CFPB Withdraws Proposal to Delay Debt Collection Rules

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The Consumer Financial Protection Bureau (Bureau) announced on Sept. 1 a withdrawal of its April 2021 proposal to delay the Nov. 30, 2021, effective date of two rules revising Regulation F, 12 CFR Part 1006, which implements the Fair Debt Collection Practices Act. The rules will become effective Nov. 30.

In April 2021, the bureau issued a proposal to delay that effective date by 60 days to Jan. 29, 2022, to afford institutions additional time to review and implement the final rules during the midst of the COVID-19 pandemic. However, most industry commenters stated that, despite the pandemic, they will be prepared to comply with the debt collection final rules by November 30. Consumer advocate commenters generally supported extending the effective date, yet not focusing on the effects of the pandemic or on whether institutions needed additional time to comply with the rules. Instead, they urged the bureau to use the extension to reconsider the debt collection final rules. However, extending the effective date to reconsider the rules is beyond the scope of the Notice of Proposed Rulemaking. The bureau states that they may reconsider the debt collection rules at a later date.

The first debt collection rule, issued in October 2020, addresses communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection.

The second debt collection rule, issued in December 2020, clarifies the information that a debt collector must provide to a consumer at the outset of debt collection communications and provides a model notice containing such information, prohibits debt collectors from bringing or threatening to bring a legal action against a consumer to collect a time-barred debt, and requires debt collectors to take certain actions before furnishing information about a consumer’s debt to a consumer reporting agency.

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