Debt Collection Practices (Regulation F)

Federal RegisterNov 30, 2020

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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1006

[Docket No. CFPB-2019-0022]

RIN 3170-AA41

Debt Collection Practices (Regulation F)

AGENCY:

Bureau of Consumer Financial Protection.

ACTION:

Final rule; official interpretation.

SUMMARY:

The Bureau of Consumer Financial Protection (Bureau) is issuing this final rule to revise Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA) and currently contains the procedures for State application for exemption from the provisions of the FDCPA. The Bureau is finalizing Federal rules governing the activities of debt collectors, as that term is defined in the FDCPA. The Bureau's final rule addresses, among other things, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection.

DATES:

This rule is effective November 30, 2021.

FOR FURTHER INFORMATION CONTACT:

Dania Ayoubi, Joseph Baressi, Seth Caffrey, Brandy Hood, David Jacobs, Courtney Jean, Jaclyn Maier, Adam Mayle, Kristin McPartland, Michael Scherzer, or Michael Silver, Senior Counsels, Office of Regulations, at 202-435-7700. If you require this document in an alternative electronic format, please contact

CFPB_Accessibility@cfpb.gov.

SUPPLEMENTARY INFORMATION:

I. Summary of the Final Rule

The Bureau is finalizing amendments to Regulation F, 12 CFR part 1006, which implements the FDCPA.

The amendments prescribe Federal rules governing the activities of debt collectors, as that term is defined in the FDCPA (debt collectors or FDCPA debt collectors). The final rule focuses on debt collection communications and related practices by debt collectors.

15 U.S.C. 1692

et seq.

In 1977, Congress passed the FDCPA to eliminate abusive debt collection practices by debt collectors, to ensure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

The statute was a response to “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.”

According to Congress, these practices “contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.”

15 U.S.C. 1692(e).

15 U.S.C. 1692(a).

Id.

The FDCPA established specific consumer protections, enabling consumers to establish controls on when and how debt collectors contact them, establishing privacy protections surrounding the collection of debts, and protecting consumers from certain collection practices. The FDCPA also established broad consumer protections, prohibiting harassment or abuse, false or misleading representations, and unfair practices. As the first Federal agency with authority under the FDCPA to prescribe substantive rules with respect to the collection of debts by debt collectors, the Bureau is adopting this final rule to implement and interpret those consumer protections, including by clarifying how they apply to newer communication technologies. The Bureau intends to issue a disclosure-focused final rule in December 2020 (disclosure-focused final rule) to implement and interpret the FDCPA's requirements regarding consumer disclosures and certain related consumer protections.

A. Coverage and Organization of the Final Rule

The final rule is based primarily on the Bureau's authority to issue rules to implement the FDCPA and, consequently, covers debt collectors, as that term is defined in the FDCPA.

The final rule restates nearly all of the FDCPA's substantive provisions largely in the order that they appear in the statute, sometimes without further interpretation. Restating the statutory text in this way should facilitate understanding and compliance by making it possible for stakeholders to, in general, consult only the regulation to view relevant definitions and substantive provisions. Except where specifically stated, by restating the statutory text, the Bureau does not intend to codify existing case law or judicial interpretations of the statute.

The record retention requirement in § 1006.100 is based on the Bureau's rulemaking authority under title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Public Law 111-203, 124 stat. 1376 (2010), but applies only to FDCPA debt collectors.

See

the section-by-section analysis of § 1006.100.

The final rule has four subparts. Subpart A contains generally applicable provisions, such as definitions that apply throughout the regulation. Subpart B contains rules for FDCPA debt collectors. Subpart C is reserved for any future debt collection rulemakings. Subpart D contains certain miscellaneous provisions.

B. Scope of the Final Rule

Communications Provisions

Debt collection efforts often begin with attempts by a debt collector to reach a consumer. Communicating with a debt collector may benefit a consumer by helping the consumer either to resolve a debt the consumer owes or to identify and inform the debt collector if the debt is one that the consumer does not owe. However, debt collection communications also may constitute unfair practices, may contain false or misleading representations, or may be harassing or abusive either because of their content (for example, when debt collectors employ profanity) or because of the manner in which they are made (for example, when debt collectors place telephone calls with the intent to harass or abuse).

To address such concerns about debt collection communications and to clarify the application of the FDCPA to newer communication technologies that have developed since the FDCPA's passage in 1977, the final rule, in general:

• Clarifies restrictions on the times and places at which a debt collector may communicate with a consumer, including by clarifying that a consumer need not use specific words to assert that a time or place is inconvenient for debt collection communications.

• Clarifies that a consumer may restrict the media through which a debt collector communicates by designating a particular medium, such as email, as one that cannot be used for debt collection communications.

• Clarifies that a debt collector is presumed to violate the FDCPA's prohibition on repeated or continuous telephone calls if the debt collector places a telephone call to a person more than seven times within a seven-day period or within seven days after engaging in a telephone conversation with the person. It also clarifies that a debt collector is presumed to comply with that prohibition if the debt collector places a telephone call not in excess of either of those telephone call frequencies. The final rule also provides non-exhaustive lists of factors that may

be used to rebut the presumption of compliance or of a violation.

• Clarifies that newer communication technologies, such as emails and text messages, may be used in debt collection, with certain limitations to protect consumer privacy and to protect consumers from harassment or abuse, false or misleading representations, or unfair practices. For example, the final rule requires that each of a debt collector's emails and text messages must include instructions for a reasonable and simple method by which a consumer can opt out of receiving further emails or text messages. The final rule also provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure if the debt collector follows the procedures identified in the rule when communicating with a consumer by email or text message.

These procedures appear in § 1006.6(d)(3) through (5). Throughout this Notice, the Bureau uses the phrase “may obtain a safe harbor from civil liability” to mean that a debt collector who follows the procedures in § 1006.6(d)(3) through (5) may have a bona fide error defense to civil liability under FDCPA section 813(c), 15 U.S.C. 1692k(c), for an unintentional third-party disclosure. The Bureau uses the term “may” because, to have a bona fide error defense to civil liability (

i.e.,

to obtain what this Notice refers to, for ease of reference, as a safe harbor from civil liability), a debt collector must affirmatively prove compliance with both § 1006.6(d)(3)(i) and (ii). In addition, for ease of reference, the Bureau sometimes refers to the procedures in § 1006.6(d)(3) through (5) as “safe harbor procedures.” The Bureau's use of the term “safe harbor” in the context of § 1006.6(d)(3) through (5) is different from its use of the term elsewhere in this Notice, where the term refers to actions that, when taken, permit debt collectors to comply with the FDCPA and Regulation F.

• Defines a new term related to debt collection communications: Limited-content message. This definition identifies what information a debt collector must and may include in a voicemail message for consumers (with the inclusion of no other information permitted) for the message to be deemed not to be a communication under the FDCPA. This definition permits a debt collector to leave a voicemail message for a consumer that is not a communication under the FDCPA or the final rule and therefore is not subject to certain requirements or restrictions.

Consumer Disclosure Provisions

The FDCPA requires that a debt collector provide certain disclosures to the consumer. The final rule clarifies the standards a debt collector must meet when sending the required disclosures in writing or electronically.

Additional Provisions

The final rule addresses certain other consumer protection concerns in the debt collection market. For example, the final rule includes provisions clarifying debt collectors' obligation to retain records evidencing compliance or noncompliance with the FDCPA and Regulation F; prohibiting the sale, transfer for consideration, or placement for collection of certain debts; and clarifying debt collectors' obligations when responding to duplicative disputes. The final rule also clarifies that the personal representative of a deceased consumer's estate is a consumer for purposes of § 1006.6, which addresses communications in connection with debt collection. This clarification generally allows a debt collector to discuss a debt with the personal representative of a deceased consumer's estate. The final rule also clarifies how a debt collector may locate the personal representative of a deceased consumer's estate.

Disclosure-Focused Final Rule

The Bureau is reserving certain sections of Regulation F for a disclosure-focused final rule that, as noted above, the Bureau intends to publish in December 2020 to clarify the information that a debt collector must provide to a consumer at the outset of debt collection and to provide a model notice containing the information required by FDCPA section 809(a). The Bureau also plans to address in the disclosure-focused final rule consumer protection concerns related to requirements prior to furnishing consumer reporting information and the collection of debt that is beyond the statute of limitations (

i.e.,

time-barred debt).

II. Background

A. Debt Collection Market Background

A consumer debt is commonly understood to be a consumer's obligation to pay money to another person or entity. Sometimes a debt arises out of a closed-end loan. Other times, a debt arises from a consumer's use of an open-end line of credit, commonly a credit card. And in other cases, a debt arises from a consumer's purchase of goods or services with payment due thereafter. Often there is an agreed-upon payment schedule or date by which the consumer must repay the debt.

For a variety of reasons, consumers sometimes are unable or unwilling to make payments when they are due. Collection efforts may directly recover some or all of the overdue amounts owed to debt owners and thereby may indirectly help to keep consumer credit available and more affordable to consumers.

Collection activities also can lead to repayment plans or debt restructuring that may provide consumers with additional time to make payments or resolve their debts on more manageable terms.

See

Bureau of Consumer Fin. Prot.,

Fair Debt Collection Practices Act: CFPB Annual Report 2013,

at 9 (Mar. 20, 2013),

https://www.consumerfinance.gov/data-research/research-reports/annual-report-on-the-fair-debt-collection-practices-act/

(2013 FDCPA Annual Report).

See id.

The debt collection industry includes creditors, third-party debt collectors (including debt collection law firms), debt buyers, and a wide variety of related service providers. Debt collection is estimated to be a $12.7 billion-dollar industry employing nearly 123,000 people across approximately 7,800 collection agencies in the United States.

See

Bureau of Consumer Fin. Prot.,

Fair Debt Collection Practices Act: CFPB Annual Report 2020,

at 7 (Mar. 2020),

https://files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report-congress_03-2020.pdf

(2020 FDCPA Annual Report).

Creditors

When an account becomes delinquent, initial collection efforts often are undertaken by the original creditor or its servicer. The FDCPA typically does not cover such recovery efforts and, if they result in resolution of the debt, whether through payment in full or another arrangement, the consumer typically will not interact with a third-party debt collector.

Third-Party Debt Collectors

If a consumer's payment obligations remain unmet, a creditor may send the account to a third-party debt collector to recover on the debt in the third-party debt collector's name. A creditor may choose to send an account to a third-party debt collector for several reasons, including because the third-party debt collector possesses capabilities and expertise that the creditor lacks. Third-party debt collectors usually are paid on a contingency basis, typically a percentage of recoveries; debt collectors contracting with creditors on a contingency basis generated a large majority of the industry's 2019 revenue.

Contingency debt collectors compete with one another to secure business from creditors based on, among other factors, the debt collectors' effectiveness in obtaining recoveries.

Id.

at 8.

While third-party collection agencies have been increasing in size in recent years, third-party debt collection continues to include a significant number of smaller entities.

See

Robert M. Hunt,

Understanding the Model: The Life Cycle of a Debt,

at 15, Fed. Reserve Bank of Phila. (June 6, 2013),

https://www.ftc.gov/sites/default/files/documents/public_events/life-debt-data-integrity-debt-collection/understandingthemodel.pdf.

B. Debt Buyers

If contingency collections prove unsuccessful—or if a particular creditor prefers not to use such third-party debt collectors—a creditor may sell unpaid accounts to a debt buyer. In 2009, the Federal Trade Commission (FTC) called the advent and growth of debt buying “the most significant change in the debt collection business” in recent years.

Debt buyers purchase defaulted debt from creditors or other debt owners and thereby take title to the debt. Credit card debt comprises a large majority of the debt that debt buyers purchase.

Debt buyers generated about one-third of debt collection revenue, or about $3.5 billion, in 2017.

Creditors who sell their uncollected debt to debt buyers receive a certain up-front return, but these debts typically are sold at prices that are less than their face value. Debt buyers typically price their offers for portfolios based upon their projections of the amount they will be able to collect. The debt buyer incurs the risk of recovering less than the sum of the amount it paid to acquire the debt and its expenses to collect the debt.

Fed. Trade Comm'n,

The Structure and Practices of the Debt Buying Industry,

at i (Jan. 2013),

https://www.ftc.gov/sites/default/files/documents/reports/structure-and-practices-debt-buying-industry/debtbuyingreport.pdf

(FTC Debt Buying Report).

Id.

at 7 (citing

Credit Card Debt Sales in 2008,

921 Nilson Rep. 10 (Mar. 2009)).

Bureau of Consumer Fin. Prot.,

Fair Debt Collection Practices Act: CFPB Annual Report 2018,

at 10 (Mar. 2018),

https://files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report-congress_03-2018.pdf

(2018 FDCPA Annual Report) (citing Edward Rivera,

Debt Collection Agencies in the US,

IBIS World (Dec. 2017)). Although debt buyers represent about one-third of industry revenue, this overstates debt buyers' share of dollars collected, since debt buyer revenue includes all amounts recovered, whereas the revenue of contingency debt collectors includes only the share of recoveries retained by the debt collector.

Id.

Typically, a debt buyer engages in debt collection, attempting to collect debts itself. However, a debt buyer also may use a third-party debt collector or a series of such debt collectors. If the debt buyer is unable to collect some of the debts it purchased, the debt buyer may sell the debt again to another debt buyer. Any single debt thus may be owned by multiple entities over its lifetime. The price paid for a debt generally will decline as the debt ages and passes from debt buyer to debt buyer, because the probability of payment decreases.

FTC Debt Buying Report,

supra

note 12, at 23-24.

Debt Collection Law Firms

A debt owner may try to recover on a debt through litigation, either after unsuccessful debt collection attempts or as a primary collection activity. Most debt collection litigation is filed in State courts. Debt owners often retain law firms and attorneys that specialize in debt collection and that are familiar with State and local rules. If a debt owner obtains a judgment in its favor, post-litigation efforts may include garnishment of wages or seizure of assets.

B. Debt Collection Methods

The debt collection experience is a common one—approximately one in three consumers with a credit record reported having been contacted about a debt in collection in 2014.

Of those, 27 percent reported having been contacted about a single debt over the prior year, 57 percent reported having been contacted about two to four debts, and 16 percent reported having been contacted about more than four debts.

Bureau of Consumer Fin. Prot.,

Consumer Experience with Debt Collection: Findings from CFPB's Survey of Consumer Views on Debt,

at 5 (2017),

http://files.consumerfinance.gov/f/documents/201701_cfpb_Debt-Collection-Survey-Report.pdf

(CFPB Debt Collection Consumer Survey). This figure includes consumers contacted only by creditors as well as those contacted by one or more debt collection firms.

Id.

at 13.

Id.

