Last year, a new debt collection rule to clarify, help interpret and expand upon the Federal Fair Debt Collection Practices Act took effect nationwide. The new rule went into effect November 30, 2021. In the short time it has been in effect, the new rule promulgated by the Consumer Financial Protection Bureau (CFPB), has already shown that it will have far-reaching implications for those within the debt collection industry.
How the New Rule Impacts Debt Collectors
For debt collectors, this new rule makes their jobs more complicated, expanding on information they must provide and eliminating proven and effective debt collection methods. A few of the ways that the CFPB’s new debt collection rule will impact those who perform debt collection work include the following:
- Limited Content Messages – Debt collectors are required to leave limited content messages when they contact a person about a debt and they do not reach them. These messages are required to include limited information about why the debt collector is contacting the person, so that if a third-party hears or reads the message, the message will not disclose that the debt collector was contacting the person about a debt.
- Call Frequency Limitations – Debt collectors are not allowed to call about a debt too frequently. Debt collectors are prohibited from calling about a debt more than seven times in seven days. In addition, if the debt collector talks with the person about the debt, they cannot call the person again about the debt until after seven days have passed.
- Use of Electronic Communications – Debt collectors are only permitted to email or text a person they are attempting to collect a debt from if the person has previously used that email address or phone number to communicate with the debt collector or creditor before, and the person has not opted out of being contacted at that email address or phone number. In addition, the debt collector can only contact the person at a phone number or email address not connected with the account if they receive the person’s consent to contact them at that email address or phone number.
- Time and Place Restrictions – Debt collectors are not allowed to contact a person about a debt if it is before 8:00 am or after 9:00 pm in the person’s time zone.
- Itemization Date Requirement – This involves a debt collector being required to provide the person they are contacting about a debt with an itemization of the account balance starting from an itemization date. The debt collector has the option to choose from one of five dates as the itemization date. The dates are:
- The date the consumer initiated the purchase
- The date of the last payment the consumer made
- The date of the final account statement the creditor provided the consumer
- The date the account was charged-off
- The judgment date
- Validation Period – The debt collector must provide the person they are attempting to collect a debt from 30 days to respond to the debt collection request. During that time, the person has the opportunity to request validation of the debt and/or dispute the debt. The debt collector also has to provide the person with five extra days beyond the initial 30 days to account for the time it takes for the debt collection notice to be delivered to and received by the person.
- Debt Identification Assistance – Debt collectors must provide a person they are trying to collect a debt from with information that enables the person to identify the debt. Information that the debt collector must provide includes:
- The name and mailing address of the debt collection company
- The name and address of the person who owes the debt
- The name of the original creditor and the current creditor
- The account number associated with the debt
- The itemization date
- The amount of the debt on the itemization date
- The itemization of the debt from the itemization date to the present
- The current amount of the debt
- Time-Barred Debt – Debt collectors are not allowed to threaten a person who owes a debt with a lawsuit or pursue a lawsuit against that person if the statute of limitations regarding the debt has run out. Statute of limitations regarding debts vary from state to state.
- Record Retention – Debt collectors must keep records, including documents and phone call recordings, which serve as evidence that they are complying with the new rule. The records must be kept starting with the day that the debt collector begins collections activity regarding a person’s debt and ending three years after the debt collector’s last collection activity involving the person’s debt.
Discuss Your Situation with an Experienced Debt Collection Attorney Today
Changes to the debt collection rules are often tricky for debt collectors, especially if they lack legal expertise. Attorney Alden B. Smith has been practicing law for nearly 40 years. He has truly seen it all and has an understanding of the law that is hard to match. Attorney Smith has spent decades helping clients recover what they are owed. He has successfully adjusted to law and rule changes in the past and continues to do so to this day.
At the Law Offices of Alden B. Smith, we have more than 35 years of experience helping individuals and companies with pending accounts receivable transactions recover what they are owed. Attorney Smith and his knowledgeable, experienced, and reputable debt collection staff can take the burden of collecting debts and dealing with debt collection litigation off a client’s shoulders so that they can concentrate on running their business. Clients who work with us can rest assured knowing we have successfully handled thousands of cases and have a history of securing favorable outcomes for our clients.
For more information about our debt collection law firm and how we can help you collect what is owed to you, call us at (845) 481-2867 or get in touch with us online to schedule a consultation with an experienced debt collection lawyer.