Part 2 is here and, at long last, we now have the complete final debt collection rule — Regulation F — from the Consumer Financial Protection Bureau (CFPB or Bureau). This part of the rule relates to validation notices, time-barred debt, and passive debt collection. How did the final rule come down on these topics? Continue reading to find out.
Validation Notice — Basically What Was Proposed
If you were hoping for some wild modification of the model validation notice presented in the proposed rule, you'll be disappointed. The Bureau's final rule on the validation notice is largely the same as the proposal — tear-off and all. If a debt collector wants to take advantage of the safe harbor, they have to largely have their collection notice mirror the model notice. If a state requires its disclosures to be on the front page of a collection letter, then that is allowed. Otherwise, state disclosures are allowed on the reverse side of the letter.
Time-Barred Debts — Large Departure from Proposal
This section is where the Bureau took the biggest departure from the proposal. Specifically, the Bureau decided not to mandate a time-barred debt disclosure, which means that it's business as usual in this respect. The Bureau, however, did go forward with its prohibition of suing on a time-barred debt.
Debt Parking/Delayed Credit Reporting
The Bureau finalized its proposal against debt parking, or the process of credit reporting the debt prior to communicating with the consumer. The final rule requires that debt collectors send a communication about the debt to the consumer. If that communication is in writing, the debt collector must wait a reasonable time — to ensure there are no deliverability issues — before they are allowed to credit report the account. The Bureau defined "reasonable time" as 14 days when it comes to traditional mail. Unfortunately, it seems that the Bureau also applied a 14-day "reasonable time" to electronic communications, which is odd considering that notifications that a system could not deliver an electronic message are almost instantaneous. On the bright side, the Bureau is open to receiving data as the rule gets implemented and potentially revisiting some of these items.
Effective Date — Aligned for Parts 1 and 2
The full final rule will have one effective date: November 30, 2021.
You can download Part 2 here: Debt Collection Practices (Regulation F) Part II