A creditor typically stops communicating with a consumer once responsibility for an account has moved to a third-party debt collector. Active debt collection efforts typically begin with the debt collector attempting to locate the consumer, usually by identifying a valid telephone number or mailing address, so that the debt collector can establish contact with the consumer. To obtain current contact information, a debt collector may look to information that transferred with the account file, public records, data sellers, or proprietary databases of contact information. A debt collector may also attempt to obtain location information for a consumer from third parties, such as family members who share a residence with the consumer or colleagues at the consumer's workplace.

Once a debt collector has obtained contact information for a consumer, the debt collector typically will seek to communicate with the consumer to obtain payment on some or all of the debt. The debt collector may tailor the collection strategy depending on a variety of factors, including the size and age of the debt and the debt collector's assessment of the likelihood of obtaining money from the consumer. Other types of debt are subject to statutory or regulatory requirements that may affect how a debt collector tries to recover on them. For example, privacy protections may affect how a debt collector seeks to recover on a medical debt, and the availability of administrative wage garnishment and tax refund intercepts may affect how a debt collector seeks to recover on a Federal student loan.

Changes in a consumer's situation may warrant a change in a debt collector's recovery strategy, such as when information purchased from consumer reporting agencies or other third parties indicates that the consumer has started a new job. A debt owner also may “warehouse” a debt and cease collection efforts for a significant period. A new debt collector may later be tasked with resuming collection efforts because, for example, the debt owner has sold the account, detected a possible change in the consumer's financial situation, or, as part of their portfolio management strategy, makes periodic attempts at some recovery. Each time a new debt collector obtains responsibility for collecting the debt, the consumer likely will be subject to communications or communication attempts from the new debt collector. For the consumer, this may mean contact from a series of different debt collectors over a number of years for a single debt. During this time, the consumer may make payments to multiple debt collectors or may receive communication attempts from multiple debt collectors that may stop and restart at irregular intervals, until the debt is paid or settled in full or collection activity ceases for other reasons.

C. Consumer Protection Concerns

Each year, consumers submit tens of thousands of complaints about debt collection to Federal regulators;

many

of those complaints relate to practices addressed in the final rule. Consumers also file thousands of private actions each year against debt collectors who allegedly have violated the FDCPA. Since the Bureau began operations in 2011, it has brought numerous debt collection cases against third-party debt collectors, alleging both FDCPA violations and unfair, deceptive, or abusive debt collection acts or practices in violation of the Dodd-Frank Act.

In many of these cases, the Bureau has obtained civil penalties, monetary compensation for consumers, and other relief. In its supervisory work, the Bureau similarly has identified many FDCPA violations during examinations of debt collectors. Over the past decade, the FTC and State regulators also have brought numerous additional actions against debt collectors for violating Federal and State debt collection and consumer protection laws.

See, e.g.,

2020 FDCPA Annual Report,

supra

note 9, at 13; Fed. Trade Comm'n,

2019 Consumer Sentinel Network Databook,

at 7 (Jan. 2020),

https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2019/consumer_sentinel_network_data_book_2019.pdf;

Bureau of Consumer Fin. Prot.,

Fair Debt Collection Practices Act: CFPB Annual Report 2020,

at 15-16 (Mar. 2019),

https://files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report-congress_03-2019.pdf

(2019 FDCPA Annual Report); Fed. Trade Comm'n,

2018 Consumer Sentinel Network Databook,

at 4, 7 (Feb. 2019),

https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2018/consumer_sentinel_network_data_book_2018_0.pdf;

2018 FDCPA Annual Report,

supra

note 14, at 14-15; Fed. Trade Comm'n,

2017 Consumer Sentinel Network Databook,

at 3, 6 (Mar. 2018),

https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2017/consumer_sentinel_data_book_2017.pdf;

Bureau of Consumer Fin. Prot.,

2017 Fair Debt Collection Practices Act: CFPB

Annual Report 2017,

at 15-16 (Mar. 2017),

https://files.consumerfinance.gov/f/documents/201703_cfpb_Fair-Debt-Collection-Practices-Act-Annual-Report.pdf

(2017 FDCPA Annual Report); Fed. Trade Comm'n,

Consumer Sentinel Network Data Book for January-December 2016,

at 3, 6 (Mar. 2017),

https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-january-december-2016/csn_cy-2016_data_book.pdf.

See, e.g.,

Stipulated Final Judgment and Consent Order,

Consumer Fin. Prot. Bureau

Encore Capital Grp., Inc.,

3:20-cv-01750 (S.D. Cal. Oct. 15, 2020),

https://www.courtlistener.com/recap/gov.uscourts.casd.686719/gov.uscourts.casd.686719.5.1.pdf;

Consent Order,

In re Asset Recovery Assocs.,

2019-BCFP-0009 (Aug. 28, 2019),

https://www.consumerfinance.gov/documents/7938/cfpb_asset-recovery-associates_consent-order_2019-08.pdf;

Consent Order,

In re Encore Capital Grp., Inc.,

2015-CFPB-0022 (Sept. 9, 2015),

http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf;

Consent Order,

In re Portfolio Recovery Assocs., LLC,

2015-CFPB-0023 (Sept. 9, 2015),

http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf;

Complaint,

Consumer Fin. Prot. Bureau

Nat'l Corrective Grp., Inc.,

1:15-cv-00899-RDB (D. Md. Mar. 30, 2015),

http://files.consumerfinance.gov/f/201503_cfpb_complaint-national-corrective-group.pdf.

D. FDCPA and Dodd-Frank Act Protections for Consumers

Federal and State governments historically have sought to protect consumers from harmful debt collection practices. From 1938 to 1977, the Federal government primarily protected consumers through FTC enforcement actions against debt collectors who engaged in unfair or deceptive acts or practices in violation of section 5 of the FTC Act.

When Congress enacted the FDCPA in 1977, it found that “[e]xisting laws and procedures for redressing . . . injuries [were] inadequate to protect consumers.”

Congress found that “[t]here [was] abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors” and that these practices “contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.”

15 U.S.C. 45.

15 U.S.C. 1692(b).

15 U.S.C. 1692(a).

The FDCPA was enacted, in part, “to eliminate abusive debt collection practices by debt collectors, [and] to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.”

Among other things, the FDCPA: (1) Prohibits debt collectors from engaging in harassment or abuse, making false or misleading representations, and engaging in unfair practices in debt collection; (2) restricts debt collectors' communications with consumers and others; and (3) requires debt collectors to provide consumers with disclosures concerning the debts they owe or allegedly owe.

15 U.S.C. 1692(e).

The FDCPA, in general, applies to debt collectors as that term is defined under the statute. As discussed further in the section-by-section analysis of § 1006.2(i), the FDCPA generally provides that a debt collector is any person: (1) Who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts (

i.e.,

the “principal purpose” prong), or (2) who regularly collects, or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due to another (

i.e.,

the “regularly collects” prong). FDCPA section 803(6) also sets forth several exclusions from the general definition.

Until the creation of the Bureau, no Federal agency was authorized to issue regulations to implement the substantive provisions of the FDCPA. Courts have issued opinions providing differing interpretations of various FDCPA provisions, and there is considerable uncertainty with respect to how the FDCPA applies to communication technologies that have developed since 1977. The Dodd-Frank Act amended the FDCPA to provide the Bureau with authority to “prescribe rules with respect to the collection of debts by debt collectors.”

FDCPA section 814(d), 15 U.S.C. 1692

(d).

III. The Rulemaking Process

A. The 2019 Proposal and 2020 Supplemental Proposal

On May 21, 2019, the Bureau published a proposed rule (the proposal) in the

Federal Register

to amend Regulation F, which implements the FDCPA.

The proposal provided a 90-day comment period that would have closed on August 19, 2019. To allow interested persons more time to consider and submit their comments, the Bureau issued an extension of the comment period until September 18, 2019.

In response to the proposal, the Bureau received more than 14,000 comments from consumers, consumer groups, members of Congress, other government agencies, creditors, debt collectors, industry trade associations, and others. As discussed below, the Bureau has considered these comments in adopting this final rule.

See

84 FR 23274 (May 21, 2019).

84 FR 37806 (Aug. 2, 2019).

The Bureau received feedback asking the Bureau to include in the final rule certain interventions that the Bureau did not propose; many such comments addressed debt collectors' obligation to substantiate debts. The Bureau concludes that it is not advisable to finalize such interventions without the benefit of public notice and comment and therefore does not address such comments further in this Notice.

In the proposal, the Bureau proposed to address concerns about debt collection communications and to clarify the application of the FDCPA to newer communication technologies, to clarify the steps a debt collector must take to provide required disclosures in writing and electronically, to clarify the information that a debt collector must provide to a consumer at the outset of debt collection, and to address other consumer protection concerns in the debt collection market. The proposal, among other things, proposed to set a bright-line rule for telephone call frequency and proposed a model form for providing the information required by FDCPA section 809(a). These interventions, along with the many others included in the proposal, generated a robust response. While some consumers and consumer advocate commenters supported various aspects of the proposal, in general they questioned whether the proposal provided adequate protection for consumers. Similarly, while some industry commenters supported various aspects of the proposal, in general they questioned whether the proposal provided sufficient clarity to allow for compliance or was properly tailored to the consumer protection problems and evidence at hand.

On February 21, 2020, the Bureau released a supplemental notice of proposed rulemaking to amend Regulation F to require debt collectors to make certain disclosures when collecting time-barred debts (the February 2020 proposal).

Time-barred debts are debts for which the applicable statute of limitations has expired. The February 2020 proposal provided a 60-day comment period that would have closed on May 4, 2020. To allow interested persons more time to consider and submit their comments, the Bureau issued two extensions of the comment period, the first until June 5, 2020 and the second until August 4, 2020.

As noted above, the Bureau intends to issue a disclosure-focused final rule regarding the February 2020 proposal and certain provisions of the May 2019 proposal related to consumer disclosures and to the collection of time-barred debt.

See

85 FR 12672 (Mar. 3, 2020).

See

85 FR 17299 (Mar. 27, 2020) (first extension) and 85 FR 30890 (May 21, 2020) (second extension).

B. Other Outreach

The preamble to the proposal includes a more thorough discussion of the outreach the Bureau conducted prior to issuing the proposal.

See

84 FR 23274, 23278-80 (May 21, 2019).

In November 2013, the Bureau began the rulemaking process with the publication of an Advance Notice of Proposed Rulemaking (ANPRM) regarding debt collection.

As discussed in the proposal, the ANPRM sought information about a wide variety of both first- and third-party debt collection practices. The Bureau received more than 23,000 comments in response to the ANPRM, which the Bureau considered when developing the proposal.

78 FR 67848 (Nov. 12, 2013).

The Bureau also conducted a variety of consumer testing and surveys, beginning in 2014 when the Bureau contracted with a third-party vendor, Fors Marsh Group (FMG), to develop and conduct qualitative consumer testing of two potential consumer-facing debt collection model disclosure forms: the validation notice and the statement of consumer rights. The Bureau also conducted a nationwide survey of consumers' experiences with debt collection and published a report of the findings in January 2017 (CFPB Debt Collection Consumer Survey or Consumer Survey).

In 2017, the Bureau contracted with ICF International, Inc. (ICF) to conduct a web survey of approximately 8,000 individuals possessing a broad range of demographic characteristics to obtain additional information about consumer comprehension and decision-making in response to sample debt collection disclosures relating to time-barred debt. A report summarizing the findings of this testing was published in connection with the February 2020 proposal.

CFPB Debt Collection Consumer Survey,

supra

note 16. The survey was approved under OMB control number 3170-0047, Debt Collection Survey from the Consumer Credit Panel.

Bureau of Consumer Fin. Prot.,

Disclosure of Time-Barred Debt and Revival: Finding from CFPB's Quantitative Disclosure Testing

(Feb. 2020),

https://files.consumerfinance.gov/f/documents/cfpb_debt-collection-quantitative-disclosure-testing_report.pdf

(CFPB Quantitative Testing Report).

To better understand the operational costs of debt collection firms, including law firms, the Bureau also surveyed debt collection firms and vendors and published a report based on that study in July 2016 (CFPB Debt Collection Operations Study or Operations Study).

The Operations Study focused on understanding how debt collection firms obtain information about delinquent consumer accounts and attempt to collect on those accounts.

See generally

Bureau of Consumer Fin. Prot.,

Study of Third-Party Debt Collection Operations

(July 2016),

https://www.consumerfinance.gov/documents/755/20160727_cfpb_Third_Party_Debt_Collection_Operations_Study.pdf

(CFPB Debt Collection Operations Study).

In August 2016, the Bureau convened a Small Business Review Panel (Small Business Review Panel or Panel) with the Chief Counsel for Advocacy of the Small Business Administration (SBA) and the Administrator of the Office of Information and Regulatory Affairs with the Office of Management and Budget (OMB).

As part of this process, the Bureau prepared an outline of proposals under consideration and the alternatives considered (Small Business Review Panel Outline or Outline),

which the Bureau posted on its website for review by the small entity representatives participating in the Panel process and by the general public. The Panel gathered information from the small entity representatives and made findings and recommendations regarding the potential compliance costs and other impacts on those entities of the proposals under consideration. Those findings and recommendations are set forth in the Small Business Review Panel Report, which is part of the administrative record in this rulemaking and is available to the public.

The Bureau considered these findings and recommendations in preparing the proposals and this final rule.

The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), as amended by section 1100G(a) of the Dodd-Frank Act, requires the Bureau to convene a Small Business Review Panel before proposing a rule that may have a substantial economic impact on a significant number of small entities.

See

Public Law 104-121, tit. II, 110 stat. 857 (1996) (as amended by the Small Business and Work Opportunity Act of 2007, Public Law 110-28, tit. VIII, subtit. C, sec. 8302, 121 stat. 204 (2007)).

Bureau of Consumer Fin. Prot.,

Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking: Outline of Proposals Under Consideration and Alternatives Considered

(July 28, 2016),

https://files.consumerfinance.gov/f/documents/20160727_cfpb_Outline_of_proposals.pdf

(Small Business Review Panel Outline). The Bureau also gathered feedback on the Small Business Review Panel Outline from other stakeholders, members of the public, and the Bureau's Consumer Advisory Board and Community Bank Advisory Council.

Bureau of Consumer Fin. Prot., U.S. Small Bus. Admin. & Office of Mgmt. & Budget,

Final Report of the Small Business Review Panel on the CFPB's Proposals Under Consideration for the Debt Collector and Debt Buying Rulemaking

(Oct. 2016),

https://files.consumerfinance.gov/f/documents/cfpb_debt-collector-debt-buyer_SBREFA-report.pdf

(Small Business Review Panel Report).

