CFPB pushes forward with November effective date for debt collection rules
The Consumer Financial Protection Bureau (CFPB) decided debt collection firms are ready to abide by new rules.
Last week, the bureau announced that two final rules issued under the Fair Debt Collection Practices Act (FDCPA) will take effect as planned on Nov. 30. The CFPB issued a proposal in April that — if finalized — would have extended the effective dates to Jan. 29.
The CFPB said in a news release that the regulator has now determined that such an extension is “unnecessary.”
Following this announcement, the CFPB added that it will publish a formal notice in the Federal Register withdrawing the April proposal.
The CFPB recapped that it proposed extending the final rules’ effective date by 60 days to allow stakeholders affected by the COVID-19 pandemic additional time to review and implement the rules.
“The public comments generally did not support an extension,” officials said. “Most industry commenters stated that they would be prepared to comply with the final rules by November 30, 2021.
“Although consumer advocate commenters generally supported extending the effective date, they did not focus on whether additional time is needed to implement the rules,” officials continued. “The alternative basis for an extension that many commenters urged, a reconsideration of the rules, was beyond the scope of the NPRM and could raise concerns under the Administrative Procedure Act.
“Nothing in this decision precludes the CFPB from reconsidering the debt collection rules at a later date,” officials went on to say.
The bureau recapped the two final rules under the FDCPA that now will take effect in November.
The first rule was issued in October and focuses on debt collection communications and clarifies the FDCPA’s prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.
The second rule was issued in December and clarifies disclosures debt collectors must provide to consumers at the beginning of collection communications. The second rule also prohibits debt collectors from suing or threatening to sue consumers on time-barred debt.
Additionally, the CFPB noted that the second rule requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency.
The CFPB said it is committed to informing consumers about their rights and protections under the rules and assisting debt collectors in implementing them. Consumer education materials on debt collection and resources to help debt collectors understand, implement, and comply with the rules are available through consumerfinance.gov.
The CFPB went on to note that it will consider additional guidance for debt collectors, including those that service mortgage loans, as necessary.
“The CFPB recognizes that mortgage servicers are expected to receive a potentially historically high number of loss mitigation inquiries in the fall as large numbers of borrowers exit forbearance and that, as a result, mortgage servicers, in particular, may face capacity constraints,” officials said.
“The CFPB will continue to work with all market participants to ensure a smooth and successful implementation,” officials added.