FDCPA Series Part II: CU Impact, Communications & Future Bureau Interpretations
On Friday, we blogged about a couple of basics of the CFPB’s recent debt collection rule. As we continue our series, one question that has come up is, if this does not apply to a credit union collecting on its own debts, then how are credit unions impacted? First, some credit unions may utilize third-party debt collectors and may consider compliance with these rules as part of choosing future partners in this area as well as conducting vendor/third-party due diligence. Second, some credit unions may have to follow these rules based on a state law that cross-applies the FDCPA to first-party debt collectors (collecting on their own debts). It is also worth considering that in a 2013 bulletin, the CFPB indicated that certain negative collections practices could constitute unfair, deceptive or abusive acts or practices (UDAAP) violations, making the FDCPA somewhat informative in analyzing collection practices. While the proposed rule relied on UDAAP authority in some places, which could have meant violations of those provisions would also be UDAAP violations, the final rule relies on the FDCPA itself.
As noted in our first blog in this series, the rule accounts for more modern ways to communicate with consumers. But what is a “communication” and what does it mean to “communicate”? This is important for understanding when certain provisions in Regulation F (implementing the FDCPA) will apply.
Section 1006.2(d) takes a broad approach to the term communication – it is the “convey[ance]of information regarding a debt directly or indirectly to any person through any medium.” The official commentary indicates that “any medium” includes in person or telephone contact, as well as paper documents, mail, email, text messages, social media or other electronic media. The commentary also indicates that “information regarding a debt” does not include a “limited-content message.”
What is a limited-content message? It is a voice mail that includes all of the following:
- the business name of the debt collector that does not indicate the collector is in the debt collection business;
- a request that the consumer replies to the message;
- the name of one or more people that the consumer can contact to reply to the debt collector; and
- a telephone number(s) the consumer can call to reply to the debt collector.
Some other optional information, like salutations, the date, etc., can be included with a limited-content message. The commentary to section 1006.2(j) indicates that including information that is not listed in the rule but conveys information about a debt can mean that message is no longer a limited-content message, but a communication.
The rule also defines an “attempt to communicate” which means initiating “a communication or other contact about a debt by any person though any medium.” Attempts to communicate also include soliciting responses from the person or leaving a limited-content message. The commentary provides two somewhat obvious non-exhaustive examples of what constitutes an attempt to communicate:
- If a debt collector calls a person, this is an attempt to communicate regardless of whether the call actually reaches the person.
- If a debt collector calls a person and leaves a voice mail, this is an attempt to communicate regardless of whether the voicemail message is just a “limited content message” or includes content that conveys, directly or indirectly, information about a debt.
There are many other provisions worth flagging in these rules that the NAFCU Compliance Blog will cover in coming weeks. The rule has not yet published in the Federal Register, but the rule will be effective one year from its publication date.
Finally, a couple of things caught my eye as a self-described regulations nerd. First, the rule includes Appendix C which is very short but addresses the issuance of advisory opinions. The appendix states that acts done in good faith and in conformity with CFPB advisory opinions will receive certain protections from liability under the FDCPA. The bureau also noted requests for advisory opinions can be made and any such opinions will be published in the Federal Register. An existing 2016 interpretation involving the FDCPA and some mortgage servicing provisions was incorporated into the appendix as an advisory opinion.
Second, in the introduction to the official interpretations of the rule, Supplement I to Part 1006, the bureau noted that anyone can request that an official interpretation be added to the commentary. Such requests can be submitted to the bureau’s Associate Director, Division of Research, Markets, and Regulations and should contain “a complete statement of all relevant facts concerning the issue, including copies of all pertinent documents.” Adoption of such commentary would go through the rulemaking process and be incorporated after publication in the Federal Register if finalized.
About the Author
Brandy Bruyere, NCCO was named vice president of regulatory compliance in February 2017. In her role, Bruyere oversees NAFCU's regulatory compliance team who help credit unions with a variety of compliance issues.