The Bureau has also met on many occasions with various stakeholders, including consumer advocacy groups, debt collection trade associations, industry participants, academics with expertise in debt collection, Federal prudential regulators, and other Federal and State consumer protection regulators. The Bureau also received a number of comments specific to the debt collection rulemaking in response to its Request for Information Regarding the Bureau's Adopted Regulations and New Rulemaking Authorities

and its Request for Information Regarding the Bureau's Inherited Regulations and Inherited Rulemaking Authorities;

the Bureau considered these comments in developing the proposals and this final rule. In addition, the Bureau has engaged in general outreach, speaking at consumer advocacy group and industry events and visiting consumer organizations and industry stakeholders. The Bureau has provided other regulators with information about the proposals and this final rule, has sought their input, and has received feedback that has helped the Bureau to prepare this final rule.

83 FR 12286 (Mar. 21, 2018).

83 FR 12881 (Mar. 26, 2018).

Under the Dodd-Frank Act, the Bureau is required to conduct an assessment of significant rules within five years of the rule's effective date. The Bureau anticipates that this final rule may be significant and therefore may require an assessment within five years of the rule's effective date. The Bureau is preparing now for this possible assessment. Specifically, the Bureau is considering how best to obtain information now to serve as a baseline for evaluation of the costs, benefits, and other effects of the final

rule. The Bureau expects to collect data and other information from consumers, debt collectors, and other stakeholders to understand whether the rule is achieving its goals under the FDCPA and the Dodd-Frank Act, and to help the Bureau measure the costs and benefits of the rule. Topics of data collection could include: Whether consumers find themselves less harassed by calls from debt collectors; whether debt collectors are better able to understand how to communicate with consumers using modern technology in a way that complies with the FDCPA; whether greater clarity about FDCPA requirements helps reduce litigation; and costs of the rule, both anticipated and unexpected, for consumers or for industry. The Bureau expects to conduct outreach in 2021 to explore how best to obtain such data, including potentially through surveying consumers or firms or by collecting operational data.

IV. Legal Authority

The Bureau is issuing this final rule primarily pursuant to its authority under the FDCPA and the Dodd-Frank Act. As amended by the Dodd-Frank Act, FDCPA section 814(d) provides that the Bureau “may prescribe rules with respect to the collection of debts by debt collectors,” as defined in the FDCPA.

Section 1022(a) of the Dodd-Frank Act provides that “[t]he Bureau is authorized to exercise its authorities under Federal consumer financial law to administer, enforce, and otherwise implement the provisions of Federal consumer financial law.”

Section 1022(b)(1) of the Dodd-Frank Act provides that the Director may prescribe rules and issue orders and guidance, as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws, and to prevent evasions thereof.

“Federal consumer financial law” includes title X of the Dodd-Frank Act and the FDCPA.

No provisions in this final rule are based on section 1031 of the Dodd-Frank Act.

15 U.S.C. 1692

(d). As noted, the Bureau is the first Federal agency with authority to prescribe substantive debt collection rules under the FDCPA. Prior to the Dodd-Frank Act's grant of authority to the Bureau, the FTC published various materials providing guidance on the FDCPA. The FTC's materials have informed the Bureau's rulemaking and, if relevant to particular provisions, are discussed in part V.

12 U.S.C. 5512(a).

12 U.S.C. 5512(b)(1).

12 U.S.C. 5481(12)(H), (14).

These and other authorities are discussed in greater detail in parts IV.A through E below. Part IV.A discusses the Bureau's authority under sections 806 through 808 of the FDCPA. Parts IV.B through E discuss the Bureau's relevant authorities under the Dodd-Frank Act and the Electronic Signatures in Global and National Commerce Act (E-SIGN Act).

15 U.S.C. 7001

et seq.

A. FDCPA Sections 806 Through 808

As discussed in part V, the Bureau is finalizing several provisions, in whole or in part, pursuant to its authority to interpret FDCPA sections 806, 807, and 808, which set forth general prohibitions on, and requirements relating to, debt collectors' conduct and are accompanied by non-exhaustive lists of examples of unlawful conduct. This section provides an overview of how the Bureau interprets FDCPA sections 806 through 808.

FDCPA section 806 generally prohibits a debt collector from “engag[ing] in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.”

Then, “[w]ithout limiting the general application of the foregoing,” it lists six examples of conduct that violate that section.

Similarly, FDCPA section 807 generally prohibits a debt collector from “us[ing] any false, deceptive, or misleading representation or means in connection with the collection of any debt.”

Then, “[w]ithout limiting the general application of the foregoing,” section 807 lists 16 examples of conduct that violate that section.

Finally, FDCPA section 808 prohibits a debt collector from “us[ing] unfair or unconscionable means to collect or attempt to collect any debt.”

Then, “[w]ithout limiting the general application of the foregoing,” FDCPA section 808 lists eight examples of conduct that violate that section.

The Bureau interprets FDCPA sections 806 through 808 in light of: (1) The FDCPA's language and purpose; (2) the general types of conduct prohibited by those sections and, where relevant, the specific examples enumerated in those sections; and (3) judicial decisions.

15 U.S.C. 1692d.

15 U.S.C. 1692d(1)-(6).

15 U.S.C. 1692e.

15 U.S.C. 1692e(1)-(16).

15 U.S.C. 1692f.

15 U.S.C. 1692f(1)-(8).

Where the Bureau prescribes requirements pursuant only to its authority to implement and interpret sections 806 through 808 of the FDCPA, the Bureau does not take a position on whether such practices also would constitute an unfair, deceptive, or abusive act or practice under section 1031 of the Dodd-Frank Act.

Interpreting General Provisions in Light of Specific Prohibitions or Requirements

By their plain terms, FDCPA sections 806 through 808 make clear that their examples of prohibited conduct do not “limit[ ] the general application” of those sections' general prohibitions. The FDCPA's legislative history is consistent with this understanding,

as are opinions by courts that have addressed this issue.

Accordingly, the Bureau may interpret the general provisions of FDCPA sections 806 to 808 to prohibit conduct that the specific examples in FDCPA sections 806 through 808 do not address if the conduct violates the general prohibitions.

See, e.g.,

S. Rep. No. 382, 95th Cong., 1st Sess. 2, 4 (1977),

reprinted in

1977 U.S.C.C.A.N. 1695, 1698 (S. Rep. No. 382) (“[T]his bill prohibits in general terms any harassing, unfair, or deceptive collection practice. This will enable the courts, where appropriate, to proscribe other improper conduct which is not specifically addressed.”). Courts have also cited legislative history in noting that, “in passing the FDCPA, Congress identified abusive collection attempts as primary motivations for the Act's passage.”

Hart

FCI Lender Servs., Inc.,

797 F.3d 219, 226 (2d Cir. 2015).

See, e.g., Stratton

Portfolio Recovery Assocs., LLC,

770 F.3d 443, 450 (6th Cir. 2014) (“[T]he listed examples of illegal acts are just that—examples.”).

The Bureau uses the specific examples in FDCPA sections 806 through 808 to inform its interpretation of those sections' general prohibitions. Accordingly, the final rule interprets the general provisions of FDCPA sections 806 through 808 to prohibit or require certain conduct that is similar to the types of conduct prohibited or required by the specific examples. For example, the final rule interprets the general provisions in FDCPA sections 806 through 808 as protecting consumer privacy in debt collection in ways similar to the specific restrictions in: (1) FDCPA section 806(3), which prohibits, with certain exceptions, the publication of a list of consumers who allegedly refuse to pay debts;

(2) FDCPA section 808(7), which prohibits communicating with a consumer regarding a debt by postcard; and (3) FDCPA section 808(8), which prohibits the use of certain language and symbols on envelopes.

The interpretative approach of looking to specific provisions to inform general provisions is consistent with judicial decisions indicating that the general prohibitions in the FDCPA should be interpreted “in light of [their] associates.”

For example, courts have held that violating a consumer's privacy interest through public exposure of a debt violates the FDCPA, noting that

violating a consumer's privacy is a type of conduct prohibited by several specific examples.

In this way, the Bureau uses the specific examples in FDCPA sections 806 through 808 to inform its understanding of the general provisions, consistent with the statute's use of the phrase “[w]ithout limiting the general application of the foregoing” to introduce the specific examples.

15 U.S.C. 1692d(3).

15 U.S.C. 1692f(7)-(8).

Currier

First Resolution Inv. Corp.,

762 F.3d 529, 534 (6th Cir. 2014) (citing

Limited, Inc.

Comm'r,

286 F.3d 324, 332 (6th Cir. 2002)).

See id.

at 535.

15 U.S.C. 1692d-1692f.

Judicial Decisions

The Bureau interprets the general prohibitions in FDCPA sections 806 through 808 in light of the significant body of existing court decisions interpreting those provisions, which provide instructive examples of collection practices that are not addressed by the specific prohibitions in those sections but that nonetheless run afoul of the FDCPA's general prohibitions in sections 806 through 808.

For example, courts have held that a debt collector could violate FDCPA section 808 by using coercive tactics such as citing speculative legal consequences to pressure the consumer to engage with the debt collector.

Additionally, courts have held that a debt collector could violate FDCPA sections 806 through 808 by taking certain actions to collect a debt that a consumer does not actually owe or that is not actually delinquent.

Similarly, a debt collector could violate FDCPA section 807 by, for example, giving “a false impression of the character of the debt,”

such as by failing to disclose that an amount collected includes fees.

This interpretive approach is consistent with courts' reasoning that these general prohibitions should be interpreted in light of conduct that courts have already found violate them.

See, e.g., Todd

Collecto, Inc.,

731 F.3d 734, 739 (7th Cir. 2013). While judicial decisions inform the Bureau's interpretation of the general prohibitions in FDCPA sections 806 through 808, the Bureau does not adopt specific judicial interpretations through its restatement of the general prohibitions except where noted.

See, e.g., Hosseinzadeh

M.R.S. Assocs., Inc.,

387 F. Supp. 2d 1104, 1117 (C.D. Cal. 2005) (denying debt collector's motion for summary judgment on section 808 claim where debt collector used false name and implied that consumer “would have legal problems” if consumer did not return debt collector's telephone call).

See, e.g., Ferrell

Midland Funding, LLC,

No. 2:15-cv-00126-JHE, 2015 WL 2450615, at *3-4 (N.D. Ala. May 22, 2015) (denying debt collector's motion to dismiss section 806 claim where debt collector allegedly initiated collection lawsuit even though it knew plaintiff did not owe debt);

Fox

Citicorp Credit Servs., Inc.,

15 F.3d 1507, 1517 (9th Cir. 1994) (reversing grant of summary judgment to debt collector in part because “a jury could rationally find” that filing writ of garnishment was unfair or unconscionable under section 808 when debt was not delinquent);

Pittman

J.J. Mac Intyre Co. of Nev., Inc.,

969 F. Supp. 609, 612-13 (D. Ne

1997) (denying debt collector's motion to dismiss claims under sections 807 and 808 where debt collector allegedly attempted to collect fully satisfied debt).

Fields

Wilber Law Firm, P.C.,

383 F.3d 562, 565-66 (7th Cir. 2004) (reversing dismissal of plaintiff's claims brought under sections 807 and 808 because dunning letter that failed to communicate that total amount due included attorneys' fees “could conceivably mislead an unsophisticated consumer”).

Id.

Several courts have applied an objective standard of an “unsophisticated” or “least sophisticated” consumer to FDCPA sections 807

and 808

and an objective, vulnerable consumer standard to FDCPA section 806.

In determining whether particular acts violate FDCPA sections 806 through 808, the Bureau interprets those sections to incorporate “an objective standard” that is designed to protect consumers who are “of below-average sophistication or intelligence” or who are “especially vulnerable to fraudulent schemes.”

Jensen

Pressler & Pressler,

791 F.3d 413, 419 (3d Cir. 2015) (“The standard is an objective one, meaning that the specific plaintiff need not prove that

she

was actually confused or misled, only that the objective least sophisticated debtor would be.”);

Hartman

Great Seneca Fin. Corp.,

569 F.3d 606, 613 (6th Cir. 2009) (applying least sophisticated consumer standard to section 807 claim);

Bentley

Great Lakes Collection Bureau,

6 F.3d 60, 62 (2d Cir. 1993) (same);

Swanson

S. Or. Credit Serv., Inc.,

869 F.2d 1222, 1227 (9th Cir. 1988) (per curiam) (same).

See, e.g., Crawford

LVNV Funding, LLC,

758 F.3d 1254, 1258 (11th Cir. 2014) (“[W]e have adopted a `least-sophisticated consumer standard to evaluate whether a debt collector's conduct is `deceptive,' `misleading,' `unconscionable,' or `unfair' under the statute.”);

LeBlanc

Unifund CCR Partners,

601 F.3d 1185, 1200-01 (11th Cir. 2010) (per curiam) (applying least sophisticated consumer standard to section 808 claim);

Turner

J.V.D.B. & Assocs., Inc.,

330 F.3d 991, 997 (7th Cir. 2003) (applying unsophisticated consumer standard to section 808 claim). Circuit courts have also held, for example, that the least sophisticated consumer standard applies to a consumer's understanding of a validation notice required under FDCPA section 809 and threats to take legal action under FDCPA section 807(5).

See Swanson,

869 F.2d at 1225-27;

Wilson

Quadramed Corp.,

225 F.3d 350, 353 (3d Cir. 2000).

For example, in

Jeter

Credit Bureau, Inc.,

760 F.2d 1168, 1179 (11th Cir. 1985), the court applied a standard analogous to the “least sophisticated consumer” to an FDCPA section 806 claim, holding that claims under section 806 “should be viewed from the perspective of a consumer whose circumstances makes him relatively more susceptible to harassment, oppression, or abuse.”

See, e.g.,

Brief for the Consumer Financial Protection Bureau in Support of Appellee and Affirmance at 13,

DeGroot

Client Servs., Inc.,

2020 WL 5951360 (7th Cir. 2020) (No. 20-1089),

https://www.consumerfinance.gov/documents/8865/cfpb_amicus-brief_degroot-v-client-services.pdf

(explaining that whether a debt collection notice is deceptive is “ `an objective test' ” based on a “hypothetical unsophisticated consumer”) (citation omitted); Brief for the United States as Amicus Curiae Supporting Respondents,

Sheriff

Gillie,

136 S. Ct. 1594 (2016) (No. 15-338), 2016 WL 836755, at *29 (quoting

Gammon

GC Servs. Ltd. P'ship,

27 F.3d 1254, 1257 (7th Cir. 1994) (quoting

Clomon

Jackson,

988 F.2d 1314, 1319 (2d Cir. 1993))).

Courts have reasoned, and the Bureau agrees, that “[w]hether a consumer is more or less likely to be harassed, oppressed, or abused by certain debt collection practices does not relate solely to the consumer's relative sophistication” and may be affected by other circumstances, such as the consumer's financial and legal resources.

