulemaking (NPRM)? We at insideARM have two resources for you:

  1. We created this redline document that compares the language of the final rule to the rule proposed in the NPRM.
  2. We are hosting a webinar today at 1PM Eastern focusing on what changed, what didn't, and what to do about it. You can register here

The redline document is a very interesting read. You can see exactly what the CFPB changed (including specific word choices), kept the same, reserved, or deleted altogether. Check out some of the highlights below.

Editor's Note: We are, admittedly, still slogging through the 653-page document, so the information below is based solely on the redline of the actual rule language, we'll provide updates if we later find that the commentary clarifies some of these items.

Email Procedures—Simplified, or Not?

Remember that really long section of the NPRM that outlined reasonable procedures for emailing disclosures, as well as alternative procedures to do the same? This NPRM section talked a lot about the E-SIGN act, types of things that need to be included in the subject line of an email, and so forth. 

This entire section was deleted. Instead, the final rule simply states that E-SIGN must be followed.

The question then remains: will this be something that the Bureau will address in more detail in the December rule, or is the Bureau bowing out of trying to provide complex procedures and, instead, letting debt collectors figure it out themselves—not providing more clarity as we had all hoped for?


The Know/Should Know Standard for Employer Email

While the Bureau kept the know/should know standard in certain sections of the final rule, it very clearly relaxed the standard as it applies to whether or not a debt collector knows they are emailing a work address for the consumer. The final rule maintains its restrictions against contacting a consumer at work if it's inconvenient, and it provides certain restrictions about which domains a debt collector can email (e.g., they can use emails with publicly-available domains, such as gmail.com, unless they know that it is provided by an employer), but the Bureau is drawing a line in the sand when it comes to knowing whether an email is work-related.

Now, instead of knows/should know, the standard is simply "knows." The Bureau adds in its commentary that it does not expect debt collectors to do a line-by-line, account-by-account manual review of email addresses to check if they are employer-provided.

Limited-Content Messages: Only for Voicemails, Not for Texts/Emails

Who would have thought that a single word could completely change the way a section of a rule reads and applies? For the limited-content message (LCM) section of the rule, that word is "voicemail." In the NPRM, the LCM section referenced only "messages," whereas the final rule specifies that an LCM is a "voicemail message." That means that LCMs for text messages and emails are dead.

However, the final rule allows the debt collector to leave its company name in the LCM so long as the name does not indicate that the company is in the debt collection business.

Some Fun and Peculiar Word Change Choices

Sometimes, word choices are the most important thing—especially when it comes to laws and regulations, which are scrutinized with fine-tooth combs by attorneys on all sides of the aisle. With the redline document, it's easy to see specific areas where the Bureau re-thought or clarified provisions by their change in word choice. Some examples include:

  • Verification of Debt: When it comes to a debt collector responding to verification requests, the rule now uses the term "sends verification" rather than "provides verification."
  • Inconvenient Time/Place: Sometimes, it's hard to tell a consumers' location based on information in the account placement. In the NPRM, the Bureau states what the debt collection should do if it is "unable to determine" the consumer's location. The final rule changes this terminology—the rule now states what the debt collector should do "if the collector has conflicting or ambiguous information" about the location of the consumer. 
  • Sales/Transfers/Placements: The Bureau clarified the language it used when dealing with transferring or placing accounts. Now, instead of just "transfer" or "placement," we have "transfer for consideration" and "placement for collection."

Very Clear Signs that the Final Rule is a Living Document

The Bureau included several little nuggets that suggest they are open to reviewing and providing further clarity and safe harbors as they become necessary. For example, in the section regarding overshadowing, the final rule adds that Bureau "may provide by regulation a safe harbor for debt collectors when they use certain Bureau-approved disclosures." Does this mean that the industry might get some safe harbor settlement offer language at some point in the future? We sure hope so, seeing as settlement offers tend to be a target for litigation by "frequent filer" plaintiffs' counsel.

There's the whole advisory opinion section too, but the full scope of that will be addressed in a future article.

Validation Notice—Eerily Missing (But We Know Its on the Way)

As the CFPB notes early in the final rule commentary, it intends to release an additional rule in December 2020 that will deal specifically with disclosures. One such reserved disclosure is the validation notice, including the model form that we saw in the NPRM. While we know that rules related to this are coming in the future, it is very eery to see the entire section on the validation notice redlined out. 

Effective Dates—Will They Be Staggered?

One other interesting thing to note is the concept of effective dates. The final rule released on Friday states that it will be effective one year from publication in the Federal Register (this has not yet happened, likely to come this or next week). However, it's important to note that this rule does not include the sections on disclosures. Will the December rule have a similar one-year-from-publication effective date? If so, will the implementation periods be staggered? It's fine either way, but it's something to be aware of.

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