Courts have further reasoned that section 807's prohibition on false, deceptive, or misleading representations incorporates an objective, “unsophisticated” consumer standard.

This standard “protects the consumer who is uninformed, naive, or trusting, yet it admits an objective element of reasonableness.”

The Bureau agrees with the reasoning of courts that have applied this standard or a “least sophisticated consumer” standard.

The Bureau uses the term unsophisticated consumer to describe the standard it applies when assessing the effect of conduct on consumers.

Jeter,

760 F.2d at 1179 (“[R]ather, such susceptibility might be affected by other circumstances of the consumer or by the relationship between the consumer and the debt collection agency. For example, a very intelligent and sophisticated consumer might well be susceptible to harassment, oppression, or abuse because he is poor (

i.e.,

has limited access to the legal system), is on probation, or is otherwise at the mercy of a power relationship.”).

See

Brief for the United States as Amicus Curiae Supporting Respondents,

supra

note 67, at *10, 27-30.

Gammon,

27 F.3d at 1257.

See, e.g., Rosenau

Unifund Corp.,

539 F.3d 218, 221 (3d Cir. 2008) (“We use the `least sophisticated debtor' standard in order to effectuate the basic purpose of the FDCPA: To protect all consumers, the gullible as well as the shrewd.”) (citations and some internal quotation marks omitted);

Clomon,

988 F.2d at 1319 (“To serve the purposes of the consumer-protection laws, courts have attempted to articulate a standard for evaluating deceptiveness that does not rely on assumptions about the `average' or `normal' consumer. This effort is grounded, quite sensibly, in the assumption that consumers of below-average sophistication or intelligence are especially vulnerable to fraudulent schemes. The least-sophisticated-consumer standard protects these consumers in a variety of ways.”).

FDCPA's Purposes

FDCPA section 802 establishes that the purpose of the statute is to eliminate abusive debt collection practices by debt collectors, to ensure that debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

In particular, FDCPA section 802 delineates certain specific harms that the general and specific prohibitions in sections 806

through 808 were designed to alleviate. Section 802 states: “[T]he use of abusive, deceptive, and unfair debt collection practices by many debt collectors . . . contribute[s] to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.”

15 U.S.C. 1692(e).

15 U.S.C. 1692(a).

B. Dodd-Frank Act Section 1031

The Bureau proposed to rely on its Dodd-Frank Act section 1031 authority (relating to unfair, deceptive, or abusive acts or practices in connection with consumer financial products or services) to support two interventions in the proposal. As discussed in more detail in the section-by-section analysis of §§ 1006.14 and 1006.30, the Bureau is not finalizing any provisions of the rule pursuant to its authority under Dodd-Frank Act section 1031.

C. Dodd-Frank Act Section 1032

Dodd-Frank Act section 1032(a) provides that the Bureau may prescribe rules to ensure that the features of any consumer financial product or service, “both initially and over the term of the product or service,” are “fully, accurately, and effectively disclosed to consumers in a manner that permits consumers to understand the costs, benefits, and risks associated with the product or service, in light of the facts and circumstances.”

Under Dodd-Frank Act section 1032(a), the Bureau is empowered to prescribe rules regarding the disclosure of the “features” of consumer financial products and services generally. Accordingly, the Bureau may prescribe rules containing disclosure requirements even if other Federal consumer financial laws do not specifically require disclosure of such features. Dodd-Frank Act section 1032(c) provides that, in prescribing rules pursuant to Dodd-Frank Act section 1032, the Bureau “shall consider available evidence about consumer awareness, understanding of, and responses to disclosures or communications about the risks, costs, and benefits of consumer financial products or services.”

The Bureau is finalizing §§ 1006.6(e) and 1006.38 based in part on its authority under Dodd-Frank Act section 1032.

12 U.S.C. 5532(a).

12 U.S.C. 5532(c).

D. Other Authorities Under the Dodd-Frank Act

Section 1022(b)(1) of the Dodd-Frank Act provides that the Bureau's Director “may prescribe rules and issue orders and guidance, as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws, and to prevent evasions thereof.”

“Federal consumer financial laws” include the FDCPA and title X of the Dodd-Frank Act.

Section 1022(b)(2) of the Dodd-Frank Act prescribes certain standards for rulemaking that the Bureau must follow in exercising its authority under Dodd-Frank Act section 1022(b)(1).

See part VII for a discussion of the Bureau's standards for rulemaking under Dodd-Frank Act section 1022(b)(2).

12 U.S.C. 5512(b)(1).

12 U.S.C. 5481(14).

12 U.S.C. 5512(b)(2).

Dodd-Frank Act section 1024(b)(7)(A) authorizes the Bureau to prescribe rules to facilitate supervision of persons identified as larger participants of a market for a consumer financial product or service as defined by rule in accordance with section 1024(a)(1)(B) of the Dodd-Frank Act. Dodd-Frank Act section 1024(b)(7)(B) authorizes the Bureau to require a person described in Dodd-Frank Act section 1024(a)(1) to retain records for the purpose of facilitating supervision of such persons and assessing and detecting risks to consumers. As discussed in the section-by-section analysis, the Bureau is finalizing § 1006.100 pursuant to the Bureau's authorities under Dodd-Frank Act sections 1022 and 1024.

E. The E-SIGN Act

The E-SIGN Act provides standards for determining if delivery of a disclosure by electronic record satisfies a requirement in a statute, regulation, or other rule of law that the disclosure be provided or made available in writing to a consumer. E-SIGN Act section 104(b)(1) permits the Bureau to interpret the E-SIGN Act through the issuance of regulations. As discussed in part V, the Bureau is finalizing comments 6(c)(1)-1 and -2 (providing an interpretation of the E-SIGN Act as applied to a debt collector responding to a consumer's notification that the consumer refuses to pay the debt or wants the debt collector to cease communication) and comments 38-1 and -2 (providing an interpretation of the E-SIGN Act as applied to a debt collector responding to a consumer dispute or request for original-creditor information) pursuant to E-SIGN Act section 104(b)(1).

V. Section-by-Section Analysis

Subpart A—In General

Section 1006.1 Authority, Purpose, and Coverage

1(a) Authority

Existing § 1006.1(a) states that the purpose of part 1006, known as Regulation F, is to establish procedures and criteria for any State to request that the Bureau exempt debt collection practices within that State from the requirements of the FDCPA as provided in FDCPA section 817. Consistent with the Bureau's proposal to revise part 1006 to regulate the debt collection activities of FDCPA debt collectors, the Bureau proposed to revise existing § 1006.1(a) to set forth the Bureau's authority to issue such rules.

Specifically, proposed § 1006.1(a) stated that part 1006 is known as Regulation F and is issued by the Bureau pursuant to sections 814(d) and 817 of the FDCPA,

title X of the Dodd-Frank Act,

and section 104(b)(1) and (d)(1) of the E-SIGN Act.

The Bureau proposed to move the remainder of existing § 1006.1(a), regarding State law exemptions from the FDCPA, to paragraph I(a) of appendix A of the regulation.

84 FR 23274, 23286 (May 21, 2019).

15 U.S.C. 1692

(d), 1692o.

12 U.S.C. 5481

et seq.

15 U.S.C. 7004(b)(1), (d)(1).

The Bureau did not receive comments on proposed § 1006.1(a). Pursuant to its authority under FDCPA section 814(d), the Bureau is finalizing § 1006.1(a) largely as proposed. However, the Bureau is removing section 104(d)(1) of the E-SIGN Act from the list of authorizing statutory provisions because, as discussed in the section-by-section analysis of § 1006.42, the Bureau is not relying on that provision as authority for the final rule.

1(b) Purpose

Existing § 1006.1(b) defines terms relevant to the procedures and criteria for States to apply to the Bureau for an exemption as provided in FDCPA section 817. Consistent with the Bureau's proposal to revise part 1006 to regulate the debt collection activities of FDCPA debt collectors, the Bureau proposed to revise § 1006.1(b) to identify the purposes of part 1006 and proposed to move the definitions in existing § 1006.1(b) to paragraph 1(b) of appendix A of the regulation.

The Bureau did not receive comment on proposed § 1006.1(b) and is finalizing it

as proposed pursuant to its authority under FDCPA section 814(d).

84 FR 23274, 23286 (May 21, 2019).

1(c) Coverage

Section 814(d) of the FDCPA gives the Bureau authority to prescribe rules with respect to the collection of debts by debt collectors, but it prohibits the Bureau from applying those rules to motor vehicle dealers as described in section 1029(a) of the Dodd-Frank Act. Consistent with that authority, the Bureau proposed to add § 1006.1(c) to describe the applicability of proposed part 1006.

Proposed § 1006.1(c)(1) stated that, with the exception of proposed § 1006.108 and appendix A, proposed part 1006 would apply to debt collectors as defined in proposed § 1006.2(i),

i.e.,

FDCPA debt collectors, but not to motor vehicle dealers as described in section 1029(a) of the Dodd-Frank Act.

Proposed § 1006.1(c)(2) stated that certain provisions that were proposed only under sections 1031 or 1032 of the Dodd-Frank Act,

specifically proposed §§ 1006.14(b)(1)(ii), 1006.34(c)(2)(iv) and (3)(iv), and 1006.30(b)(1)(ii), applied to FDCPA debt collectors only to the extent that such debt collectors were collecting a debt related to an extension of consumer credit or another consumer financial product or service, as defined in the Dodd-Frank Act.

Proposed § 1006.1(c)(2) did not propose to expand coverage to any party not covered by the FDCPA.

Id.

at 23286-87.

This proposed exclusion would apply only to Regulation F. Any motor vehicle dealers who are FDCPA debt collectors would still need to comply with the FDCPA.

12 U.S.C. 5531(b), 5532.

Proposed §§ 1006.14(b)(1)(ii) and 1006.30(b)(1)(ii) would have relied on the Bureau's authority under Dodd-Frank Act section 1031. Proposed § 1006.34(c)(2)(iv) and (3)(iv) would have relied on the Bureau's authority under Dodd-Frank Act section 1032.

The Bureau received a number of comments on the coverage of the proposal. Some commenters requested that the Bureau exempt certain entities (

e.g.,

servicers and attorneys) from coverage. Such comments are discussed in the section-by-section analysis of § 1006.2(i), which is the provision that implements FDCPA section 803(6),

i.e.,

the definition of debt collector.

A number of comments discussed coverage of non-FDCPA debt collectors,

i.e.,

parties who collect debts but who do not meet the FDCPA's definition of debt collector—a group that typically includes creditors. For ease of reference throughout this section-by-section analysis, the Bureau refers to such parties as first-party debt collectors.

A handful of consumer advocates and a group of State Attorneys General advocated that the Bureau expand the rule to apply to first-party debt collectors.

Nearly all of the comments regarding first-party debt collector coverage were from industry stakeholders such as credit unions, banks, and installment lenders, and their trade associations. These commenters generally expressed concern that the rule would be applied to first-party debt collectors, with some such commenters expressing particular concern that the Bureau's reliance on its authority under Dodd-Frank Act section 1031 for certain proposed provisions would be used by the Bureau or others to expand the rule to apply to such parties. Dodd-Frank Act section 1031 grants the Bureau authority to write regulations applicable to covered persons and service providers to identify and prevent unfair, deceptive, or abusive acts or practices in connection with a transaction with a consumer for, or the offering of, a consumer financial product or service.

Because first-party debt collectors are likely covered persons or service providers under Dodd-Frank Act section 1031, the commenters expressed concern that the Bureau's reliance on that provision effectively would expand the scope of the rule to cover them, even if they were not FDCPA debt collectors. The SBA also commented that the Bureau's use of its section 1031 Dodd-Frank Act authority would create uncertainty and legal risk for first-party debt collectors that were not in the SBREFA process or any subsequent process. The commenters asked the Bureau to clarify the rule's coverage, either by issuing a final rule without relying on Dodd-Frank Act section 1031 or by clearly stating that the final rule, including any provisions that rely on Dodd-Frank Act section 1031, does not apply to first-party debt collectors.

12 U.S.C. 5531(b).

The Bureau declines to expand the rule to apply to first-party debt collectors who are not FDCPA debt collectors, as requested by some commenters. The proposal was intended to implement provisions of the FDCPA, and the Bureau did not solicit feedback on whether or how such provisions should apply to first-party debt collectors. This rule also is not intended to address whether activities performed by entities that are not subject to the FDCPA may violate other laws, including the prohibitions against unfair, deceptive, or abusive practices in Dodd-Frank Act section 1031.

For the same reasons, the Bureau also declines to clarify whether any particular actions taken by a first-party debt collector who is not an FDCPA debt collector would constitute an unfair, deceptive, or abusive practice under Dodd-Frank Act section 1031. Indeed, for the reasons discussed in the section-by-section analysis of §§ 1006.14 and 1006.30, the Bureau is not finalizing any provisions of the rule pursuant to its authority under Dodd-Frank Act section 1031.

For these reasons, and because the Bureau plans to finalize proposed § 1006.34(c)(2)(iv) and (3)(iv) as part of the Bureau's disclosure-focused final rule,

the Bureau is adopting § 1006.1(c)(1) as proposed and is reserving § 1006.1(c)(2). The Bureau is adopting § 1006.1(c) pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors.

See

the section-by-section analysis of § 1006.34.

Section 1006.2 Definitions

Existing § 1006.2 describes how a State may apply for an exemption from the FDCPA as provided in FDCPA section 817.

Consistent with the Bureau's proposal to revise part 1006 to regulate the debt collection activities of FDCPA debt collectors, the Bureau proposed to repurpose existing § 1006.2 to implement and interpret FDCPA section 803,

which defines terms used throughout the statute, and to define additional terms that would be used in the regulation.

The Bureau proposed to move existing § 1006.2 to paragraph II of appendix A of the regulation.

15 U.S.C. 1692o.

15 U.S.C. 1692a.

See

84 FR 23274, 23287-93 (May 21, 2019).

The Bureau received no substantive comments on proposed § 1006.2(a) (defining the term Act or FDCPA) or on proposed § 1006.2(c), (g), or (

) (implementing the FDCPA section 803 definitions of Bureau, creditor, and State, respectively). The Bureau therefore is adopting those provisions as proposed and is not discussing them further in the section-by-section analysis below. The Bureau received a number of comments on the other definitions in proposed § 1006.2 and is finalizing them as discussed in the section-by-section analysis of § 1006.2(b), (d) through (f), and (h) through (k) below. As proposed, the Bureau is finalizing § 1006.2 to implement and interpret FDCPA section 803, pursuant to its authority under FDCPA section 814(d).

2(b) Attempt To Communicate

The Bureau proposed in § 1006.2(b) to define an attempt to communicate as any act to initiate a communication or other contact with any person through any medium, including by soliciting a response from such person.

Proposed § 1006.2(b) further stated that an attempt to communicate includes providing a limited-content message, as defined in § 1006.2(j). For the reasons discussed below, the Bureau is finalizing § 1006.2(b) with a narrower definition of attempt to communicate and is adopting new commentary to clarify the definition's scope.

See id.

at 23287.

The Bureau received a number of comments on proposed § 1006.2(b)'s definition of attempt to communicate. Industry commenters generally requested additional clarity on, or exclusions for, certain messages or activity. Specifically, these commenters asked about the following: (1) Telephone calls that do not result in a voicemail message or conversation with a consumer for various reasons (such as a full voicemail inbox, a voicemail message system that records only a partial message from the debt collector, a telephone number that has been disconnected, or a consumer who disconnects the call after answering); (2) activity directed to groups of consumers or the general public, such as marketing or advertising; (3) personal communications, such as ordering lunch; (4) legally required communications; (5) visits by a consumer to a debt collector's website or online portal; and (6) administrative communications, such as any communications with financial institutions necessary to facilitate a consumer's payment arrangement. These commenters believed that, without additional clarity or exclusions for such situations, the definition of attempt to communicate would be overbroad.

As an initial matter, the Bureau notes that the definition of attempt to communicate, by itself, imposes no direct obligations on debt collectors. Other sections of the final rule, including §§ 1006.6(b) and (c) and 1006.14(h), however, restrict or prohibit attempts to communicate in certain circumstances. While commenters generally did not express concern about the proposed definition of attempt to communicate as it relates to those provisions, the Bureau interprets commenters' feedback in light of the conduct those provisions were designed to address.

The Bureau finds that certain messages or activity discussed by commenters, such as telephone calls that do not result in a voicemail message or conversation with a consumer, should be considered attempts to communicate. These messages or activity may raise consumer protection concerns that provisions of the final rule regulating attempts to communicate are designed to address. For example, a debt collector might call a consumer to discuss the consumer's debt at a time that the consumer has designated as inconvenient but fail to reach the consumer because the consumer declines to answer the telephone. Final § 1006.6(b)(1) prohibits a debt collector from communicating or attempting to communicate with a consumer in connection with the collection of any debt at a time or place that the debt collector knows or should know is inconvenient to the consumer. In this example, the debt collector likely would have “act[ed] to initiate a communication”—and thus attempted to communicate—with the consumer at an inconvenient time in violation of § 1006.6(b)(1)(i).

As discussed in the section-by-section analysis of final § 1006.6(b), a consumer who hears a telephone ringing at an inconvenient time or place but who does not answer it may experience the natural consequence of harassment from the telephone ringing in much the same way as a consumer who answers and speaks to the debt collector on the telephone. Therefore, such activity remains covered under final § 1006.2(b) so that final §§ 1006.6(b) and (c) and 1006.14(h) have their intended effect.

Similar reasoning would apply to telephone calls that do not result in a voicemail message or conversation with a consumer for various reasons, described above.

At the same time, the Bureau finds that other messages or activity discussed by commenters, such as general marketing and advertising directed to groups of consumers or the general public, or personal communications, should not be considered attempts to communicate. These messages or activity may not raise the same consumer protection concerns that motivated other provisions of the final rule regulating attempts to communicate. For example, a debt collector might place a general advertisement on a website, and a consumer might then view that advertisement at a time that the consumer has designated as inconvenient. As noted above, final § 1006.6(b)(1) prohibits a debt collector from communicating or attempting to communicate with a consumer in connection with the collection of any debt at a time or place that the debt collector knows or should know is inconvenient to the consumer. In this example, the debt collector likely would have “act[ed] to initiate a . . . contact”—and thus attempted to communicate under proposed § 1006.2(b)—with the consumer at an inconvenient time in violation of § 1006.6(b)(1)(i). But consumers likely consider a general online advertisement about a debt collector's business, which contains no reference to the consumer's specific debt, to be less intrusive, and therefore less inconvenient than, for example, a telephone call placed to them by a debt collector. Consumers also are more likely to be able to ignore a general advertisement. Moreover, a debt collector likely cannot control when a consumer visits a website displaying the debt collector's advertisement or reconcile all the communications preferences of all the consumers who might see the advertisement. To tailor the covered activity, the Bureau is finalizing the definition of attempt to communicate in § 1006.2(b) with the phrase or other contact “about a debt.”

Similarly, a debt collector's personal communications would not be an act to initiate a contact about a debt and therefore not an attempt to communicate.

The Bureau determines that the other categories of messages or activity raised by industry commenters are sufficiently addressed by other provisions of this final rule and therefore do not require a revision to the definition of attempt to communicate. As to consumers' visits to a debt collector's website or online portal, comment 6(b)(1)-2.iii illustrates that, notwithstanding an inconvenient time designation by a consumer, a debt collector may provide information to a consumer who visits or navigates the debt collector's website or online portal. As to legally required communications, § 1006.14(h)(2)(iii) provides that, if otherwise required by applicable law, a debt collector may communicate or attempt to communicate with a person in connection with the collection of any debt through a medium of communication that the person has requested the debt collector not use to communicate with the person. And finally, as to administrative communications, § 1006.6(d)(2)(ii) allows debt collectors to communicate with third parties with the prior consent of the consumer given directly to the debt collector, which should permit communications necessary to facilitate a consumer's payment plan. The relevant

section-by-section analyses provide more information about the operation of these provisions.

See

the section-by-section analyses of §§ 1006.6(b)(1) and (d)(2)(ii) and 1006.14(h)(2)(iii).

Finally, a group of consumer advocates noted that, although they generally opposed the limited-content message in proposed § 1006.2(j), they supported the fact that the proposal would impose some limitations on attempts to communicate. However, these commenters stated that certain protections did not apply to attempts to communicate, such as the prohibition on third-party disclosures in proposed § 1006.6(d)(1) and the prohibition on communicating by postcard in proposed § 1006.22(f)(1). The Bureau has evaluated the scope of this final rule and determines that each substantive provision addresses a range of conduct appropriate to achieve the goals of that section. The section-by-section analysis throughout part V provides additional explanation for the final rule's substantive provisions.

For the reasons discussed above, the Bureau is finalizing § 1006.2(b) to provide that an attempt to communicate means any act to initiate a communication or other contact about a debt with any person through any medium, including by soliciting a response from such person.

Comment 2(b)-1 clarifies that an act to initiate a communication or other contact about a debt with a person is an attempt to communicate regardless of whether the attempt, if successful, would be a communication that conveys information regarding a debt directly or indirectly to any person, and includes two illustrative examples.

2(d) Communicate or Communication

FDCPA section 803(2) defines the term communication to mean the conveying of information regarding a debt directly or indirectly to any person through any medium.

The Bureau proposed § 1006.2(d) to restate the statutory definition of communication, with only minor changes for clarity.

Proposed § 1006.2(d) further stated that a debt collector does not convey information regarding a debt directly or indirectly to any person—and therefore does not communicate with any person—if the debt collector provides only a limited-content message, as defined in § 1006.2(j). For the reasons discussed below, the Bureau is finalizing § 1006.2(d) largely as proposed, with minor revisions for clarity.

15 U.S.C. 1692a(2).

See

84 FR 23274, 23287-88 (May 21, 2019).

The Bureau received several comments on proposed § 1006.2(d)'s definition of communicate or communication. As with comments on the proposed definition of attempt to communicate discussed above, industry commenters generally requested the Bureau provide clarity on, or exclusions for, certain types of activity. These commenters asked about the following: (1) Marketing, advertising, or other promotional materials; (2) automated replies acknowledging a consumer's message; (3) visits by a consumer to a debt collector's website or online portal; (4) legally required communications; and (5) caller ID information that discloses the debt collector's business name.

The Bureau agrees that it would be useful to clarify that certain types of advertising and marketing are not communications under § 1006.2(d). For example, a debt collector might develop general advertising or marketing materials to build the debt collector's brand, promote the debt collector's services, or establish the debt collector's legitimacy. If such activity includes no information about a specific debt, it likely would not meet the definition of a communication.

The Bureau determines that other provisions in this final rule sufficiently address the other categories of messages or activity raised by industry commenters. Therefore, these messages or activity do not require clarification in the definition of communication. First, as to automated replies, comment 6(b)(1)-2.iv illustrates that a debt collector may send an automated reply generated in response to a message sent by a consumer at a time that the consumer previously had designated as inconvenient. Second, comment 6(b)(1)-2.iii illustrates that, notwithstanding an inconvenient time designation by a consumer, a debt collector may provide information to a consumer who visits or navigates the debt collector's website or online portal. Third, § 1006.14(h)(2)(iii) provides that, if otherwise required by applicable law, a debt collector may communicate with a person in connection with the collection of any debt through a medium of communication that the person has requested the debt collector not use to communicate with the person. And, finally, § 1006.2(j) defines a type of message—the limited-content message—that includes a debt collector's business name but is not a communication. Although the final rule does not explicitly address caller ID, a debt collector's business name that does not indicate that the debt collector is in the debt collection business is part of the required content of a limited-content message under the final rule, so caller ID information that discloses that content alone would not transform what is otherwise an attempt to communicate into a communication. The relevant section-by-section analyses provide more information about the operation of these provisions.

See

the section-by-section analyses of §§ 1006.2(j), 1006.6(b)(1), and 1006.14(h)(2)(iii).

Finally, consumer advocates objected to the proposed clarification that a limited-content message is not a communication. The Bureau finds that the limited-content message is appropriately considered an attempt to communicate rather than a communication, as discussed below in the section-by-section analysis of final § 1006.2(j).

For the reasons discussed above, the Bureau is finalizing § 1006.2(d) and comment 2(d)-1 largely as proposed.

100

The Bureau is also adopting new comment 2(d)-2 to clarify the status of limited-content messages, as defined in § 1006.2(j), and marketing or advertising messages that do not contain information about a specific debt.

100

Comment 2(d)-1 explains that a communication can occur through “any medium” and explains that “any medium” includes any oral, written, electronic, or other medium. The Bureau did not receive any relevant feedback regarding this comment and, therefore, is finalizing it as proposed.

2(e) Consumer

FDCPA section 803(3) defines a consumer as any natural person obligated or allegedly obligated to pay any debt.

101

The Bureau proposed § 1006.2(e) to implement this definition and to interpret it to include a deceased natural person who is obligated or allegedly obligated to pay a debt.

102

Proposed § 1006.2(e) also provided that, for purposes of §§ 1006.6 and 1006.14(h), the term consumer included the persons described in the special definition of consumer in § 1006.6(a).

101

15 U.S.C. 1692a(3).

102

See

84 FR 23274, 23288 (May 21, 2019).

The Bureau received a number of comments regarding its proposal to interpret the term consumer to include deceased natural persons. The Bureau proposed that interpretation, in large part, to facilitate the delivery of validation notices under proposed § 1006.34 when the consumer obligated, or allegedly obligated, on the debt has died. The Bureau plans to address comments received regarding that interpretation, and to determine whether to finalize that interpretation,

as part of the Bureau's disclosure-focused final rule.

103

See

the section-by-section analysis of § 1006.34.

The Bureau's proposed § 1006.2(e) cross-referenced proposed § 1006.14(h). The Bureau proposed that the prohibition on communication media under § 1006.14(h) apply to “a consumer” as defined under § 1006.6(a) but, as finalized, § 1006.14(h) applies to “a person.”

104

It therefore is not necessary for § 1006.2(e) to include the proposed cross-reference § 1006.14(h).

104

See

the section-by-section analysis of § 1006.14(h)(1).

For the reasons discussed above, the Bureau is finalizing § 1006.2(e) to provide that the term consumer means any natural person obligated or allegedly obligated to pay any debt. Final § 1006.2(e) further provides that, for purposes of § 1006.6, the term consumer includes the persons described in § 1006.6(a). It also provides that the Bureau may further define the term by regulation to clarify its application when the consumer is deceased.

2(f) Consumer Financial Product or Service Debt

The Bureau proposed § 1006.2(f) to define consumer financial product or service debt to mean any debt related to any consumer financial product or service, as consumer financial product or service is defined in section 1002(5) of the Dodd-Frank Act.

105

84 FR 23274, 23288-89 (May 21, 2019).

The Bureau is not finalizing § 1006.2(f) as proposed. As discussed in the section-by-section analysis of § 1006.1(c), the Bureau proposed certain provisions pursuant to its authority under Dodd-Frank Act sections 1031 and 1032, and those provisions would have applied to a debt collector only if the debt collector was collecting a debt related to a consumer financial product or service, as that term is defined in section 1002(5) of the Dodd-Frank Act.

106

However, as discussed in more detail in the section-by-section analyses of §§ 1006.14, 1006.30 and 1006.34, the Bureau is not finalizing those provisions in this rulemaking. As a result, there is no need to define consumer financial product or service debt in this rulemaking.

106

12 U.S.C. 5531(b).

2(h) Debt

FDCPA section 803(5) defines the term debt for purposes of the FDCPA.

107

Proposed § 1006.2(h) would have implemented FDCPA section 803(5) and generally restated the statute by defining debt as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services that are the subject of the transaction are primarily for personal, family, or household purposes, whether or not the obligation has been reduced to judgment. Proposed § 1006.2(h) also would have clarified that, for purposes of § 1006.2(f), the term debt means debt as that term is used in the Dodd-Frank Act.

108

107

12 U.S.C. 1692a(5).

108

See

84 FR 23274, 23289 (May 21, 2019).

Several consumer advocates and an industry trade group stated that the proposal to define debt for purposes of § 1006.2(f) as that term is used in the Dodd-Frank Act was confusing and should be removed or revised. In addition, one industry trade group commenter recommended that the Bureau clarify that debt subject to the FDCPA is limited to debt incurred only by a natural person.

The Bureau is finalizing § 1006.2(h) generally as proposed. However, the Bureau is not finalizing proposed § 1006.2(h)'s cross-reference to § 1006.2(f) because, as discussed in the section-by-section analysis of § 1006.2(f), the Bureau is not finalizing § 1006.2(f). This change should address commenters' concerns about the regulation including different definitions of the term debt.

The final rule also adds new comment 2(h)-1 to clarify, as requested, that debt subject to the FDCPA is limited to debt incurred by a natural person. The comment explains that § 1006.2(h) defines debt to mean, in part, an obligation of a consumer, and that § 1006.2(e), in turn, defines a consumer as a natural person obligated or allegedly obligated to pay any debt. Thus, only natural persons can incur the debts defined in § 1006.2(h).

2(i) Debt Collector

FDCPA section 803(6) defines the term debt collector for purposes of the FDCPA.

109

The introductory language of FDCPA section 803(6) generally provides that a debt collector is any person: (1) Who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts (

i.e.,

the “principal purpose” prong), or (2) who regularly collects, or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due to another (

i.e.,

the “regularly collects” prong). FDCPA section 803(6) also sets forth several exclusions from the general definition.

109

15 U.S.C. 1692a(6).

Proposed § 1006.2(i) generally restated FDCPA section 803(6)'s definition of debt collector, with only minor wording and organizational changes for clarity

110

and to specify that the term excludes private entities that operate certain bad check enforcement programs that comply with FDCPA section 818.

111

The preamble to the proposal discussed the Supreme Court's holding in

Henson

Santander Consumer USA Inc.

112

and, consistent with that decision, noted that a debt buyer collecting debts that it purchased and owned could be considered a debt collector for purposes of the rule if the debt buyer either met the “principal purpose” prong of the definition or regularly collected or attempted to collect debts owned by others, in addition to collecting debts that it purchased and owned.

113

110

For example, to avoid obsolete language, proposed § 1006.2(i) uses the term “mail” instead of “the mails.”

111

15 U.S.C. 1692p.

112

137 S. Ct. 1718 (2017). In

Henson,

the Court held that a company may collect defaulted debts that it has purchased from another without being an FDCPA debt collector. Furthermore, the Court decided only whether, by using its own name to collect debts that it had purchased, Santander met the “regularly collects” prong of the introductory language in FDCPA section 803(6).

Id.

at 1721 (quoting 15 U.S.C. 1296a(6)). The Court held that Santander was not a debt collector within the meaning of the “regularly collects” prong because Santander was collecting debts that it purchased and owned, not collecting debts owed to another.

Id.

at 1721-22. The Court expressly declined to address two other ways that a debt buyer like Santander might qualify as a debt collector under FDCPA section 803(6): (1) By meeting the “regularly collects” prong by regularly collecting or attempting to collect debts owned by others, in addition to collecting debts that it purchased and owned; or (2) by meeting the “principal purpose” prong of the definition.

Id.

at 1721 (quoting 15 U.S.C. 1296a(6)). The Court had not identified these questions as being presented when it granted certiorari.

Id.

113

84 FR 23274, 23289 (May 21, 2019). In addition to

Henson,

the Supreme Court also recently interpreted FDCPA section 803(6) to hold that a business engaged in no more than nonjudicial foreclosure proceedings is not an FDCPA debt collector, except for the limited purpose of FDCPA section 808(6).

See Obduskey

McCarthy & Holthus LLP,

139 S. Ct. 1029 (2019). And the Third Circuit provided in

Barbato

Greystone Alliance, LLC,

916 F.3d 260 (3d Cir.), cert. denied, 140 S. Ct. 245 (2019), that a debt buyer whose principal purpose was debt collection was an FDCPA debt collector even though the debt buyer outsourced its collection activities to third parties.

The Bureau received a number of comments on the proposed definition of debt collector. The Bureau received comments from both consumer advocate and industry commenters discussing the extent to which debt buyers would be considered debt collectors under Regulation F and asking the Bureau to provide additional explanation or include the proposed preamble

discussion of the

Henson

decision in commentary to the final rule. Several industry commenters also requested carve outs for certain entities, including mortgage servicers and, citing Dodd-Frank Act section 1027(e)(1),

114

licensed attorneys engaged in litigation activities or the practice of law.

114

12 U.S.C. 5515(e)(1) (establishing an exclusion for the practice of law, subject to certain exceptions, as to the Bureau's exercise of supervisory or enforcement authority).

The Bureau is finalizing § 1006.2(i) as proposed, except the final rule corrects an inaccurate cross-reference that had been included in the proposal and includes new comment 2(i)-1 to respond to requests to clarify the scope of the term debt collector as interpreted by the Supreme Court in

Henson.

Specifically, new comment 2(i)-1 provides that a person who collects or attempts to collect defaulted debts that the person has purchased, but who does not collect or attempt to collect, directly or indirectly, debts owed or due, or asserted to be owed or due, to another, and who does not have a business the principal purpose of which is the collection of debts, is not a debt collector as defined in § 1006.2(i).

The Bureau declines to exclude licensed attorneys or mortgage servicers from the definition of debt collector. The FDCPA's definition of debt collector does not exempt licensed attorneys or mortgage servicers who otherwise meet the definition of debt collector. Interpreting the definition to exclude these or other entities would constitute a significant interpretation of the FDCPA on which the public did not have the opportunity to comment. These suggestions thus are outside the scope of the proposal. In addition, the FDCPA applies to attorneys who regularly engage in debt collection activity, even when that activity consists of litigation,

115

and the Bureau disagrees that it does not have authority to engage in rulemaking or other activities covering attorneys engaged in litigation or the practice of law. Dodd-Frank Act section 1027(e)(1) does not restrict the Bureau's rulemaking authority, and the Bureau considered and rejected arguments that Dodd-Frank Act section 1027(e)(1) constrains the Bureau's supervisory or enforcement authority over larger participant debt collectors in its 2012 final rule defining larger participants of the consumer debt collection market.

116

115

See Heintz

Jenkins,

514 U.S. 291, 299 (1995) (holding that “attorneys who `regularly' engage in consumer-debt-collection activity” are subject to the FDCPA, “even when that activity consists of litigation.”). In reaching this decision, the Supreme Court discussed the history of the FDCPA, which contained an express exemption for lawyers until Congress repealed the exemption in its entirety in 1986 “without creating a narrower, litigation-related exemption to fill the void.”

Id.

at 294-95.

116

See

77 FR 65775, 65784 (Oct. 31, 2012) (citing Dodd-Frank Act section 1027(e)(3), 12 U.S.C. 5515(e)(3), which states that Dodd-Frank Act section 1027(e)(1) “shall not be construed so as to limit the authority of the Bureau with respect to any attorney, to the extent that such attorney is otherwise subject to any of the enumerated consumer laws or the authorities transferred under subtitle F or H”).

2(j) Limited-Content Message

FDCPA section 803(2) defines the term communication to mean the conveying of information regarding a debt directly or indirectly to any person through any medium.

117

Proposed § 1006.2(d) would have implemented and interpreted that definition, including by specifying that a debt collector does not engage in an FDCPA communication if the debt collector provides only a limited-content message.

118

The Bureau proposed in § 1006.2(j) to further interpret FDCPA section 803(2) by defining a type of message, the “limited-content message,” that would not convey information about a debt directly or indirectly to any person. Therefore, as proposed, a debt collector could provide such a message for a consumer without communicating with any person for the purposes of the FDCPA or Regulation F. Proposed § 1006.2(j)(1) would have required that limited-content messages include certain content, and proposed § 1006.2(j)(2) would have permitted certain additional content.

119

117

15 U.S.C. 1692a(2).

118

See

84 FR 23274, 23290-93 (May 21, 2019).

119

Proposed § 1006.2(j)(1) would have required limited-content messages to include: The consumer's name, a request that the consumer reply to the message, the name or names of one or more natural persons whom the consumer can contact to reply to the debt collector, a telephone number that the consumer can use to reply to the debt collector, and, if delivered electronically, a disclosure explaining how the consumer can stop receiving messages through that medium. Proposed § 1006.2(j)(2) would have permitted limited-content messages to include the following additional items: A salutation, the date and time of the message, a generic statement that the message relates to an account, and suggested dates and times for the consumer to reply to the message.

See

the section-by-section analysis of § 1006.2(j)(1) and (2).

Proposed comment 2(j)-1 explained that any message that included content other than the required or optional content specified in § 1006.2(j)(1) and (2) would not be a limited-content message. The proposed comment further explained that, if a message included any other content and such other content directly or indirectly conveyed any information about a debt, the message would be a communication, as defined in proposed § 1006.2(d). Proposed comment 2(j)-2 provided examples of limited-content messages, proposed comment 2(j)-3 illustrated ways in which a debt collector could transmit a limited-content message to a consumer (

e.g.,

by voicemail, text message, or with a third party, but not by email), and proposed comment 2(j)-4 provided that a debt collector who placed a telephone call and left only a limited-content message would not have, with respect to that telephone call, violated FDCPA section 806(6)'s prohibition on the placement of telephone calls without meaningful disclosure of the caller's identity.

The Bureau received a large number of comments from industry and trade association commenters, consumer advocates, government commenters, and others on the proposal to define a limited-content message. After considering that feedback, the Bureau is finalizing the proposed definition with several modifications as discussed below.

Limited-Content Message Concept

Many commenters addressed the overall concept of a limited-content message and general aspects of the proposed definition.

120

Federal government agency staff noted the uncertainty surrounding voicemail messages and supported efforts to clarify debt collectors' obligations. Industry commenters also supported the limited-content message in principle and explained that such a provision would have several benefits. Many of these commenters argued that a limited-content message would facilitate communication between consumers and debt collectors, which would benefit consumers by reducing the frequency of debt collection calls, lowering the interest and fees accrued by outstanding debts, reducing the number of lawsuits filed against consumers, and giving consumers more control over when they listen to debt collection messages and respond to debt collectors. Several of these commenters stated that consumers believe that calls from unknown telephone numbers are scams, especially if such callers fail to leave voicemail messages. One industry commenter observed that consumers expected callers to leave voicemail messages, while another commenter reported that, without voicemail messages, consumers may think debt collectors are unresponsive to consumers' efforts to communicate.

120

To the extent that comments addressed elements of the proposed required or optional content, the Bureau discusses them in the section-by-section analysis of final § 1006.2(j)(1) and (2), respectively.

Other industry commenters argued that a limited-content message would reduce unjustified lawsuits against debt collectors. One trade group commenter stated that legal uncertainty and fear of liability cause many debt collectors to avoid leaving messages entirely. Another trade group commenter asserted that debt collectors have tried leaving various messages but are still threatened by lawsuits. Finally, a trade group commenter reported that most of its members leave a message found not to be a communication by one Federal district court in

Zortman

J.C. Christensen & Assocs., Inc.

121

870 F. Supp. 2d 694, 696 (D. Minn. 2012) (holding that debt collector did not violate FDCPA section 805(b) by leaving a voicemail message that stated, “We have an important message from J.C. Christensen & Associates. This is a call from a debt collector. Please call 866-319-8619.”).

Many individual consumers and consumer advocates opposed any limited-content message. Most of these commenters asserted that such a message was an impermissible exemption from the FDCPA sections defining and regulating communications. Other commenters argued that the proposal would violate consumer privacy by permitting third parties to hear or see limited-content messages. And other commenters appeared to assert, incorrectly, that none of the proposal's provisions regulating attempts to communicate or communications would apply to limited-content messages.

As explained in the proposal, uncertainty about what constitutes a communication under FDCPA section 803(2) has led to questions about how debt collectors can leave voicemails or other messages for consumers while complying with certain FDCPA provisions.

122

If a voicemail or other message is a communication with a consumer, FDCPA section 807(11) requires that the debt collector identify itself as a debt collector or inform the consumer that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose.

123

A debt collector who leaves a message with such disclosures, however, risks violating FDCPA section 805(b)'s prohibition against revealing debts to third parties if the disclosures are seen or heard by a third party.

124

Thus, certain messages may put a debt collector who wants to avoid FDCPA liability in the position of having to disclose the debt collector's identity and purpose, while avoiding disclosure of the debt to third parties.

122

See

84 FR 23274, 23290 (May 21, 2019).

123

15 U.S.C. 1692e(11).

See also Foti

NCO Fin. Sys., Inc.,

424 F. Supp. 2d 643, 655-56 (S.D.N.Y. 2006);

Hosseinzadeh,

387 F. Supp. 2d at 1104.

Apart from the absence of uncertainty and litigation comparable to voicemail messages, other communication media differ from voicemail messages in ways that are relevant to the limited-content message. Consumers may behave differently in response to voicemail messages than messages sent through other communication media. For example, because of cybersecurity concerns, consumers may be more likely to delete or ignore a generic text or email message from an unfamiliar sender than a similar voicemail message. As several commenters noted, email and text messages can contain links or other content that could install malware on a consumer's mobile telephone or computer. Indeed, several Federal agencies advise consumers to delete suspicious emails and text messages.

131

Finally, messages sent through other communication media might include information beyond that permitted by final § 1006.2(j). For example, a social media platform may limit debt collectors' ability to send messages to people outside a user's network, but a debt collector joining a consumer's network may create a prohibited third-party disclosure.

132

131

Fed. Trade Comm'n,

How to Recognize and Avoid Phishing Scams

(May 2019),

https://www.consumer.ftc.gov/articles/how-recognize-and-avoid-phishing-scams;

Fed. Deposit Ins. Corp.,

Learning Bank—Frauds & Scams

(Jan. 30, 2018),

https://www.fdic.gov/about/learn/learning/scams.html;

Fed. Commc'ns Comm'n,

Avoid the Temptation of Smishing Scams

(Nov. 9, 2018),

https://www.fcc.gov/avoid-temptation-smishing-scams.

132

LinkedIn Messaging—Overview (July 4, 2018),

https://www.linkedin.com/help/linkedin/answer/61106/linkedin-messaging-overview?lang=en

(“On LinkedIn, you can only message your 1st-degree connections (and, within group pages, fellow group members) for free.”); Colin Hector,

Debt collectors: You may “like” social media and texts, but are you complying with the law?,

Fed. Trade Comm'n Bus. Blog (Mar. 28, 2016),

https://www.ftc.gov/news-events/blogs/business-blog/2016/03/debt-collectors-you-may-social-media-texts-are-you-complying.

For these reasons, final § 1006.2(j) limits the definition of limited-content messages to voicemail messages for a consumer.

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The Bureau finds that voicemail messages include ringless voicemail messages. The Bureau concludes that, from a consumer's perspective, ringless voicemail messages present no greater risk of third-party disclosure than traditional voicemail messages.

Final § 1006.2(j) identifies a voicemail message that debt collectors may leave for consumers without conveying information about a debt—and therefore communicating—under the final rule. Final § 1006.2(j) neither defines the exclusive means by which debt collectors can avoid conveying information about a debt nor reflects a determination that messages sent using other communication media are always communications under the FDCPA and the final rule. In addition, as noted above, final § 1006.6(d)(3) through (5) provides procedures that debt collectors

may follow to obtain a safe harbor from civil liability for unintentional third-party disclosures when communicating with consumers by email or text message.

Messages Left With Third Parties

Proposed § 1006.2(j) would have allowed a debt collector to leave a limited-content message orally with a third party. For example, a debt collector could have left a limited-content message in a live conversation with a third party who answered the consumer's home, mobile, or work telephone number. The Bureau received many comments on this aspect of the proposal.

Several industry commenters supported it. One trade group commenter explained that debt collectors often do not know whether a telephone number they are dialing belongs to the consumer, while another industry commenter argued that, without the ability to leave a limited-content message with anyone who answers a consumer's telephone, debt collectors would have to continue calling until they reach the consumer. Another trade group commenter requested that the Bureau allow debt collectors to ask third parties to convey the message to the consumer. One industry commenter asked whether debt collectors could combine limited-content messages with location calls, asserting that this would reduce the number of attempts to speak to a third party.

Many commenters, including consumer advocates, government commenters, numerous individual consumer commenters, and an academic commenter, opposed allowing debt collectors to leave limited-content messages with third parties. These commenters raised several issues with the proposal. First, most of these commenters believed that, after receiving a limited-content message in a live conversation, a third party would ask questions that, if answered, would reveal that the consumer owes or is alleged to owe a debt. These commenters further asserted that, even if the debt collector avoided answering a third party's questions, such evasiveness would also disclose that the call related to debt collection. Along with the risks created by the interactive nature of live conversations with third parties, Federal government agency staff encouraged the Bureau to consider the effect of debt collectors leaving limited-content messages in multiple live conversations with the same third party.

Second, some of these commenters expressed concern with limited-content messages left with particular third parties. For example, commenters, including many consumer advocates, expressed concern that a limited-content message left with an employer could threaten a consumer's continued employment. And one consumer advocate stated that domestic abusers could learn details of a consumer's financial situation or manipulate the debt collector into revealing other private information.

Third, some commenters asserted that the proposal could encourage debt collectors to intentionally contact third parties for the purpose of leaving limited-content messages. These commenters believed that a debt collector could indirectly harass a consumer by leaving limited-content messages with the consumer's friends, employers, coworkers, family, or other associates.

Fourth, consumer advocates expressed concern about the proposal's impact on third parties. Third parties, this commenter argued, may also find limited-content messages harassing or annoying and, as this commenter observed, the proposal would not have granted them the same rights as consumers to cease communications, designate inconvenient times and places, or restrict communication media.

Finally, consumer advocates asserted that allowing third-party limited-content messages would upset the statutory balance Congress struck between consumers' and debt collectors' interests. Under this commenter's interpretation, the FDCPA created a narrow exception to the prohibition on third-party communications only for location communications, which the proposal would violate by also permitting limited-content messages.

After further consideration, the Bureau is declining to finalize a definition of limited-content message that allows for third-party limited-content messages. As discussed above, final § 1006.2(j) is limited to voicemail messages. Thus, a limited-content message left in a live conversation with third parties would not meet the definition in § 1006.2(j). Regarding voicemail messages left with third parties, the section-by-section analysis of final § 1006.2(j)(1) requires debt collectors to include a business name for the debt collector that does not indicate that the debt collector is in the debt collection business but not the name of the consumer. Prohibiting debt collectors from including the consumer's name greatly reduces the probability of any message left for a third party eventually reaching the consumer. Without a clear connection to the consumer, the Bureau finds that third-party voicemail messages would benefit neither consumers nor debt collectors. Therefore, final § 1006.2(j)'s definition of limited-content message does not permit third-party messages, either in live conversations or as voicemail messages.

The Bureau recognizes, however, that debt collectors are often unsure whether a person with whom they are attempting to communicate is the consumer. Indeed, the restricted content of the limited-content message contemplates the possibility of a third party hearing the information. Prohibiting all third-party limited-content messages, no matter how inadvertent, would unreasonably limit final § 1006.2(j). Therefore, messages left without knowledge that the voicemail belongs to a third party, or if a debt collector is unsure to whom the voicemail belongs, are limited-content messages. Accordingly, the Bureau is finalizing comment 2(j)-2 to clarify that a message knowingly left for a third party is not a limited-content message.

Importantly, nothing in final § 1006.2(j) places additional restrictions on debt collectors' abilities to communicate or attempt to communicate with third parties. Final § 1006.2(j) identifies a voicemail message that debt collectors may leave for consumers without conveying information about a debt—and therefore communicating—under the final rule. Final § 1006.2(j) does not attempt to define the exclusive means by which debt collectors can avoid conveying information about a debt. By finalizing a definition of limited-content message that excludes third-party messages, therefore, the Bureau has not determined that messages other than limited-content messages sent to third parties are always communications under the FDCPA and the final rule. The Bureau also notes that the final rule authorizes certain communications with third parties. For example, debt collectors may communicate with third parties to seek location information under § 1006.10 or with the prior consent of the consumer given directly to the debt collector as provided for under § 1006.6(d)(2)(ii).

Meaningful Disclosure of Identity

Proposed comment 2(j)-4 provided that a debt collector who placed a telephone call and left only a limited-content message for a consumer would not have, with respect to that telephone call, violated FDCPA section 806(6)'s prohibition on the placement of telephone calls without meaningful

disclosure of the caller's identity. The Bureau based this interpretation on the fact that proposed § 1006.2(j)(1) would have required a limited-content message to include the name of a natural person whom the consumer could contact as well as a telephone number that the consumer could use to reply to the debt collector and that a limited-content message could not have contained any content that was not described in proposed § 1006.2(j)(1) or (2). The interpretation in proposed comment 2(j)-4 would have applied only when a debt collector placed a telephone call and left only a limited-content message for a consumer.

Two industry commenters believed that the proposed limited-content message satisfied the meaningful disclosure requirement because it required debt collectors to include the name of a natural person to whom the consumer could reply. But two groups of consumer advocates commented that the proposed limited-content message failed to meaningfully disclose the caller's identity because the natural person would likely be unknown to the consumer, might use an assumed name, and might not be the same person who leaves the voicemail message. Meaningful disclosure, these commenters asserted, would require disclosing the identity of the debt collector employing the natural person.

The Bureau determines that consumers benefit from the inclusion in the limited-content message of the name of a natural person, and a telephone number, to which a consumer may reply, as well as from the prohibition on false or misleading statements about the caller's identity or the purpose of the call. But the Bureau agrees with commenters' concerns regarding meaningful disclosure of the caller's identity. Consumers are unlikely to recognize the name of a natural person working for the debt collector, and who might be using an alias. And, as proposed, if the natural person to whom the consumer could reply was different from the natural person leaving the limited-content message, the only information concerning the caller's identity would have been the telephone number included under proposed § 1006.2(j)(1)(iv). For this reason, and as discussed in the section-by-section analysis of § 1006.2(j)(1)(i), the final rule requires limited-content messages to include a business name for the debt collector that does not indicate that the debt collector is in the debt collection business. Not only is the debt collector's business name more useful to consumers, but it also better ensures that debt collectors who leave limited-content messages do not violate FDCPA section 806(6) requiring meaningful disclosure of a debt collector's identity in telephone calls. Because § 1006.2(j)(1)(i) requires that the business name included in a limited-content message not reveal that a debt collector is in the debt collection business, debt collectors may be uncertain whether business names with abbreviations designed to satisfy § 1006.2(j)(1)(i) satisfy the meaningful disclosure requirement. The Bureau is adopting proposed comment 2(j)-4, renumbered as comment 2(j)-3, to clarify that a debt collector who leaves a limited-content message does not violate the requirement to meaningfully disclose the caller's identity with respect to that message.

Implementation Issues

A few industry commenters raised implementation issues related to the proposed limited-content message. These commenters cited issues that may prevent debt collectors from leaving limited-content messages, such as disconnected telephone numbers, voicemail message system limitations, and telephone network errors. They requested that the Bureau clarify that debt collectors who leave incomplete limited-content messages because of technological issues have still left a limited-content message.

Final § 1006.2(j) reflects a carefully tailored message designed to meaningfully disclose the caller's identity and include enough information to permit a consumer to decide how to respond while avoiding conveying information regarding a debt. A partial limited-content message would be less likely to achieve these purposes. Accordingly, the Bureau declines to define partial limited-content messages as limited-content messages. The Bureau notes, however, that nothing in the final rule automatically transforms a partial limited-content message into a communication. If such a message is inconsistent with the final rule despite being caused by inadvertent technological issues,

e.g.,

because the call is dropped before the debt collector can leave its business name, and thereby does not disclose its identity, the Bureau notes that such issues can arise in the context of any telephone call (not just a limited-content message). Depending on the circumstances the bona fide error defense to civil liability in FDCPA section 813(c) may also apply.

Limited-Content Messages and State Laws

A few commenters raised issues related to State laws. A local government commenter asserted that the proposed limited-content message would confuse debt collectors who must also comply with State laws that lack similar provisions. More specifically, a trade group commenter claimed that debt collectors would be unable to leave limited-content messages in States requiring disclosure of the debt collector's business name in every communication. One trade group commenter asked the Bureau to add optional language to proposed § 1006.2(j)(2) to accommodate additional State law disclosures, while another trade group commenter asked the Bureau to preempt such State laws. These commenters did not specifically mention items of information other than the debt collector's name that would be inconsistent with the proposed limited-content message.

As noted above, final § 1006.2(j) identifies a voicemail message that debt collectors can leave for consumers without conveying information about a debt—and therefore communicating—under the final rule. Accordingly, § 1006.2(j) is a definition and by itself neither requires nor prohibits any action. Circumstances might exist, such as when State law requires additional or different information to be included in a voicemail message, under which debt collectors are unable to take advantage of the ability to leave limited-content messages. To the extent commenters' concerns about inconsistent State law concern the name of the debt collector, final § 1006.2(j)(1)(i) requires limited-content messages to include a business name for the debt collector that does not indicate that the debt collector is in the debt collection business.

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See

the section-by-section analysis of § 1006.2(j)(1)(i).

Fraudulent Messages

A few consumer advocates and local government commenters stated that the proposed limited-content message would enable fraud. These commenters argued that the limited-content message was so generic that it could be adopted by scammers and used for fraudulent purposes. Some of these commenters believed that, by proposing to define the limited-content message, the Bureau was contradicting the advice that Federal agencies have given consumers about how to recognize and respond to fraudulent messages. These commenters stated that Federal agencies recommend that consumers ignore messages

containing limited information or coming from unfamiliar senders. But these commenters claimed that the Bureau would encourage consumers to respond to such messages if they took the form of the proposed limited-content message. One consumer advocate cited the heightened cybersecurity risks of limited-content text or email messages, which might contain links or other content that could install malware on a consumer's mobile telephone or computer.

The Bureau has considered these risks and determines that final § 1006.2(j) does not heighten the risk of exploitation by scammers. First, the Bureau is aware of no evidence that voicemail messages currently left by debt collectors, some of which closely resemble final § 1006.2(j)'s limited-content message, have increased bad actors' abilities to harm consumers. Second, the final rule limits the definition of limited-content message to voicemail messages, which should lessen commenters' concerns about limited-content email and text messages. Third, final § 1006.2(j)(1)(i) requires limited-content messages to include a business name for the debt collector that does not indicate that the debt collector is in the debt collection business. Improved information about the identity of the caller decreases any similarity between the limited-content message adopted under this final rule and the types of fraudulent messages about which Federal agencies have warned consumers.

Familiarity With Limited-Content Messages

Several consumer advocates and government commenters argued that the public would eventually become familiar with the limited-content message and associate it with debt collection, suggesting the limited-content message itself would create a prohibited third-party disclosure even if its content alone did not convey information regarding a debt.

As an initial matter, the Bureau notes that limited-content messages may vary slightly in their content because debt collectors may choose to include different items of optional information described in final § 1006.2(j)(2). The Bureau understands that, despite the legal uncertainty in the voicemail context, some debt collectors have been leaving messages that some courts have held are not communications. The Bureau is not aware of any evidence that these messages, some of which closely resemble final § 1006.2(j)'s limited-content message, are so familiar to consumers that the message itself automatically creates a prohibited third-party disclosure. And the Bureau does not believe that any level of familiarity would allow a third party to exclude alternative plausible explanations for a limited-content message, such as a debt collector dialing the wrong telephone number or a debt collector calling for non-collection purposes.

Interaction With Other Provisions of Regulation F

Consumer advocates expressed concern that certain provisions of the proposal governing communications would not apply to the proposed limited-content message, including proposed § 1006.6(d)(1)'s prohibitions regarding communications with third parties, proposed § 1006.10's provisions regarding location communications, proposed § 1006.18(e)'s disclosures, proposed § 1006.22(f)(1)'s prohibition on communicating with consumers by postcard, and proposed § 1006.34's requirements regarding sending validation notices to consumers. The Bureau has evaluated the scope of the final rule and determines that each substantive provision addresses a range of conduct appropriate to achieve the goals of that section. The section-by-section analysis throughout part V provides additional explanation for each of the final rule's substantive provisions.

Interaction With Other Federal Law

One trade group commenter stated that the proposed limited-content message was potentially inconsistent with the Federal Communications Commission's (FCC) rules implementing the Telephone Consumer Protection Act of 1991 (TCPA)

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and the Cellular Telecommunications Industry Association (CTIA)'s industry standards. Specifically, this commenter argued that limited-content text messages sent without a consumer's prior consent may violate the TCPA or industry standards. As explained above, final § 1006.2(j) is limited to voicemail messages. The Bureau declines to address limited-content text messages.

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Public Law 102-243, 105 Stat. 2394 (1991).

For the reasons discussed above and pursuant to its authority to interpret FDCPA section 803(2), the Bureau is finalizing the proposed definition of limited-content message with revisions. Specifically, final § 1006.2(j) provides that a limited-content message is a voicemail message for a consumer that includes all of the content described in § 1006.2(j)(1), that may include any of the content described in § 1006.2(j)(2), and that includes no other content.

The Bureau is finalizing comment 2(j)-1 largely as proposed but with revisions to the reflect the decision to limit the definition of limited-content message to messages left for a consumer by voicemail and to provide an example of a message that is not a limited-content message. New comment 2(j)-2 clarifies that, for the reasons discussed above, a message knowingly left for a third party is not a limited-content message because it is not for a consumer and provides an example. Finally, the Bureau is finalizing proposed comment 2(j)-4 regarding meaningful disclosure of a caller's identity as comment 2(j)-3.

2(j)(1) Required Content

Proposed § 1006.2(j)(1) would have required limited-content messages to include the following content to ensure that they facilitate contact between debt collectors and consumers: The consumer's name (proposed § 1006.2(j)(1)(i)); a request that the consumer reply to the message (proposed § 1006.2(j)(1)(ii)); the name or names of one or more natural persons whom the consumer can contact to reply to the debt collector (proposed § 1006.2(j)(1)(iii)); a telephone number that the consumer can use to reply to the debt collector (proposed § 1006.2(j)(1)(iv)); and, if delivered electronically, a disclosure explaining how the consumer can stop receiving messages through that medium (proposed § 1006.2(j)(1)(iv)). Proposed comment 2(j)(1)(iv)-1 explained that a voicemail or a text message that spells out, rather than enumerates numerically, a vanity telephone number is not a limited-content message. Spelling out a vanity telephone number could, in some circumstances, convey information about a debt or otherwise disclose that the message is from a debt collector.

For the reasons described below, the Bureau is finalizing § 1006.2(j)(1) largely as proposed but with modifications to reflect the revised scope of the definition, as discussed in the section-by-section analysis of § 1006.2(j), and to require a business name for the debt collector that does not indicate that the debt collector is in the debt collection business, in lieu of the consumer's name in § 1006.2(j)(1)(i).

Many industry commenters requested that the Bureau require or permit additional information in the limited-content message. Without additional content, these commenters asserted, consumers would view the limited-content message as uninformative, confusing, or suspicious. Most of these commenters asked the Bureau to allow debt collectors to disclose their business

name, especially if the name did not reveal that the debt collector was in the debt collection business. A few commenters pointed to FDCPA section 808(8), which allows debt collectors to include their business name on an envelope if the name does not indicate that the debt collector is in the debt collection business. Three commenters cited the Bureau's Debt Collection Consumer Survey, which found that almost 90 percent of consumers reported that they preferred voicemail messages to include the creditor or debt collector's name. Along with the debt collector's name, industry commenters asked the Bureau to include various items of information, including: the creditor's name; the debt collector's website address; the type of account, such as a student loan or branded credit card; the debt collector's email address or other electronic contact information; an invitation to enroll in a debt collector's text messaging service; and four consecutive digits from an account number.

After considering the comments, the Bureau is finalizing § 1006.2(j)(1) to require a business name for the debt collector that does not indicate that the debt collector is in the debt collection business, in lieu of the consumer's name in § 1006.2(j)(1)(i). As commenters who referred to the Bureau's Debt Collection Consumer Survey noted, most consumers prefer that voicemail messages disclose the caller's institutional identity.

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Including the debt collector's business name will enable consumers to verify the debt collector's legitimacy and make a better-informed decision about what action, if any, to take in response to the limited-content voicemail message. Consistent with the advice of several Federal agencies, consumers who are suspicious of a limited-content message can use the debt collector's business name to research the company and reply using contact information the consumer finds rather than relying on the telephone number included in the message.

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Consumers may also be more likely to reply to a limited-content message if they believe the message is legitimate. Finally, requiring limited-content messages to include the debt collector's business name ensures meaningful disclosure of the caller's identity consistent with FDCPA section 806(6), as discussed in the section-by-section analysis of § 1006.2(j), above.

136

CFPB Debt Collection Consumer Survey,

supra

note 16, at 38.

137

See, e.g.,

Bureau of Consumer Fin. Prot.,

How to tell the difference between a legitimate debt collector and scammers

(Nov. 20, 2019),

https://www.consumerfinance.gov/about-us/blog/how-tell-difference-between-legitimate-debt-collector-and-scammers/

(“If you're uncomfortable providing any information, you can request the caller's name, company name, street address, and a callback number. You can use this information to verify that they are not a scammer before providing any personal information.”); Fed. Trade Comm'n,

How to Recognize and Avoid Phishing Scams

(May 2019),

https://www.consumer.ftc.gov/articles/how-recognize-and-avoid-phishing-scams#suspect

(“[C]ontact the company using a phone number or website you know is real. Not the information in the email.”); Fed. Commc'ns Comm'n,

Avoid the Temptation of Smishing Scams

(Nov. 9, 2018),

https://www.fcc.gov/avoid-temptation-smishing-scams

(“If you get a text purportedly from a company or government agency, check your bill for contact information or search the company or agency's official website. Call or email them separately to confirm whether you received a legitimate text. A simple web search can thwart a scammer.”).

The Bureau is not finalizing the consumer's name as a required or optional element of the limited-content message as proposed. The Bureau finds that a message containing a business name for the debt collector that does not indicate that the debt collector is in the debt collection business, but not the consumer's name avoids conveying information regarding a debt under FDCPA section 803(2). A third party overhearing such a message would be unable, based on the message's content alone, to rule out several alternative explanations for the message other than that the consumer owes a debt. For example, the third party may believe that a business other than a debt collector has left the message, because final § 1006.2(j)(1) permits only business names that do not indicate that a debt collector is in the debt collection business. Even if a third party believes that a debt collector has left the message, the debt collector might have dialed the wrong telephone number; the debt collector might have dialed the intended telephone number but have inaccurate information about to whom the telephone number is assigned; the debt collector might be calling to seek location information from the consumer;

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or the debt collector might be calling for a non-debt-collection purpose.

139

Including the consumer's name would narrow the range of alternative explanations and increase the risk of third-party disclosure.

140

Accordingly, final § 1006.2(j)(1) does not include the consumer's name in the limited-content message.

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Like FDCPA section 804, final § 1006.10(b)(1) permits a debt collector seeking location information to identify the debt collector's employer “only if expressly requested,” but even a third party who overhears the limited-content message and is generally aware that debt collectors make location communications may be unaware of the precise form and content provisions governing those communications.

139

For example, in a case where the plaintiff worked for a debt collector, a court noted that “[i]t would not be unreasonable that a call from a debt collector related to her employment.”

Zortman,

870 F. Supp. 2d at 705.

140

Although courts disagree about when a message conveys information about a debt, the Bureau's analysis is consistent with several cases considering messages similar to final § 1006.2(j).

See Zortman,

870 F. Supp. 2d at 701 (finding that the following message was not a communication: “We have an important message from J.C. Christensen & Associates. This is a call from a debt collector. Please call 866-319-8619.”);

Miller

MediCredit, Inc.,

No. 3:18-CV-00603 (DJN), 2019 WL 6709388, at *7-8 (E.D. Va. Dec. 9, 2019) (finding that a message similar to the

Zortman

voicemail was not a communication);

Jackson

Eltman, Eltman & Cooper, P.C.,

128 F. Supp. 3d 980, 985 (E.D. Mich. 2015) (finding a fax message was a communication because it “identifies [the consumer] by name and states its purpose as “COLLECTION”);

Gearman

Heldenbrand,

No. 15-cv-2039 (DSD/FLN), 2015 WL 5255335, at *1 (D. Minn. Sept. 9, 2015) (“[M]erely identifying oneself as a debt collector does not convey information regarding a debt.”);

Zweigenhaft

Receivables Performance Mgmt., LLC,

No. 14 CV 01074 RJD JMA, 2014 WL 6085912, at *1 (E.D.N.Y. Nov. 13, 2014) (finding that a message similar to the

Zortman

voicemail was not a communication);

Hanson

Green Tree Servicing, LLC,

No. 12-cv-2933 (DSD/SER), 2013 WL 4504290, at *2 (D. Minn. Aug. 23, 2013) (similar). Indeed, § 1006.2(j) is more protective of consumer privacy than the messages at issue in the

Zortman

line of cases because it includes the condition that the debt collector's business name not reveal that the debt collector is in the debt collection business.

Based on the range of industry commenters who supported including a business name for the debt collector that does not indicate that the debt collector is in the debt collection business, the Bureau expects that many debt collectors will be able to disclose a business name (

e.g.,

a doing business as (d/b/a) name) without revealing that they are in the debt collection business. Moreover, industry has long been subject to FDCPA section 808(8), which allows debt collectors to include their business name on an envelope only if the name does not indicate that the debt collector is in the debt collection business. But circumstances might exist that would prevent debt collectors from taking advantage of the limited-content message definition. For example, a debt collector's business name might reveal that the debt collector is in the debt collection business. In such circumstances, a message that includes the debt collector's business name would not be a limited-content message, as defined in final § 1006.2(j). But, as explained above, final § 1006.2(j) identifies a voicemail message that debt collectors may leave for consumers without conveying information about a debt—and therefore communicating—under the final rule. Final § 1006.2(j) neither defines the exclusive means by which debt collectors can avoid conveying information about a debt nor

reflects a determination that messages that include a business name that reveals that a debt collector is in the debt collection business are always communications under the FDCPA and the final rule.

The Bureau declines to require other information in the content of the limited-content message as requested by commenters. Some information commenters requested be included, such as invitations to enroll in a debt collector's text messaging service, is less relevant given that final § 1006.2(j) is limited to voicemail messages. In addition, the Bureau finds that debt collectors can better convey information regarding electronic communication options to consumers by emailing or texting them consistent with the safe harbor procedures for electronic communications in final § 1006.6(d)(3) through (5). Other requested information, such as descriptions of, or digits from, an account, or the fact that the account was held with a particular creditor, would convey information regarding a debt, as discussed in the section-by-section analysis of § 1006.2(j)(2), below.

A trade group commenter asked whether caller ID information that discloses the debt collector's business name would prevent a debt collector from leaving a limited-content message. As explained immediately above, the final rule requires limited-content messages to include a business name for the debt collector that does not indicate that the debt collector is in the debt collection business. Accordingly, caller ID information that discloses no more than the business name or other content required or permitted by § 1006.2(j) is consistent with the definition of a limited-content message. The Bureau acknowledges that caller ID information may disclose more information than permitted by § 1006.2(j). In these circumstances, such voicemail messages would not meet the definition of limited-content message. The Bureau does not determine, however, that messages with different content, such as a business name displayed by caller ID that reveals that a debt collector is in the debt collection business, are always communications under the FDCPA and the final rule.

The Bureau is not finalizing proposed § 1006.2(j)(1)(v), which would have required the limited-content message to include, if delivered electronically, a disclosure explaining how the consumer can stop receiving messages through that medium. Because final § 1006.2(j) is limited to voicemail messages, this element is no longer applicable.

Similarly, the Bureau is not finalizing proposed comment 2(j)(1)(iv)-1, which would have explained that a voicemail or a text message that spells out, rather than enumerates numerically, a vanity telephone number is not a limited-content message. This comment was intended to address concerns that spelling out a vanity telephone number might convey information about a debt or otherwise disclose the name of the debt collector. Because § 1006.2(j)(1)(i) requires disclosing a business name for the debt collector that does not indicate that the debt collector is in the debt collection business, this comment is less relevant to the limited-content message as finalized. The Bureau notes, however, that a vanity telephone number that reveals that the debt collector is in the debt collection business would not comply with final § 1006.2(j)(1)(i). As explained above, the Bureau finds that a message containing the debt collector's business name but not the consumer's name avoids conveying information regarding a debt under FDCPA section 803(2) and under § 1006.2(d).

For the reasons discussed above, § 1006.2(j)(1) requires that limited-content messages include the following content: A business name for the debt collector that does not indicate that the debt collector is in the debt collection business, a request that the consumer reply to the message, the name or names of one or more natural persons whom the consumer can contact to reply to the debt collector, and a telephone number or numbers that the consumer can use to reply to the debt collector. Comment 2(j)(1)-1 provides an example of a limited-content message containing only required content.

2(j)(2) Optional Content

Proposed § 1006.2(j)(2) would have permitted a debt collector to include in a limited-content message the following optional information: A salutation (proposed § 1006.2(j)(2)(i)), the date and time of the message (proposed § 1006.2(j)(2)(ii)), a generic statement that the message relates to an account (proposed § 1006.2(j)(2)(iii)), and suggested dates and times for the consumer to reply to the message (proposed § 1006.2(j)(2)(iv)). As discussed in the proposal, the Bureau believed that this content might prompt a consumer to reply but, unlike the content described in proposed § 1006.2(j)(1), might not be necessary to enable the consumer to reply to the message or to prevent harassment through an overly generic or uninformative message. For the reasons described below, the Bureau is finalizing § 1006.2(j)(2) largely as proposed, but with revisions to prohibit inclusion of a generic statement that the message relates to an account, and to permit a statement that a consumer who replies to the message can speak to any of the debt collector's representatives or associates.

Numerous commenters addressed proposed § 1006.2(j)(2)(iii)'s optional generic statement that the message relates to an account. Only a few commenters supported this provision. A trade group commenter stated that it had considered alternative language but found it potentially confusing, while an individual believed the word “account” was too general to result in any prohibited third-party disclosures.

In contrast, most of the commenters who addressed the issue opposed the optional reference to an account. Industry commenters generally believed that the word account was too vague to be useful to consumers. These commenters argued that such a reference would be unlikely to prompt consumers to reply. One trade group commenter asserted that fraudulent voicemail messages often contain references to a generic account. Another industry commenter believed that the word “account” might reveal more information than the name of the creditor or debt collector.

Several consumer advocates and government commenters also opposed allowing debt collectors to refer to an account. These commenters argued that the word account would itself reveal the existence of a debt or otherwise invade a consumer's privacy. Some of these commenters argued that the word account inherently discloses the existence of a debt. An academic commenter asserted that most non-debt collection messages include more information about the nature of the consumer's account. One group of consumer advocates cited cases holding that certain messages were not communications under the FDCPA and argued that the absence of a reference to an account was important to the holding in those cases.

The Bureau does not believe that the word account necessarily discloses the existence of a debt because consumers may receive messages about their accounts with companies other than debt collectors. In the context of the final rule's limited-content message, however, referring to an account would increase the risk of a prohibited third-party disclosure. As discussed above in the section-by-section analysis finalizing § 1006.2(j)(1)(i)'s requirement to include the debt collector's business name, a third party overhearing a

limited-content message on a consumer's voicemail system would be unable to determine whether a debt collector or another business left the message, or assuming a debt collector left the message, whether the debt collector left it because the consumer owes a debt or for another reason. But including the word account narrows the range of possible alternative explanations for the message. For example, a message to a consumer referring to “your account” is unlikely to be a message seeking location information from the recipient. This raises the probability of a third party inferring that the message relates to a consumer's debt.

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Two commenters stated that the Bureau had not conducted consumer testing regarding what information does or does not reveal the existence of a debt. Although the Bureau recognizes the value of consumer testing, there are other legitimate grounds on which to base a provision of a final rule. Here, the Bureau is relying on its interpretation of FDCPA section 803(2)'s definition of communication, after considering comments received and existing case law.

Additionally, the proposal may have overestimated the benefits of an optional generic statement that the message relates to an account. As commenters noted, debt collectors could not include information about the account, such as the type of account or the company with whom the account is held. The presence of such information would risk conveying information about a debt, but its absence leaves the consumer without important context that may prompt consumers to reply, if they so choose. As explained in the section-by-section analysis of § 1006.2(j)(1)(i), the business name of the debt collector is more beneficial to consumers. In light of the limited utility of a reference to an account, the Bureau finds that such content would create an unjustified risk of prohibited third-party disclosure. Accordingly, final § 1006.2(j) no longer provides that a limited-content message may include a generic reference to an account.

Several industry commenters asked the Bureau to modify proposed § 1006.2(j)(1)(iii)'s requirement that a limited-content message include the name or names of one or more natural persons whom the consumer can contact to reply to the debt collector. These commenters stated that large debt collectors would be unable to predict which natural person might be available to answer a consumer's reply. These commenters offered several solutions, including permitting limited-content messages to refer generally to “agents,” “associates,” “representatives,” or particular groups or organizations within the debt collector. Such an approach, some c

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